Wednesday, 26 October 2022

Market Summary

Market Summary 26 October 2022

Bitcoin Price: US$ 20,080.07 (+3.88%)
Ethereum Price: US$ 1,459.74 (+8.64%) 


BTC Price Approaches Production Cost as Difficulty Increases

  • Bitcoin mining difficulty increased by 3.44% on Oct. 23 to hit an all-time high. This comes just two weeks after a 13.55% increase on Oct. 10, the largest increase of 2022.
  • Since the end of Mar. 2022, the difficulty has increased by a total of 29%. Over that same time period, BTC price decreased by 57%.
  • This suggests that miners may be experiencing a significant decrease in profitability from just six months prior. However, Bitcoin’s hash rate has been oblivious to these numbers, marking an all-time high of 262 EH/s.
  • Moreover, BTC price is approaching the estimated production cost of electricity once again. Currently, the production cost sits at $16.9K while the BTC price sits at $19.8K, a 17% difference.
  • In the past five years, the production cost of electricity has consistently marked a price floor for BTC. The price has reached the production cost just three times in the network’s history: in Dec. 2018, Mar. 2020, and Jun. 2022. After each of these instances, the price has rallied.
  • It is worth noting that the production cost of electricity is only an estimate based on calculations by Capriole Investments. These estimates vary across the industry, depending on inputs and assumptions.


Central Bank of Turkey Plans to Launch a CBDC in 2023

  • Turkey is poised to launch a central bank digital currency (CBDC) next year.
  • Turkey’s Presidential Annual Program for 2023, presented on Monday by the Presidential Strategy and Budget Directorate, contains the discussion of a central bank digital currency.
  • The announcement came a year after Turkey’s central bank announced in September 2021 that it was considering issuing a CBDC to complement its existing payments infrastructure, in a project entitled “Central Bank Digital Turkish Lira Research and Development.”


Crypto Game Axie’s AXS Tokens Get Unlocked, Recipients Send $5.7M Worth to Exchanges

  • Axie Infinity, the play-to-earn crypto game that rose to sudden popularity last year, started releasing previously restricted AXS tokens to early investors and insiders as part of a massive $200 million unlocking event.
  • The unlock came with an unexpected bit of drama: a swift rally in crypto markets that wiped out some traders who had been betting that dumping by long-time holders might result in a price decline. The short squeeze drove up the price, possibly making the market conditions even more tempting for would-be dumpers.
  • Crypto traders have been monitoring the timing of the token vesting period, partly because of the possibility that some investors might choose to sell their holdings, which could theoretically drive down the price. Vesting refers to the period of time when certain investors and insiders have to wait before claiming their assets; the point is to ensure they are invested for the long-term and prevent immediate sales. Once the vesting period expires – and the tokens become unlocked – all’s fair game.


Pancakeswap approves DEX launch on Aptos via governance vote

  • Decentralized exchange Pancakeswap has passed a governance proposal for deploying it on the newly launched blockchain, Aptos.
  • The pending launch will be Pancakeswap’s second on another blockchain, following its deployment on Ethereum. As part of the proposal, Pancakeswap’s token CAKE will be natively integrated into Aptos, along with four of its DEX primary features.
  • Pancakeswap is joining a trend of projects that expand to multiple blockchains using their native tokens, as new bridging platforms enable this kind of growth. Being able to use native tokens on other chains versus synthetic or “wrapped” versions lets DeFi apps operate on multiple chains.
  • The team will roll out swaps, farms, pools, and initial farm offerings by the end of November.
  • The Aptos and Pancakeswap teams will work on establishing Aptos projects and assisting with their growth on its platform, a representative from Aptos told The Block. Pancakeswap will also set up liquidity pools for Aptos’s native token, APT.


Asset Managers Add to Bitcoin Long Positions Ahead of Price Increase: Crypto Markets Analysis

  • Institutional investor appetite for bitcoin may be rising despite BTC’s persistently flat trading range.
  • The “Commitment of Traders” report, released each Friday and reflecting data as of the prior Tuesday, shows that asset managers’ open interest in BTC is now 84% long and 16% short.
  • The latest figures represent a slight increase from the prior week’s report where asset managers were 80% long (expectation of a rise) and 20% short (expectation of a decline). We’ve seen this metric trend moderately higher since Sept. 6, when asset managers were 74% long BTC.
  • Asset managers’ holdings show how they are using the large amounts of capital at their disposal, and offer a window into market sentiment.


