This Week in Crypto: 20th October 2022

Caroline Bowler

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 23/100 in the Extreme Fear zone up 3 points from this time last week. The index reached a sustained high of 24/100 from Friday to Sunday and a low of 20/100 on Monday.

Market reflections

The U.S Consumer Price Index (CPI) came in hotter than expected for September, with a 0.4% increase to 8.2%. The elevated CPI underscores fundamental inflation pressure that continues to impact the broader economy. Markets reacted wildly with an initial sell off followed by a sharp recovery to close the day in positive territory. The NASDAQ gained 2.2% on the day, recovering from a 3.2% decline while the S&P closed up 2.2%.

In the crypto markets, Bitcoin retraced sharply down 5% after the release of the CPI numbers but quickly rallied, closing in the green at AUD $29,043. Kaiko, a digital asset data provider reported Bitcoin’s 20-day volatility equalled the NASDAQ for the first time in two years. The report stated that since September 2022, BTC has held its value while the NASDAQ fell 13% and the S&P fell 10%.

The crypto market cap is sitting at AUD $1.523 trillion, a 0.59% decrease since last week. BTC has settled at AUD $30,587.75, a 0.02% drop, ETH down 1.07% at AUD $2043.67, and XRP finished at AUD $0.725, dipping 6.75%.

In regulatory news, European lawmakers have approved the Markets in Crypto-Assets (MiCA) bill containing legislative reforms for cryptocurrency assets. The bill will now move to final negotiations with various government entities before being adopted by the European Parliament. Once voted into law, it will come into effect in 2024 after a 12-18-month adoption period to allow industry participants time to make the required changes.

The extensive set of regulatory reforms signals an industry first, requiring crypto platforms and issuers of digital assets to abide by stringent reporting and liquidity requirements.

Crypto news

Stablecoin Tether reduces risk around collateral backing.

Tether, the largest stablecoin by market cap, has decreased its reliance on commercial paper as a reserve. This is due to the insecure nature of commercial paper, which is historically the dominant source of Tether's stablecoin backing. As Tether decoupled from this risky debt, it simultaneously invested in US Treasury Bills, now the most prominent asset supporting Tether’s reserves.

This transition marks the trend for stablecoin issuers wanting to secure their reserves with less risky asset classes. Circle, the provider of the second largest stablecoin USDC, implemented a similar strategy backing its stablecoin with US Treasury Bills and dollars in July 2022. Stablecoin issuers have bolstered the integrity of their reserves, as the danger of having concentrated and volatile asset classes as a reserve were displayed in the Terra-Luna incident in May 2022.

Uniswap Labs raises Series B funding to bolster its offering.

Uniswap Labs, the firm responsible for creating the Uniswap protocol, has raised a new round of funding totalling US $165 million. This influx of capital is the largest presented for a DeFi protocol, with Uniswap’s Dex now facilitating US $4.62 billion in total value locked in its protocol. Despite these figures, Uniswap CEO Hayden Adams stated that Uniswap Labs isn’t profitable, and newfound funds will be used to expand their product offerings and become financially sustainable in the coming years.

Adams cited plans to “unlock new interactions between tokens and NFT’s” alluding to their June purchase of Genie, an NFT market aggregator. Uniswap intends to build an NFT aggregator that functions like their Uniswap Dex. He also wants to build services that make Web3 more accessible to non-technical people.

Anthony Hopkins ventures into Web3 with NFT drop.

Sir Anthony Hopkins has made waves in the NFT world by releasing a 1000 1:1 NFT drop that sold out in under 7 minutes. The collection was designed to “conceptualise an interpretation of the vast character archetypes Sir Anthony Hopkins has portrayed over his illustrious film career drawing its potent energy from his stimulating body of art” and includes autographs, artworks and Zoom calls with the iconic actor.

This trend of celebrities developing NFT drops has not always been as booming as the above case, with many attempting similar opportunities with limited success.NFT investors have been transitioning to additional utility, not hype on speculative gain. According to comments from NFT launchpad GuardianLink, investor appetite for real world use cases for NFT's is expected to grow beyond 2022.

BTC Markets updates

ETHW deployment update.

We are in the final stages of deploying the newly developed ETHW wallet infrastructure (currently in the testing phase). We aim for this to be complete by next week, and will provide further updates as they become available. Thank you for your ongoing support.

Solana (SOL) is coming to BTC Markets.

We are excited to announce that Solana (SOL) is coming to BTC Markets. We look forward to bringing you more information about the Solana network and its native token SOL as we get closer to the launch.

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 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.

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