This Week in Crypto: 15th December 2022

BTC Markets

Bitcoin Fear and Greed Index

Bitcoin Fear and Greed Index is currently at 31/100 in the Fear zone, up 6 points from this time last week. The index reached a high of 31/100 today and a low of 25/100 on Thursday last week.

2022 ‘Blockies’ Digital Currency Exchange & Blockchain Leader of the Year.

Last night, BTC Markets took home two industry awards at the 2022 Blockchain Australia event – the ‘Blockies’ held in Sydney. We were awarded ‘Digital Currency Exchange of the Year’ and our CEO Caroline Bowler won ‘Blockchain Leader of the Year’.

The ‘Digital Currency Exchange of the Year’ award recognises an outstanding exchange with trusted industry leadership. It has been a challenging year and to be recognised as the trusted market leader in the Australian cryptocurrency landscape, is a huge accolade and achievement for our business.

The ‘Blockchain Leader of the Year’ award recognises leadership in the blockchain industry that is pioneering, visionary, and strategic. This recognition tops an exemplary year for Caroline, after taking home the 2022 Female Fintech Leader of the Year in March.

Market reflections

Global markets put on quite a display as participants responded to extensive macro data and interest rate decisions throughout the week. The new week promised a robust schedule of data between CPI, Fed rates, retail sales, and the latest updates from central banks around the world.

Short-term traders prepared for opportunities amidst probable price swings and increased volatility. From a risk management standpoint, investors braced for discrepancies between what was ultimately priced in versus what would actually transpire. As the week progressed, the variety of high-impact market drivers indeed delivered volatility and riveting price-action as promised.

As in previous weeks, rising Covid cases in China continued to dampen trade sentiment, however, pandemic rules were unexpectedly relaxed at the end of last week. The Chinese government uncharacteristically pivoted to a more tempered stance on Covid Zero policy which provided relief to financial markets.

On Tuesday, US Consumer Price Index (CPI) data for November was due. Leading into the release, markets had priced in core CPI at 0.3%, however, results surprised investors when a lower-than-expected reading of 0.1% was handed down. In the US pre-market session, equities pumped and ripped to the upside showing significant strength in price-action and a corresponding spike in implied volatility. At the open of trade, the last of the shorts were squeezed out before demand faded and sellers stepped back in.

Despite the lower-than-expected inflation data, it wasn’t quite ‘mission accomplished’ just yet. While several deflationary indications had begun to emerge, inflation was clearly not completely under control.

In the latest US Federal Reserve Open Market Committee (FOMC) meeting, Fed Chair Jerome Powell showed up in hawkish stance. The Fed downshifted to a 0.5% hike, raising the target range for the federal funds rate to 4.25%-4.5%. Powell stated that “historical experience cautions strongly against prematurely loosening policy. I wouldn’t see us considering rate cuts until the committee is confident that inflation is moving down to 2% in a sustained way.” Following his official comments, Powell added, “restoring price stability will likely require maintaining a restrictive policy stance for some time.”

State of crypto

The digital asset majors delivered exciting price action throughout the week. Emotions ran high and traders were on the edge of their seats as major market drivers shaped otherwise unexpected outcomes.

Bitcoin opened this weekly candle at US$17,089, pulled back to lows of US$16,873 early on Monday morning, and rallied to reclaim prices above US$17,000 early on Tuesday. Trading in significant positive correlation with the Nasdaq and S&P, Bitcoin responded to macro drivers positively and pressed to highs upwards of US$18,865.

Ether opened the weekly candle at US$1,263 and slipped to lows of $1,240 in the first hours of Monday’s morning session. Correlating tightly with Bitcoin’s price-action, Ether continued to press to the upside and test local highs of $1,351 before pulling back slightly on Thursday morning.
At the time of writing, Bitcoin was up 4.15% on the week, trading at US$17,800 and Ether was up 3.35% at US$1,305.

Bitcoin dominance by market capitalisation lifted 1.87%, positioning Bitcoin at 41.5% dominance by market cap. With total crypto market cap trading 2.21% higher on the week thus far, we’re now seeing US$823.4 billion in the crypto markets.

