Thursday, 6 July 2023

Market Summary

Market Summary 6 July 2023

Bitcoin Price: US$ 30,504.81 (-0.85%)
Ethereum Price: US$ 1,910.36 (-1.33%)  


In a surprising shift of perspective, BlackRock CEO Larry Fink acknowledged the potential of bitcoin to revolutionise the financial system. Previously skeptical of cryptocurrencies and their association with illicit activities, Fink now recognises bitcoin’s ability to tokenise assets and securities, offering a new alternative for investors. Fink highlighted the advantages of bitcoin as an international asset that can serve as a hedge against inflation and currency devaluation. In another news, Israeli lawmakers have shown support for a bill that aims to eliminate discriminatory taxation on the country’s crypto sector. The proposed law seeks to extend tax benefits enjoyed by high-tech firms to the crypto industry, exempting foreign residents from capital gains taxes on digital currency sales and reducing tax rates for crypto options. Israel’s proactive efforts to regulate and integrate crypto into its economy signal a desire to compete with major financial centers like London and New York. Furthermore, the decentralised exchange dYdX has taken a step closer to its transition away from Ethereum by launching its public test network on Cosmos. Users can now place market and limit orders on the testnet, which currently features bitcoin and ethereum markets but is expected to expand to include over 30 markets as the network evolves. The existing Ethereum platform has demonstrated significant trading volume, and dYdX’s governance token has experienced a notable surge in recent weeks. With its move to the Cosmos blockchain, dYdX aims to enhance its decentralised exchange capabilities and explore new opportunities.

The week promises a flurry of economic releases with the potential to impact the inflation and interest rate landscape, consequently influencing cryptocurrencies like bitcoin. Wednesday’s highlight will be the release of the minutes from the U.S. Federal Reserve’s mid-June meeting, where the central bank paused its series of rate hikes. Despite the pause, Fed officials, including Chairman Jay Powell, have indicated that rate hikes will resume, with expectations of at least two more increases in 2023. Additionally, Thursday will bring the ADP Employment Report, offering insights into June’s private sector hiring, and the government’s initial jobless claims figure. On the crypto front, Starknet, a layer 2 solution for Ethereum, is gearing up for a significant upgrade called “Quantum Leap” aimed at enhancing transaction throughput and confirmation times. The upgrade recently went live on the testnet and, pending community approval, is scheduled for deployment on the mainnet in mid-July. Meanwhile, Chainlink’s proof-of-reserves service, designed to provide transparency and assurance about exchanges’ backing, has come under scrutiny for relying on promises rather than concrete proof, potentially offering a misleading sense of security.

Crypto trading on centralised exchanges (CEXs) experienced a significant boost in June, reaching a staggering $2.71 trillion in combined spot and derivatives trading volume, according to CCData’s report. However, major exchanges such as Binance, Binance.US, and Coinbase saw their market shares decline during the same period. The rise in trading activity was fueled by notable events, including BlackRock’s filing for a Bitcoin ETF and regulatory challenges faced by Binance and Coinbase from the Securities and Exchange Commission (SEC) in the United States. In other news, the Danish Financial Supervisory Authority (DFSA) has ordered Saxo Bank to divest its cryptocurrency holdings, citing the bank’s crypto activities falling outside the legal business area of financial institutions. Additionally, Nasdaq has proposed listing the Valkyrie Bitcoin Fund, partnering with Coinbase for surveillance-sharing to enhance market monitoring. The pursuit of a spot Bitcoin ETF continues with several firms, including Invesco, Wisdom Tree, Bitwise, and Fidelity, submitting fresh applications after BlackRock’s recent move in the same direction.

Crypto lender Celsius Network has moved around $74 million worth of altcoins, including Synthetix, Uniswap, and ZRX, to different wallets, following liquidators’ approval to convert the altcoins to bitcoin and ether. The move also involved stablecoins like USDC and USDT, with some tokens being sent to a wallet associated with market making firm Wintermute. Meanwhile, Securities and Exchange Commission (SEC) Commissioner Hester Peirce criticised the regulatory ambiguity surrounding spot products in the US. Peirce expressed the need for regulatory clarity, stating that the current ambiguity may lead companies and projects to consider leaving the US, complying with unclear regulations, or shutting down entirely. In light of expected increased trading volume, Binance CEO Changpeng Zhao, also known as CZ, stated that the platform is making preparations to accommodate the surge, citing factors such as new filings for spot bitcoin ETFs and the upcoming Bitcoin halving event in 2024. CZ remains bullish on the long-term potential of the crypto industry and assured that Binance has the resilience to withstand a bear market if it persists.




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