This Week in Crypto: 17th November 2022

Each week, we share insights on the latest news and moves to impact the crypto market and the broader macroeconomic landscape. Want these updates delivered straight to your inbox? Sign up here.

BTC Fear & Greed Index

Bitcoin Fear and Greed Index is currently at 20/100 in the Extreme Fear zone, down two points from this time last week. The index reached a high of 25/100 on Friday and a low of 20/100 today. The total crypto market cap grew by 0.55% to AUD$1.29 trillion.

Market reflections

The events over the past week have prompted several questions about cryptocurrency exchanges and their operations. Today’s announcement from the Treasury department indicated legislation could be introduced as early as next year. BTC Markets are supportive of responsible and appropriate regulation and have actively worked alongside industry participants to submit recommendations on regulatory reforms. The industry and consumers need clarity on custodial services, segregation of client assets, capital requirements and auditing obligations.

The focus for regulators should be on governing human behaviour rather than the underlying technology. Assets such as Bitcoin and Ethereum should not be part of the discussion, instead it's the appropriation of client funds by the management team that requires regulatory scrutiny.

At BTC Markets, we hold our business to a higher standard in the absence of clearly defined regulations. Therefore, we want to again reassure you that all crypto assets are held onshore at a 1:1 ratio, and we do not touch your assets. More importantly, there is no debt in our business, and we do not have a proprietary trading desk. These are just a few of the requirements we hold ourselves accountable to. Our goal is to ensure that your assets are secure, and you have peace of mind when trading with us. To achieve this, we are working towards a solution with an external auditor to provide you with a greater level of transparency and confidence in BTC Markets.

The role of a regulator should be to confirm proof of reserves and ensure that digital assets are held on a 1:1 basis by exchanges operating in Australia. They should also question if these assets are deployed by any trading or investment arm, query liabilities in the business and understand what they are secured against. If an exchange issues a token, they should understand if the token is used to support the core functions of the business and all legal entities and relationships are understood and clearly communicated.

BTC Markets will continue to advocate for stricter disclosure requirements based upon similar frameworks applied to the traditional finance industry. These regulations need to govern all exchanges operating in Australia or servicing Australian consumers as well as providing a safeguard for both investors and the crypto industry.

The problems that have surfaced from this event are not security related but exacerbated by the lack of effective governance and regulation, coupled with highly unethical behaviour. Despite the events of the past week, we remain confident about the future of blockchain technology and the longevity of the cryptocurrency industry. The fundamentals have not changed, and the underlying technology is still the same.

From the team at BTC Markets, we thank you for your support during this time. We will continue to provide you with the same level of security and support that you deserve from an Australian owned and operated crypto exchange.

Crypto news

Caroline Bowler on Bloomberg Daybreak Australia.

Our CEO, Caroline Bowler appeared on Bloomberg Daybreak Australia to discuss the impact of FTX and the broader crypto market. She stated that “the technology behind cryptocurrencies blockchain itself, Bitcoin, Ethereum...remains sound”. Caroline noted that the crypto industry needs a well-defined regulatory framework to strengthen consumer protections.

She went on to state that “The underlying asset classes are still valid and viable” and that “there's going to be far greater scrutiny and far greater due diligence done on who you partner with. But for those of us in the industry who are prepared for this, that won’t be an issue”
 
You can watch the full interview here.

Investor inflows to digital assets reaches a 14-week high.

Despite the events over the past week, investor appetite for crypto grew according to data collated by CoinShares. In a report published on November 14th, US$42 million flowed into digital asset investments over a seven day period. This defied the trend of outflows from the market, which had been at negative levels for the past three months.

The largest increase was attributed to Bitcoin, which had US$19 million inflow as some investors saw the price weaknesses as a buying opportunity. However, a US$12.6 million growth for BTC short investments demonstrates that caution remains among some investors. Details from the report indicated that investors who chose blockchain equities saw the highest outflow since May 2022, at US$32 million, indicating the sensitivity to major market events among equities investors.

Nike launches ‘.Swoosh’ a Web3 Platform.

Nike has launched ‘.Swoosh’, a platform that will host virtual apparel and NFT-based products. The firm plans to utilise the Polygon blockchain and its native token Matic as the protocol to support this venture. The announcement comes after the success of Nike’s 20,000 NFT collection ‘CryptoKicks’ digital shoes, which at their height sold for US$130,000, and has traded 7,698 in Ethereum volume on OpenSea.
 
The ‘.Swoosh’ endeavour is conducting a closed launch on November 18th, 2022 and will list its first NFT collection in January 2023. This is the first time the company has deviated away from the Ethereum mainnet, which it had used for previous projects. Data from Dune, a community-driven on-chain data aggregator and query service, suggests that Nike has generated US$93 million in revenue from NFT primary sales and US$92 million in NFT royalties.

Bitcoin mempool activity surges.

The Bitcoin mempool had a significant uptick in activity this week, illustrating the demand for the BTC block space to process on-chain actions. Data collected by Johoes Bitcoin Mempool Activity illustrates the surge which took place on November 15th, amounting to levels not seen since July 2021.

This increased level of activity indicates the competition among users seeking to receive confirmations faster than others, which has resulted in investors either waiting for longer timeframes for their requests to be confirmed or paying higher fees to compete.

BTC Markets updates

We’re getting a new look!

We’re excited to announce that we are refreshing the look and feel of our brand. Over the next few weeks, you will start to see new brand elements across our website, mobile app, social media platforms and email newsletter.

Our logo remains the same, but we are updating our font and colour scheme as part of the ongoing growth and evolution of our business. It reflects a more modern look and captures our mission to deliver exceptional value to our clients.

We hope you enjoy the changes as much as we do.

ASX 'Markets Day for Charity’ is coming this Tuesday 22nd of November

We are once again excited to be a key participant for the ‘Markets Day for Charity’ presented by the ASX Refinitiv Charity Foundation. Aimed at raising one million dollars, this incredible fundraising event will take place on Tuesday, 22nd of November 2022, where we will donate a full day's trading revenue to charity.

Alongside ASX, BlackRock, nabtrade, Macquarie GroupCiti BetaShares Nine and other leading companies, we invite you to join us as the financial sector comes together to trade for charity.

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. Last week we released a range of videos on topics of scam recognition and scam prevention. Below are links to the videos on a range of topics from our Twitter we encourage users to view:

2-Factor Authentication
Phishing
Investment scams
Dating/romance scams 

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 10:30 AM AEDT on 17/11/2022.