Crypto news

2022 Crypto Venture Funding.

Global financial data and software provider, Pitchbook, released their inaugural 2022 Crypto Report. According to the report, venture funding for crypto start-ups has remained strong this year, with nearly US$20 billion of capital raised across 616 deals through the first three quarters of 2022. This represented a 41% increase compared to the same period last year. Despite macro conditions, investors continued to deploy capital investment into the start-up ecosystem.

The average funding for seed and early-stage crypto start-ups in 2022 increased to the range of US$5 million and US$20 million, from US$3 million and US$11.7 million in 2021. Capital deployed for later stage start-ups remained consistent at US$30 million. Upwards of US$1.5 billion was committed to Web3 related projects, marking a 44% increase in deal flow relative to 2021.

Whilst signs remain mixed as to how long global financial markets continue in uncertain conditions, institutional heavyweights have continued to deploy capital. The general narrative in the investment world has continued to revolve around harnessing the ‘revolutionary technology’ of blockchain. According to Goldman Sachs CEO David Solomon, the firm intends to allocate tens of millions of dollars to digital assets in the near future. Regulated financial institutions are well positioned to harness the revolutionary technology.

Mastercard and institutional adoption.

Mastercard’s Director of Start-up Engagement for Digital Assets, Grace Berkery, recently shared her thoughts that institutional investment in the digital asset space won’t be slowing down any time soon. Berkery doesn’t think that investors will shy away from the space in current market environments, but will instead focus on improved due diligence, more selective partnership agreements, and working with companies with demonstrated track records.

Mastercard has supported the crypto industry for years through different investments and initiatives, working toward improved payment rails, regulatory compliance and security, and better interaction between banks and customers.

Increasing institutional involvement in digital assets has been a disputed subject in some crypto native communities. While some believe institutional activity will drive growth of the crypto market, new use cases, and adoption, others believe that increased institutional participation will impede decentralisation and inhibit innovation. From a lens which positions crypto as a maturing global asset class, it is becoming increasingly clear that institutional involvement will support responsible regulation and further development of the industry and its stakeholders.

Sam Bankman-Fried charged by United States authorities.

FTX Founder, Sam Bankman-Fried has been charged by United States authorities and faces eight criminal counts, including wire fraud, conspiracy, securities fraud, and money laundering, among others.

In parallel action, the Securities and Exchange Commission (SEC), the US Attorney’s Office for the Southern District of New York, and the Commodity Futures Trading Commission (CFTC) have announced simultaneous charges against Bankman-Fried.

According to the SEC official litigation complaint, “From at least May 2019 through November 2022, Bankman-Fried engaged in a scheme to defraud equity investors in FTX Trading Ltd. Bankman-Fried raised more than $1.8 billion from investors, including U.S. investors, who bought an equity stake in FTX believing that FTX had appropriate controls and risk management measures. But from the start, Bankman-Fried improperly diverted customer assets to his privately held crypto hedge fund, Alameda Research, and then used those customer funds to make undisclosed venture investments, lavish real estate purchases, and large political donations.”

The complaint continued, stating that “Bankman-Fried hid all of this from FTX’s equity investors, including U.S. investors, from whom he sought to raise billions of dollars in additional funds. He repeatedly cast FTX as an innovative and conservative trailblazer in the crypto markets. In truth, Bankman-Fried had exempted Alameda from the risk mitigation measures and had provided Alameda with significant special treatment on the FTX platform, including a virtually unlimited “line of credit” funded by the platform’s customers.”

SEC Chair, Gary Gensler emphasised that “compliance protects both those who invest on and those who invest in crypto platforms with time-tested safeguards, such as properly protecting customer funds and separating conflicting lines of business. It also shines a light into trading platform conduct for both investors through disclosure and regulators through examination authority.”

