Wednesday, 5 October 2022

Market Summary

Market Summary 5 October 2022

Bitcoin Price: US$20,337.82 (+3.61%)
Ethereum Price: US$ 1,361.49 (+2.90%) 

 

Optimism Adoption And Stickiness On The Rise

  • Binance is launching a program to train global law enforcement agencies on how to stop crypto crime.
  • A regulatory panel by the US Treasury recommends that Congress pass legislation to address risks posed by crypto.
  • A federal court rules that the CFTC can legally sue Ooki DAO members by posting the complaint on its governance forum.
  • Mastercard is launching a tool to help banks assess the risk of crime associated with crypto merchants on its network.
  • Sushi community members vote to elect Jared Grey as the new CEO or Head Chef. Jared has previously worked at EONS and Bitfineon.
  • Optimism, a layer-2 scaling solution for Ethereum, has seen more than a 51% increase in daily active users (DAU) since August. DAUs are measured as the number of unique addresses that interact with the network each day.
  • Optimism has also seen an increase in new users. The L2 saw an average of 1.9k new users per day over the first 20 days of September. This increased to an average of 4.1k new users per day over the final 10 days of September and the start of October.
  • This rise in DAUs and new users can most likely be attributed to the launch of Optimism Quests on Sept 20th.
  • The program rewards users with NFTs for completing tasks that involve interacting with the most popular apps on Optimism. Some users have speculated that earning enough NFTs will make them eligible for a future airdrop.
  • The Stickiness Ratio has also trended upward since late August, climbing from a low of 3.8% on Aug 22nd to 11.9% today.
  • The Stickiness Ratio is calculated as the ratio of DAUs to monthly active users. A higher Stickiness Ratio signifies consistent usage from users that frequently return to transact on the L2.
  • Sei Network
  • When building blockchains, we generally try to bucket them into two distinct boxes: general purpose or app chain. General purpose chains are for permissionless innovation and app chains are for permissioned and specific use cases.
  • Sei is an upcoming Cosmos chain aiming to be a “DeFi-optimized” layer 1. What does that mean? It means making fundamental changes (and tradeoffs) to the base layer that will allow DeFi applications to thrive.
  • These include a built-in order matching engine, sub-second finality, parallelization of orders, single block order execution, and more. All of these customizations are done at the base layer.
  • To be clear, Sei is not a DEX, it is a layer 1 optimized for DeFi. It is not a “pure” app chain like THORChain that focuses solely on cross-chain swaps. But it is built for applications like DEXs, perps, and options to build on top.
  • Serum, an order book application built on top of Solana, is the most used entity that accounts for ~1/3 of Solana program executions. Serum is the “order book layer” on Solana for projects like Mango Markets, Zeta, Atrix, and more to tap into.
  • Activities unrelated to Serum, like gaming and minting NFTs, can drive congestion on the chain and, as we have seen a few times, cause the chain to halt.
  • Sei “trims the fat” and strips out all non-DeFi activities from its chain. Sei is if Serum was its own L1; making specific tradeoffs so that the base layer is optimized for DeFi and giving these apps an “unfair advantage” vs. non-DeFi ones.

 

Bitcoin Gains Momentum on Fed Pivot Narrative, but Some Banks Anticipate Dollar Rebound

  • Bitcoin (BTC) continues to build bullish momentum, hoping that financial stability risks and signs of economic slowdown will force the U.S. Federal Reserve to pivot away from aggressive liquidity withdrawal measures.
  • However, some observers are unconvinced the Fed will abandon or dramatically slow the so-called liquidity tightening anytime soon, and they expect renewed dollar strength.
  • The top cryptocurrency by market value reached a high of $20,150 soon before press time, registering a 2% gain for the day. The dollar index fell to a nine-day low of 11, having hit a two-decade high of 114.77 on Sept. 28.
  • Bitcoin buyers stepped in on Monday after the U.S. Institute of Supply Management (ISM) said its manufacturing purchasing managers’ index (PMI) dropped to 50.9 in September, the lowest reading since May 2020, from 52.8 in August. Notably, the index’s new orders and employment measures contracted, strengthening the case for the Fed pivot.
  • “It’s been a case of ‘bad news is good news’ for equities, with the market treating the downside surprise to the ISM index as increasing the chances of an earlier Fed pause, seen as positive for risk assets,” Bank of New Zealand’s research team wrote in clients early Tuesday. Bitcoin tends to move more or less in line with equities and has halved this year in terms of market value, with the Fed raising rates by 300 basis points.

 

EU policymakers vote to modernize tax with blockchain technology

  • The European Parliament voted in favor of a resolution that acts as a crypto-focused double whammy — tackling both tax evasion through crypto-assets and streamlining rules for their taxation.
  • The resolution tries to identify what makes a taxable event, and suggests that the conversion from crypto to fiat currency is the most viable option. The European Commission is yet to clearly define this and other possible taxable events, and is considering the borderless nature of crypto-assets. 
  • Additionally, the exchange of taxpayer information by cross-national tax administration will need to include information on crypto-assets. However, the policy also calls for a “simplified tax treatment” for smaller transactions.
  • Blockchain technology is also pushed forward as an instrument for tax collection, identifying the technology’s potential to “automate tax collection, limit corruption and better identify ownership of tangible and intangible assets allowing for better taxing mobile taxpayers,” according to the European Parliament’s release. 

