Wednesday, 21 June 2023

Market Summary

Market Summary 21 June 2023

Bitcoin Price: US$ 28,307.99 (+5.45%)
Ethereum Price: US$ 1,791.99 (+3.16%)  


Bitcoin’s recent rally above $28,000 triggered the largest short squeeze this month, causing significant losses for traders who bet on price declines. The surge in Bitcoin’s value follows announcements from major financial institutions regarding their crypto initiatives, which have lifted the mood in a market previously dampened by increasing regulatory pressures in the United States. Meanwhile, the Grayscale Bitcoin Trust (GBTC) experienced a surge in share price due to optimism surrounding the potential conversion of the fund into an exchange-traded fund (ETF) following BlackRock’s filing for a BTC ETF. The narrowing discount on GBTC’s share price relative to its net asset value reflects investor optimism about future fund redemptions and the possibility of Grayscale winning an ongoing lawsuit against the SEC. However, Cardano’s ADA token faced regulatory uncertainty as it witnessed a “death cross” pattern on its daily price chart, with its 50-day simple moving average dropping below the 200-day SMA. This technical indicator, coupled with the SEC’s classification of ADA and other tokens as securities, has contributed to a significant decline in ADA’s market value this month. While the regulatory risk primarily affects altcoin investors, holders of BTC and ETH are relatively less impacted.

Bitcoin’s illiquid supply is witnessing a substantial increase, with network participants characterised by limited spending history accumulating the cryptocurrency at the swiftest pace in half a year. Glassnode’s metric reveals a rise to 147,351.58 BTC ($3.9 billion) in illiquid wallets, marking the highest level since December 19. The total holdings of illiquid entities have surged to a record 15,207,843 BTC, with a recent monthly increase of 215,000 BTC. These trends indicate a prevailing inclination among long-term investors to accumulate Bitcoin, demonstrating their confidence in its future price prospects despite prevailing macroeconomic uncertainties and regulatory risks. Meanwhile, as China implements its first reduction in benchmark lending rates in ten months, Bitcoin maintains a stable position, failing to be swayed by the move. The looser monetary conditions in China stand in contrast to ongoing monetary tightening in Western economies, driven by concerns over China’s slowing economy and looming deflationary risks. Consequently, Bitcoin struggled to gain upward momentum, trading around $26,819 after faltering to sustain gains above $27,150 during Asian trading hours. The risk-off sentiment is reflected in the decline of the Australian dollar against the US dollar and the mixed performance of Chinese and Asia-Pacific equities. Investors remain skeptical about the efficacy of rate cuts in reviving the economy and are anticipating a more significant stimulus package. Furthermore, the recent positive trajectory of Bitcoin’s price was reinforced by Deutsche Bank’s application for a crypto asset custody license, aligning with a series of related announcements from prominent financial players such as BlackRock and Fidelity Investments. The launch of EDX Markets, a new cryptocurrency exchange backed by investors including Fidelity, Charles Schwab, and Citadel Securities, further contributed to market optimism. However, the timing of these developments in light of regulatory actions against major exchanges has raised suspicions.

A malicious app masquerading as Trezor Wallet has been discovered on the Apple App Store, posing a risk to cryptocurrency users. Dubbed “Trezor Wallet Suite,” the fake app prompts users to enter their seed phrase, enabling the operators to steal their digital assets. The app has been available for several weeks, potentially leaving a significant number of victims in its wake. In another development, Binance US has seen its market share plummet amidst ongoing regulatory scrutiny by the Securities and Exchange Commission (SEC). Market research from Kaiko reveals that Binance US’s share has dwindled to 1.5% from 8% since the beginning of the year, while Coinbase, the leading US cryptocurrency exchange, has also experienced a decline to 50.5% from 56%. The SEC’s lawsuits against both exchanges have had a profound impact on their market activity. Meanwhile, Deutsche Bank has reportedly applied for a digital asset custody license with the German financial regulator, BaFin. The bank’s global head of corporate bank, David Lynne, confirmed their efforts to establish a digital asset custody business, aiming to launch a minimum viable product in 2021 and gauge global client interest. As Europe’s ninth largest bank, Deutsche Bank’s move into the cryptocurrency space further emphasises the growing acceptance and adoption of digital assets in traditional financial institutions.

Binance, the popular cryptocurrency exchange, has begun running Lightning nodes as it prepares to integrate Bitcoin’s Lightning Network for deposits and withdrawals. The exchange confirmed this development on its official Twitter account, acknowledging the addition of Lightning Network support. However, Binance noted that further technical work is required before it can fully support Lightning Network payments. Meanwhile, Alex Obadia, co-founder of Flashbots, an Ethereum infrastructure service combating negative consequences of MEV extraction techniques, has announced his departure in a farewell letter. In the letter, Obadia warns of “serious challenges” ahead, highlighting the vulnerability of the system to centralisation and the need to protect it from becoming the very problem it seeks to solve. Additionally, Polygon Labs has proposed an upgrade to its Polygon Proof-of-Stake (PoS) sidechain, aiming to introduce “zkEVM Validium,” a Layer 2 network secured by Ethereum. The upgrade would align the sidechain with the vision for Polygon 2.0 and leverage zero-knowledge scaling technology to enhance security and performance while maintaining low fees.




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