At BTC Markets, we encourage responsible regulation which supports innovation. In Australia, we will continue to work with regulators in drafting legislation for investor protections for the digital asset class, whilst encouraging the growth and innovation of blockchain technology. We do, however, believe that regulation must be done properly to ensure appropriate protections are in place for the advancement of the industry.

Modernising Australia’s financial system.

Earlier this week, Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones released a statement which addressed the Australian payment system, financial market infrastructure, and the digital assets sector.

Looking forward into 2023, the Australian government intends to deliver reforms to modernise Australia’s financial system and strategically position the economy to capture opportune improvements.

The planned reforms will support a financial system which works better for consumers, businesses, investors, and delivers for the Australian economy overall.

The Treasury’s latest media stated, “our regulatory architecture has not kept pace with changes in the market, including the advent of new digital products and services. In many areas, the previous government sat on its hands. In other areas, it made announcements but didn’t deliver. In its first six months, the Albanese Government has demonstrated its mature and methodical approach to delivering reform. We will work closely with regulators, industry, and consumer and business advocacy groups over the coming months to get these reforms right.”

The reforms included a focus on the crypto sector, stating that “the Albanese Government is also taking action to improve the regulation of crypto service providers and ensure additional safeguards for Australians. The next steps in the Government’s ongoing ‘token mapping’ work will include the release of a consultation paper in early 2023 to inform what digital assets should be regulated by financial services laws, and the development of appropriate custody and licensing settings to safeguard consumers. Following the release of token mapping, the Government will consult on a custody and licensing framework next year before introducing legislation.”

Steve Vallas, Managing Director at Blockchain APAC, provided excellent commentary on the matter, affirming that “regulators must work more closely to ensure that the licensing and regulation of the sector balances the need for consumer protection with an environment in which innovation can be supported. The announcement reflects the Albanese Government decision to take a holistic approach in the development of a fit for purpose regulatory regime. Those calling for urgent regulation are better served agitating for an acceleration in the consultation between industry, regulators and interested stakeholders.”

BTC Markets Updates

Happy holidays from our team!

As the holiday season approaches and 2022 comes to a close, we wanted to extend our appreciation to all of our clients for your trust and support. We’re committed to providing you with the best experience possible by continuously improving our platform and services to meet your needs.

We’re beyond grateful to you for choosing BTC Markets as your trusted partner in trading, investing, and building your future with Australia’s fastest crypto exchange.

As we look ahead to 2023, we’re thrilled for the opportunities and growth to come. We’re fully devoted to staying at the forefront of the digital asset space here in Australia and providing you with the tools and support you need to succeed in this emerging asset class.

In the meantime, we’ll be taking a short break from our weekly newsletter until Thursday, 12th January 2023. We look forward to the next edition of ‘This Week in Crypto’ to kick the new year off.

On behalf of the entire team at BTC Markets, we’d like to wish you and your loved ones a very happy holiday season and a great start to the new year. We look forward to a positive year ahead!

Staying safe - protect yourself online.

Scams are on the rise in Australia, and some of them are targeting BTC Markets clients. We want to remind you of the importance of safe online practices, so that you can avoid falling victim to these scams. The most common scams right now include fake websites and social media posts that attempt to steal your personal information.

Scammers may pose as representatives from companies that you interact with such as BTC Markets, and they use these fake sites to trick you into handing over your personal information. These sites often look like real websites with logos and addresses that make them appear like they're legitimate.

You should never give out your personal information or provide credit card details over email or social media messenger chats. We have a dedicated page on how to 'Protect Yourself Online', which we encourage you to read. Being informed and taking simple measures is the best action you can take to protect yourself and your account while online. The Australian government’s ‘Scam Watch’ website provides the latest information on how to recognise, avoid and report scams.

Disclaimer: The information provided in this email is for general purposes only. It should not be construed as professional financial advice from BTC Markets Pty Ltd. BTC Markets is not a financial adviser, and you should consider seeking independent legal, financial, taxation or other advice to ensure that the information relates to your unique circumstances. BTC Markets is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this information contained with this email. Prices are accurate as of 10:00 AM AEDT, on 15/12/2022.

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