Bitcoin is Back in Limbo

Weekly News Wrap Up

We saw some encouraging trends in the US labour market this week, with initial jobless claims declining to 216,000. Labour force participation surged while Q2 worker productivity increased at 3.5% annualized rate, indicating the most significant gain since Q3 2020. These findings provide a more optimistic outlook on the resilience of the US labour market, which can influence policy making and investment strategies. That said, equity markets closed the week in the red with SPX -1.29%, DJIA -0.75%% and NASDAQ -1.93% while investors anxiously wait for the US inflation readings next week. 

Cryptocurrency price action is back in its familiar range bound motion with BTC ending the week +0.36% slightly under 26,000 while ETH +0.38%.

While Grayscale’s win over the SEC the week before may have caused a wave of celebration and a spike in volatility, trading volumes continue to remain muted. According to Kaiko, Bitcoin volume continued to fall, though with a brief initial spike, after having erased gains within the same week itself. The cumulative volume delta (CVD), which helps investors understand the relationship between price moves and trading, indicates net selling in the market post the Grayscale ruling.

In another report by Glassnode, it introduced the Aggregate Realized Value metric which amalgamates the flows of BTC and ETH, along with the top five stablecoins: USDT, USDC, BUSD, DAI, and TUSD. Analysis reveals that predating major recent events, there was a capital exodus initiated in early August, resulting in an outflow of approximately $55B from digital assets throughout the month. This synchronized outflow could underscore a broader sentiment of caution and repositioning among investors, highlighting potential market headwinds or a strategic reallocation of assets.

Cryptocurrency News

  • Visa is expanding its stablecoin settlement capabilities by tapping USDC stablecoin and the Solana blockchain, in a bid to improve cross-border settlement. Visa has also started pilot programs with merchant acquirers Worldpay and Nuvei, in which their clients may now choose USDC settlement instead of receiving fiat.
  • Australia’s Senate Economics Legislation Committee rejected “The Digital Assets (Market Regulation) Bill 2023”, saying that the bill lacked detail and is not in line with the government’s approach, and instead recommended further consultation with the industry to develop fit-for-purpose digital assets regulation in Australia.
  • Grayscale’s Legal Win Versus SEC Makes Spot Bitcoin ETF Approval More Likely: JPMorgan. JPMorgan analyst said in a report last week that the SEC would be more likely to approve the spot BTC ETF applications than to withdraw its previous approval of futures-based BTC ETFs after federal court ruled that the regulator must review its rejection of Grayscale’s attempt to convert GBTC into an ETF.
  • The London Stock Exchange Group has drawn up plans to offer blockchain-based trading of traditional financial assets. The project does not involve cryptocurrencies and only uses the blockchain technology underpinning the digital assets to make buying, selling and holding of traditional assets more efficient.
  • Hong Kong has entered the second phase of technical testing for the e-CNY, expanding its trial to more banks as it incorporates a predominant local payment system. The digital yuan is expected to provide a secure, convenient and innovative option for cross-border retail consumption for residents in both regions.
  • Global Standard Setters to Deliver Global Crypto Policy Roadmap. The Financial Stability Board and the International Monetary Fund are set to deliver a paper calling for global crypto policy coordination at the upcoming G20 summit. The paper includes a roadmap on the implementation of policy frameworks for crypto including global coordination, cooperation and information sharing.
  • Ethereum co-founder Vitalik Buterin says node centralization is one of Ethereum‚Äôs main challenges, but the perfect solution may not come for another 20 years. Currently, the majority of the 5,901 active Ethereum nodes are being run through centralized web providers like Amazon Web Services, which many experts claim leaves the Ethereum blockchain exposed to a centralized point of failure. Ultimately however, Buterin concluded that the most time-sensitive and pressing concern for Ethereum as whole was achieving higher levels of scalability.
  • ConsenSys and YouGov released the findings from the global Web3 perception survey, which sought to provide both macro and regional insights into the perception of 15 different countries toward cryptocurrencies and the broader Web3 ecosystem. Africa’s largest economy, Nigeria, has the most cryptocurrency-aware population in the world. On the other hand, of the U.S. respondents, 95% said they were aware of crypto, while 42% had heard of the sector but lacked a clear understanding. Only half of the American respondents indicated that they own or previously owned cryptocurrencies.
  • Coinbase has launched a new crypto lending service for institutional clients in the US. Through this platform, companies will be able to lend funds to Coinbase and receive collateral in excess of the amount they loaned, creating an overcollateralized lending mechanism. The plan is similar to the prime brokerage services of traditional banks but is different from the Lend program that Coinbase scrapped last year due to regulatory issues.
  • ARK Invest and 21Shares file with the SEC for a spot ether ETF. The filing is the latest in a recent wave of applications from asset managers seeking approval for spot crypto funds. Ark and 21Shares were an early mover when it came to filing for a spot bitcoin ETF, which the SEC moved to delay a decision on last month. The pair last month also applied for a fund that would invest in bitcoin and ether futures.¬†
  • Coinbase Targets Regulatory Clarity in International Expansion Plan. Coinbase have set out plans for an international expansion focusing on acquiring licenses in “markets that are enacting clear rules” for the crypto industry, with the EU, U.K., Canada, Brazil, Singapore and Australia its near-term priorities.
  • JPMorgan is in the early stages of exploring a blockchain-based digital deposit token. The proposed digital token payment and settlement system could hasten transaction speed while lowering costs, with the deposit token representing a digital version of a customer’s deposits. It could be used to send funds to users of a different bank or settle tokenized securities.
  • Grab, a super-app popular in Southeast Asia, has incorporated web3 services whereby users can now set up a web3 wallet, win blockchain-based rewards, pay with NFTs and more. In June of this year, Grab had signed on to be a part of a pilot study with the Monetary Authority of Singapore surrounding the use of three digital assets including CBDCs, tokenized bank deposits and stablecoins. Grab, along with Amazon and Southeast Asian financial services firm Fazz, has also tested escrow arrangements for a new digital asset-based payment system called Purpose Bound Money.

