Thursday, 20 June 2024

Market Summary

Market Summary 20 June 2024

Bitcoin Price: US$ 65,022.69 (-0.28%) 
Ethereum Price: US$ 3,560.51 (+2.21%) 

The U.S. Securities and Exchange Commission (SEC) has dropped its investigation into whether Ether is a security. This decision, celebrated by Ethereum developer Consensys as a major victory for Ethereum developers, technology providers, and industry participants, confirms that the regulator will not bring charges alleging that sales of ETH are securities transactions, despite an ongoing lawsuit against the SEC. On the same day, asset management firm Bitwise revised its spot Ether exchange-traded fund (ETF) Form S-1 registration statement, indicating a potential $100 million investment in the ETF upon its trading launch. However, not all news in the crypto world was positive. North Dakota’s financial regulator revoked a money transmitter license for Binance’s U.S. arm, Binance.US, due to the company’s failure to comply with the state’s money transmitter laws. This makes North Dakota the seventh state to do so, with the revocation order citing Binance founder Changpeng Zhao’s recent federal conviction for conspiracy to conduct an unlicensed money-transmitting business and a failure to maintain an effective Anti-Money Laundering (AML) program. 

On June 21, the Central Bank of Iran (CBI) is set to launch a public pilot for its national digital currency, the digital rial, with a focus on domestic micropayments and availability to banking customers and tourists on Kish Island. This digital rial, which eliminates the need for interbank settlement, is part of a broader initiative to establish a digital economy in the country and enhance micropayments. In a separate development, a crypto wallet labelled “German Government (BKA)” began moving Bitcoin on June 19, leading to speculation that the German government might be liquidating its BTC holdings. This wallet, which has held nearly 50,000 Bitcoin since February 2024, transferred nearly 6,500 BTC, believed to have been seized from the operator of the pirated movie website Movie2k. Meanwhile, the Bitcoin network has seen a significant decline in its average block size and transaction rates, coinciding with a price drop to around $64,100. This decrease in block size and the network’s transaction per second (TPS) rate suggests a reduction in activity and potentially diminished miner profitability due to the decreased post-halving BTC block rewards. 

In the past four years, stablecoin transfers have experienced a significant surge, with a 16-fold increase leading to a record high of $1.68 trillion in April. This growth is further underscored by the cumulative market capitalisation of all stablecoins, which now stands at over $162 billion. The burgeoning adoption and maturation of the crypto industry are evident in the activities of over 31.1 million active stablecoin users who made over 353 million transactions in the past 30 days. However, the industry is not without its challenges. Cryptocurrency exchange Kraken is currently grappling with a security issue where a research team exploited a bug and withdrew over $3 million worth of digital assets, leading to accusations of extortion. Despite this setback, Kraken assures that no user funds were endangered and is actively working with law enforcement to recover the stolen funds. This incident is part of a larger trend in the industry, with crypto hackers and exploiters stealing digital assets valued at $542.7 million in the first quarter of 2024 alone, marking a 42% increase compared to the same period in 2023. Private key leaks have emerged as the leading cause of these growing exploits. Over the past 13 years, the cryptocurrency industry has suffered 785 reported hacks and exploits, resulting in nearly $19 billion lost. Amid these challenges, there are positive developments. Moody’s Ratings has granted an “A-bf” bond fund rating to Hill Lights International Limited, the issuer of OpenEden’s tokenised United States Treasury bills, known as TBILL Tokens. This development, along with the tokenisation of over $1.5 billion in U.S. Treasurys, marks a significant milestone in the integration of traditional finance with blockchain technology. 

Binance is grappling with its own issues. The exchange has appealed a $4.4 million fine imposed by Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC) for alleged noncompliance with Anti-Money Laundering and Countering the Financing of Terrorism regulations. Amidst these legal battles, which include a $4.3 billion settlement with U.S. authorities and executive detentions in Nigeria, Binance announced plans to exit the Canadian market in May 2023. In parallel to these events, the Bitcoin exchange reserve has hit a 3-year low, signalling low selling pressure and potential supply shocks. This situation has been exacerbated by the approval of Bitcoin ETFs in the United States in January 2024 and the subsequent accumulation of Bitcoin by asset managers like BlackRock. The supply of Bitcoin is further constrained following the April 2024 halving event, which decreased the block mining reward, adding another layer of complexity to the evolving cryptocurrency landscape. 


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