This Week in Crypto: 1st December 2022

Caroline Bowler

Bitcoin Fear & Greed Index

Bitcoin Fear and Greed Index
is currently at 27/100 in the Fear zone, up 7 points from this time last week. The index reached a high of 29/100 on Wednesday and a low of 20/100 on Friday.

New coin listing

Polkadot (DOT) is coming to BTC Markets.
We are excited to announce that multi-chain protocol, Polkadot will be listed on BTC Markets. Post only orders, deposits and withdrawals will be available on the 6th December, with the market going live around midday on the 7th December.

Polkadot is a multichain protocol which enables cross-chain transfer of data and assets and is currently the 11th largest crypto asset by market capitalisation. Polkadot is a multichain network, which means it can process a variety of transactions on several different chains in parallel, resulting in improved scalability. This next generation protocol enables interoperability across blockchains, meaning different blockchains and systems can communicate, and exchange information passed between one another... learn more about DOT.

Market reflections

The digital asset markets have continued to consolidate in a tight trading range and market participants have maintained a general ‘one day at a time’ approach. After nearly two weeks of disconnected correlation with the broader global financial markets, the digital asset majors have once again returned to significant positive correlation with the Nasdaq and S&P equities indices.

Global markets started the week off to a soft open, broadly pulling back amidst concerns that the Chinese government would further tighten Covid 19 restrictions, resulting in potential supply chain disruption. Leading into the end of the week and the start of December, the broader markets rallied in a move to the upside.

An eventful calendar of economic news and several important economic drivers occurred during the week.

Onshore in Australia, the Australian Bureau of Statistics released retail trade data relating to monthly and quarterly estimates of turnover and volumes for retail businesses. The data indicated that the October 2022 seasonally adjusted estimate for retail businesses fell 0.2% month-on-month and rose 12.5% comparatively to October 2021.

In unprecedented gesture, Reserve Bank of Australia governor Philip Lowe apologised to the general public for the central bank’s previous guidance. Throughout 2020 and nearly all of 2021, the RBA provided ongoing indication that interest rates would remain low until 2024. Acting on this message, nearly 300,000 Australians took out loans and mortgages upwards of six times their income. In his apology, Lowe stated, “I’m sorry that that happened. I’m certainly sorry if people listened to what we’d said and then acted on that.”

In the United States, Federal Chair Jerome Powell addressed the U.S. economic outlook, inflation, and the labour market at The Brookings Institute Hutchins Centre in Washington, DC. Fed Chair Powell commented, “today I am going to offer a progress report on the FOMC’s efforts to restore price stability to the U.S. economy for the benefit of the American people. That report must begin by acknowledging the reality that inflation remains far too high. My colleagues and I are acutely aware that high inflation is imposing significant hardship, straining budgets, and shrinking what pay checks will buy. This is especially painful for those least able to meet the higher costs of essentials like food, housing, and transportation. Price stability is the responsibility of the federal reserve and serves as the bedrock of our economy.” Powell continued, “Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level.”

Powell implied that the Federal Reserve would slow the pace of interest-rate increases in December’s meeting, however, he emphasized that borrowing costs will need to remain restrictive in order to beat inflation. The market responded positively to Powell’s remarks, likely due to his comments being perceived as less hawkish than originally priced-in.

State of crypto.
Bitcoin continued to trade in a range between US$16-17.5k and Ether between US$1-1.3k. At the end of the November trading month, BTC was 16.2% lower at US$17,167 and ETH closed 17.7% lower at US$1294.

Bitcoin dominance by market capitalisation closed the month 0.69% lower, leaving Bitcoin at 40.2% dominance by market cap. With total crypto market cap closing 15.6% lower in November, we’re now seeing US$820.8 billion in the crypto markets

On-chain insights platform Glassnode released a recent update which highlighted that while Bitcoin has been trading below the cost-basis for the broader market, participants have been widely accumulating. Particularly, the cohort of entities holding less than one Bitcoin have reached an all-time-high of balance increase, accumulating an equivalent to 6.3% of the entire Bitcoin supply. According to Glassnode, long-term holders and smaller entities are taking advantage of lower prices and soaking up buys into otherwise capitulating price-action.

Crypto news

EU calls for regulation.
European Central Bank President, Christine Lagarde, called for additional legislation around crypto in the wake of recent market events.

The EU Commission’s previous proposal “Markets in Crypto-Assets Regulation,” or MiCA, was presented to address innovation, competition, and mitigation of risks relating to digital asset markets. Originally introduced in 2020, MiCA is expected to pass in early 2023 and anticipated to be implemented in 2024.

In this week’s hearing of the Committee on Economic and Monetary Affairs, Lagarde reiterated her stance that there needs to be a more robust version of MiCA (MiCA II) which would include additional legislation and further provisions. Lagarde reinforced Europe’s position as a leader in the regulation of digital assets and highlighted EU Central Bank digital payment alternatives via the digital euro which is in the pipeline.