Nearly Half of Younger People Want Crypto Exposure in 401(k)s, Schwab Study Says

  • The young, at least in the US, are leaning less on traditional 401(k)s to save for retirement — increasingly favoring fresh options such as crypto, per a new Charles Schwab study. 
  • The study found that 37% of Gen Z workers and 54% of millennials say their first investing experience was through a 401(k)  — lower than 61% for both Gen X and baby boomers. 
  • Instead, the two younger segments are more likely to also invest in crypto, real estate, annuities and small businesses than their older counterparts. Roughly 22% of Gen Z workers first got involved in investing through mobile trading, the study found, while 11% first invested in crypto.
  • The online survey, conducted in April by Logica Research for Schwab Retirement Plan Services, comprised 1,000 US 401(k) plan participants.


BNB Chain Introduces $10M Fund to Incentivize Project Growth on the Blockchain

  • BNB Chain, one of the world’s most actively used blockchains by daily active users, has introduced a $10 million fund to help projects with user acquisition and growth, a company representative told CoinDesk.
  • The program, known as the Growth Incentive Program, will initially support 10 projects in the fourth quarter, with gas incentives of up to 800 BNB tokens a month in total. In addition, individual projects can receive $1 million a month to cover fees spent on gas, the transaction fee paid to blockchain network validators for their services.
  • “Through the Growth Incentive Program, BNB Chain aims to support projects at various stages of growth and provide direct support for user acquisition,” Gwendolyn Regina, investment director at BNB Chain, said.


Bitcoin volatility hits fresh lows as Ark Invest warms on crypto stocks

  • Bitcoin and ether edged lower over the past 24 hours, as the former’s volatility hovers around its lowest level since July 2020. 
  • Price action has been relatively muted in crypto markets recently. Today, bitcoin was trading at $19,285 — down 0.8% over the day — while ether lost 0.6% in the same period to trade at $1,343, according to CoinGecko data. This stagnant price movement has seen bitcoin volatility reach fresh lows. 
  • Annualized bitcoin volatility is currently 27.06% — its lowest level since July 2020, when it fell as low as 23.37% — according to The Block’s data dashboard. (Volatility, in this case, is defined as the standard deviation of the past 30 days’ daily percentage change in the price of bitcoin.) 


Meta and L’Oréal team up on web3 startup accelerator

  • Tech giant Meta has struck a partnership with makeup brand L’Oréal and French business school HEC Paris backing a new startup acceleration program for creativity in the metaverse. 
  • It will aim to help businesses that specialise in 3D production, AR, VR, mixed reality, avatar creation, portability in user experience, token economy or other topics related to the metaverse and web3, according to a report by Vogue Business. At least five businesses will partake. 


Cathie Wood’s ARK Fintech Innovation ETF Buys More Coinbase

  • ARK’s Fintech Innovation Fund (ARKF) has added 10,880 shares of Coinbase (COIN) to its holdings, bringing its holdings of the stock up to $60.5 million, or roughly 8% of the fund’s weight.
  • This would represent ARK’s first purchase of Coinbase stock since June, according to 13F filings with the U.S. Securities and Exchange Commission (SEC). In August, ARK Chief Investment Officer Cathie Wood said the fund reduced its holdings in Coinbase because of an SEC probe into the crypto exchange.
  • Wood called the probe a “thesis risk” to Coinbase at the time and maintained that ARK would be selling 1.1 million COIN shares, which she said was “very little.”
  • Both Wood and ARK generally remain quite bullish on Coinbase and crypto in general. 13F filings show that ARK has 7.7 million shares of COIN, and added around 2 million shares to its holdings throughout the last year. Filings show that throughout all of ARK’s buys of COIN it has paid an estimated average price of $218.45.


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  • The latest Week On-chain Video report is live!
  • In this edition we cover the Bull and Bear case for #Bitcoin, assessing
    • Weak on-chain activity
    • Risk of a $1.5B miner deleveraging
    • Accumulation trends and exchange balances

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