 

Bitcoin futures volume climbed back above $1 trillion in September after August lull

  • Bitcoin futures trading volume in dollar terms climbed back above $1 trillion following a 21-month low in August.  
  • Futures trading volume for the leading cryptocurrency by market cap came in at $1.05 trillion across all exchanges last month. Volumes rose back above $1 trillion dollars after falling below this level in August, to $941.5 billion, for the first time since December 2020, according to The Block Research data dashboard
  • The August lull came amid an increase trading in ether futures ahead of The Merge, following Ethereum’s upgrade volumes in ether derivatives continued to challenge bitcoin. Ether futures volumes fell back below bitcoin’s in September, after eclipsing them for the first time in August.

 

You Can Now Buy Your Big Mac With Crypto in Lugano, Switzerland

  • Asset-backed cryptocurrency stablecoin, Tether, is collaborating with GoCrypto to bring bitcoin, tether and LVGA to the Swiss city of Lugano.
  • The initiative, dubbed Plan ₿, is designed to scale bitcoin and stablecoin adoption in Lugano and accelerate the use of cryptocurrencies.
  • A memorandum of understanding was signed earlier this year between Lugano and Tether to integrate existing payment services with bitcoin and vetted stablecoins, Tether Chief Technology Officer Paolo Ardoino said in a statement.
  • “We have been working together to ensure the technological infrastructure is in place to support this and today we watch all of that hard work come to fruition,” Ardoino said.
  • Merchants participating in the initiative so far include fast food giant McDonald’s, a handful of art galleries and others. 

 

Japan to Invest in Metaverse and NFT Expansion

  • Japan’s Prime Minister Fumio Kishida said in a policy speech on Monday that the country’s plans for investing in digital transformation include non-fungible tokens (NFT) and metaverse services.
  • The country has steadily been promoting investment in digital technology, including through tax incentives for companies that embrace a digital future. In his speech to Japan’s parliament, Kishida said the country will continue to focus on “supporting the social implementation of digital technology” and will “promote efforts to expand the use of Web3 services that utilize the metaverse and NFTs.”
  • Japan’s federal foray into Web3 follows a trend of officials taking strides to implement Web3-related services in the country – rather than following the typical bureaucratic route that policies must often travel through. Kishida’s administration recently established a Web3 policy office under the Ministry of Economy, Trade and Industry (METI), which is focused on creating policies for the country’s gradual blockchain expansion.

 

Musk renews bid for Twitter as he looks to avoid trial

  • Elon Musk wants to move forward with the acquisition of Twitter, documents filed Tuesday with the U.S. Securities and Exchange Commission (SEC) confirmed after earlier reports surfaced that the deal was back on.
  • However, that’s only if the Delaware Chancery Court stays the Twitter vs. Musk case, according to a letter from Musk’s lawyers.
  • “The Musk parties provide this notice without admission of liability and without waiver of or prejudice to any of their rights, including their right to assert the defenses and counterclaims pending in the action,” the letter reads.

 

Fidelity Reveals $5 Million Ethereum Index Fund

  • Fidelity already has $5 million invested in a new Ethereum index fund, according to registration documents filed today with the U.S. Securities and Exchange Commission.
  • The asset manager, which has $4.5 trillion on its books, registered its Fidelity Ethereum Index Fund on Tuesday, but said in its SEC filing that the first sale took place on September 26.
  • Last month, Fidelity was rumored to be considering offering Bitcoin trading to its more than 34 million retail customers, although the news didn’t come from Fidelity directly. Galaxy Digital CEO Mike Novogratz spilled the beans at New York’s SALT forum.

 

Custodian Anchorage Adds to Asia Push With Batch of Institutional Crypto Partners

  • U.S.-regulated cryptocurrency custody specialist Anchorage Digital is continuing its push into Asia, naming a brace of new institutional partners in the region.
  • Following Anchorage’s recent participation in a Japanese yen-denominated stablecoin project, the firm is partnering with Bitkub, Dream Trade, FBG Capital, GMO-Z.com Trust Company, IOSG Ventures, and Antalpha, the companies said on Wednesday.
  • Asia’s financial institutions and wealthy investors have among the highest exposures to crypto on the planet, according to Anchorage Digital co-founder and President Diogo Mónica. That said, places like Singapore, where Anchorage now has a 10-staff office, have rolled back somewhat on digital assets with the Monetary Authority of Singapore (MAS) calling for a crackdown on irresponsible crypto firms.
  • Being a U.S. federally regulated crypto firm means added scrutiny actually works in Anchorage’s favor, and life is also made easier by having to only work with one regulator, the MAS, as opposed to the mix of watchdogs in the U.S., Mónica said in an interview with CoinDesk.

 

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