Reserve Bank of India tests CBDC.
The Reserve Bank of India has announced plans to pilot the first digital rupee, a retail focused central bank digital currency. The pilot encompasses select locations in a closed user group which includes both customers and merchants and is intended to provide a real time stress-test of the entire digital rupee process including creation, distribution, and overall retail usage. Based on learnings from the initial testing phase, future iterations would be designed, implemented, and re-tested in subsequent pilot series. The RBI suggests that the digital rupee will make the inter-bank market more efficient by reducing transaction costs and “pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk.”

According to the official press release from the Reserve Bank of India, “the digital rupee would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries, i.e., banks. Users will be able to transact with the digital rupee through a digital wallet offered by the participating banks and stored on mobile phones / devices. Transactions can be both Person to Person (P2P) and Person to Merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations. The digital rupee would offer features of physical cash like trust, safety and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks.”

Bitcoin miners.
As Bitcoin prices have continued to trade at lower levels, miners have faced pressures of increased cost of production and diminishing returns on the short-term. According to on-chain analytics platform, CryptoQuant, “Bitcoin difficulty is really high for miners so that means; costs are getting higher and doing business in this kind of environment is getting harder. That's why miners do not work in full force. If they have efficient, new generation mining machines, they put them into work but that's all. Inflation is high and people feel the effect of living costs, bitcoin price is declining, mining cost and difficulty is getting higher.”

Despite the short-term headwinds that many miners are currently experiencing, firms like Greenidge and Arkon Energy have continued to boost Bitcoin mining, leading at the forefront of sustainable practices like vertically integrated green Bitcoin mining, electricity sovereignty, and regional diversity when it comes to site location.

In recent response to a successful fundraising round, Arkon’s CEO, Josh Payne stated, “in a period in which the largest bitcoin miners in the world are struggling with high costs and over-leveraged balance sheets, the ability of Arkon Energy to attract capital highlights its unique value proposition. Distressed cycles produce winners and losers and Arkon is well positioned to be a winner.”

MetaMask privacy update.
ConsenSys, the Ethereum software company behind next-generation applications like MetaMask and Infura, initiated a privacy policy update which created quite the stir among privacy-minded crypto users. The revised policy update notified users that the firm would formally collect IP and Ethereum wallet addresses.

In their official media release, ConsenSys stated, “we believe in transparency and want to ensure all users know what we are collecting and how it is being more users are exploring non-custodial ways to hold their crypto assets, the updates to our policy were made in an effort to educate users about how MetaMask works, including highlighting its use of Infura as the default RPC provider in MetaMask and users’ ability to use their own Ethereum node as an alternative to the default RPC provider.”

BlockFi commences restructuring.
Crypto lender BlockFi voluntarily filed for Chapter 11 reorganisation this week. BlockFi’s client update addressed the matter, stating, “our team has explored every strategic option and alternative available to us, and has remained laser-focused on our primary objective of doing the best we can for our clients. These Chapter 11 cases will enable BlockFi to stabilize the business and provide BlockFi with the opportunity to consummate a reorganisation plan that maximises value for all stakeholders, including our valued clients. Rest assured, we will continue to work on recovering all obligations owed to BlockFi as promptly as practicable.”

BTC Markets Updates

We've been nominated for 'The Blockies!'
We are excited to announce that BTC Markets has been nominated for two Australian Blockchain Industry Awards for 2022. The nominations include ‘Digital Currency Exchange of the Year’ and our CEO, Caroline Bowler has been nominated for the ‘Blockchain Leader of the Year’ award.

‘The Blockies’ recognises leadership and excellence in the blockchain industry and community. Australia’s blockchain sector continues to grow and flourish as individuals break new ground in technical advancement, regulation consultation, community building and new business ideas.

It’s been quite a year of growth and innovation for our sector and it’s time to celebrate the achievements of individuals and businesses that continue to contribute to the Australian blockchain industry ecosystem.

Our Trust Pilot program.
Last week, we advised you about the launch of our Trust Pilot online review program. We want to ensure we are collecting and responding to your feedback effectively. Email invitations will come from [email protected], where you can rate your experience with BTC Markets and provide feedback. We understand the concern about not clicking on unsolicited emails, so we wanted to prepare you for the Trust Pilot email. This is an image of what the email will look like.

Solana (SOL) listing update.
Due to market conditions, we have temporarily paused the launch of Solana on our platform. Once more clarity around the status on Solana is known, we will issue an update.

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 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 information 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.

Why choose BTC Markets?
BTC Markets is the exchange of choice for traders and investors who are serious about account security, market liquidity, and cutting-edge technology. You’ll benefit from our industry-leading uptime of 99.99% and multiple best-in-class API integrations. You can trade with confidence knowing that you are protected by institutional-grade security practices and onshore custody of your assets.

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 01/12/2022.

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