Investment Consideration
Our best strategy for the moment is to take at least 1-3 years in Moderate Portfolio because it has a good defense with 50% Fixed Deposit, 30% In DCD and 20% in Staking. After all, we still have potential returns in DCD and Staking, especially in BTC.

Sources:

  1. https://research.kaiko.com/insights/bitcoin-etf-decision-ignites-volatility
  2. https://insights.glassnode.com/the-week-onchain-week-36-2023/
  3. https://www.coindesk.com/business/2023/09/05/visa-taps-solana-and-usdc-stablecoin-to-boost-cross-border-payments/
  4. https://www.coindesk.com/policy/2023/09/04/australia-senate-committee-rejects-crypto-bill-from-opposition-senator-andrew-bragg/
  5. https://www.coindesk.com/markets/2023/09/04/grayscales-legal-win-versus-sec-makes-spot-bitcoin-etf-approval-more-likely-jpmorgan/
  6. https://www.coindesk.com/business/2023/09/04/lse-group-plans-to-offer-blockchain-powered-market-for-traditional-assets-report/
  7. https://www.theblock.co/post/249655/hong-kong-expands-trial-of-chinas-digital-yuan-to-more-banks-says-official
  8. https://www.coindesk.com/policy/2023/09/05/global-standard-setters-to-deliver-global-crypto-policy-roadmap/
  9. https://cointelegraph.com/news/vitalik-buterin-ethereum-centralization-issues-running-nodes-easier
  10. https://cointelegraph.com/news/99-of-nigerians-are-crypto-aware-consensys-report
  11. https://www.coindesk.com/business/2023/09/05/coinbase-creates-new-crypto-lending-service-geared-toward-large-investors/
  12. https://www.theblock.co/post/249581/ark-invest-and-21shares-file-with-sec-for-spot-ether-etf
  13. https://www.coindesk.com/business/2023/09/08/coinbase-targets-regulatory-clarity-in-international-expansion-plan/
  14. https://www.bloomberg.com/news/articles/2023-09-07/jpmorgan-jpm-explores-blockchain-deposit-token-for-payment-settlement
  15. https://www.theblock.co/post/249787/southeast-asia-super-app-grab-adds-support-for-web3-services

 

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