This Week in Crypto: 27th October 2022

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Caroline Bowler
This Week in Crypto: 27th October 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 and Greed Index

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Bitcoin Fear and Greed Index is currently at 32/100 in the 'Fear' zone up 9 points from this time last week. The index reached a high of 33/100 on Wednesday and a low of 20/100 on Saturday.

CEO's Corner

Welcome everyone to the first edition of ‘CEO's Corner’ where each month I hope to shed some light on what we're focusing on at BTC Markets to make your experience the best it can be.

Firstly, on Tuesday night, the federal government handed down their mini budget which outlined steps for improving the productive capacity of our economy. As an Australian based cryptocurrency exchange, this outcome closely aligns with our business objectives and with those of the local digital assets industry.

According to research from Ernst & Young, our sector currently contributes $2.1 billion to the Australian economy and their 2021 report states that under the right policy settings, this contribution could grow to $68.4 billion by 2030 (or, about 2.6% of the national economy).

As an industry, we have consistently sought out opportunities to collaborate with government on defining a proportionate regulatory environment for our sector. The token-mapping exercise as recommended by the 2021 Senate report is a vital stepping-stone towards regulatory clarity and one, we support. However, we need ongoing intellectual investment from government to drive and accelerate responsible regulatory outcomes without stifling growth and innovation.

In our 2020 submission to the Senate committee, BTC Markets stated that regulation sets the tone. It builds the culture, facilitates the flow of capital and manifesting of skills in our workforce. It is needed to construct the right safeguards, and demonstrate industry preparedness, in protecting all investor clients. It also provides surety as to the direction for investment and jobs growth.

International partners such as the European Union are embracing this opportunity with their recent legislation. We believe it is imperative that we move with the times or risk losing both our competitive edge and the digital economy. Our goal is to work with the government to keep innovation and consumer protections at the very heart of our industry.

Talking about consumer protections, we’re delighted to once again be the only Australian based crypto exchange to be included in Digital Asset Research’s (DAR) list of ‘Vetted Exchanges’. 450 exchanges across the world are reviewed each quarter with the aim to eliminate any exchanges not considered ‘appropriate’ for determining an accurate market price. The DAR vetting process applies ‘institutional-level diligence to digital asset markets’ and their goal, is to provide reliable crypto data in an environment where cryptocurrencies trade across hundreds of lightly regulated or unregulated exchanges. With only 21 exchanges meeting their stringent criteria, this again confirms our commitment to provide the fastest and most transparent trading platform and prices to our clients.

Lastly, BTC Markets will be at the Singapore Fintech Festival November 2nd to 4th, joining the Australian Trade and Investment Commission (Austrade) Team at the Australia Pavilion booth. It’s a great opportunity to be at the forefront of FinTech in the APAC region and we are excited about the fantastic line up of speakers and attendees. If you are at the event, come by booth 5F17 and say hi.

Caroline Bowler, CEO BTC Markets.

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OTC Desk update

Looking at the daily chart of BTC, we see the further squash of volatility and tightening in price, increasing the probability that we are on the verge of a macro move. Of course, alongside we are hearing that global currencies, such as the British Pound, and the S&P 500 stock index are now more volatile than our fearless leader Bitcoin.

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With the USD reaching at least a temporary high, a path of least resistance is now being gifted to many of the world’s "risk" assets, such as BTC and other cryptos. DXY, being the USD's value relative to a basket of other fiat currencies, is the metric of choice for most traders. As this metric is displaying signs of exhaustion and changes in market structure, we see an inversely correlated move taking shape as most crypto assets commence a move off the local lows. The counterpart to this is with such a data heavy week in the US (New Home sales, Unemployment and Consumer Sentiment) will we see the strength and continuation to this move that we need to sustain price? If we are looking at BTC/AUD, daily candle closes above our previous local high of $32,530 is the first step.

In the last few days, we have also seen the predictions for the next US FED interest rate hike to come in at 50bps, compared to the 75bps as originally thought. In concert, the Investor Fear & Greed sentiment indicator has seen a lift from “Extreme Fear” and is now into the 'Neutral' zone, with a read of 55. If this interest rate prediction does play out, and we see a slight reprieve from the US FED, it is another factor of confluence which favours the recent mark up in price.

The crypto market cap is sitting at AUD $1.608 trillion, a 5.58% increase since last week. BTC has settled at AUD $32,069, a 4.84% increase, ETH up 18.24% at AUD $2416.41, and XRP finished at AUD $0.7212, a decrease of 0.52%.

On the desk we continue to see strong volume on XRP - being the clear trade of choice for many over the last week. However, with the current price movements, it's a clear switch in flows over to BTC and ETH, giving XRP a break. Impressive gains for ETH with 5.72% jump in the last 24 hours.

Crypto news

Introducing SOL, the native token for the Solana blockchain

Solana (SOL) is an open source, permissionless blockchain with a focus on decentralisation and scalability. A permissionless blockchain allows anyone to participate in the network, rather than requiring the user to first register or obtain permission from a central authority. The network relies on the use of its native currency SOL for transaction fees and staking.

Solana claims to reduce latency in transaction verification times by up to 10x compared to other blockchains like Ethereum. It uses its own Proof-of-Stake (PoS) protocol called 'Proof-of-History' that relies on a system clock for verifying transactions which makes it fast but also potentially less secure than other PoS protocols like Ouroboros (Cardano). A PoS consensus mechanism allows users to earn rewards simply by owning SOL tokens and locking them up for a certain period.

SOL is the first of many major marketcap coins coming to BTC Markets.

An alternative scaling solution launches alpha on Ethereum mainnet

Ethereum transactions could become faster and cheaper in the future with ZK rollups from zkSync, a layer-2 Ethereum scaling solution. Over the past four years, zkSync has been developing groundbreaking technology on Ethereum’s test net which aims to reduce gas fees and increase transaction speeds by 20x.

ZkSync are rolling out on Ethereum's mainnet through three stages; first is the Baby Alpha stage, second is the Fair Launch Alpha and third is the Full Alpha launch.

The Baby Alpha launch (a version that has passed initial quality assurance, but no documentation or support is available) is on the horizon for October 28th and show the feasibility of operating in a live Ethereum environment. Using smart contracts, ZK rollups bundle together individual transactions from Ethereum's main layer off chain, combines them, then returns them to the mainnet to be processed. This produces greater efficiencies resulting in reduced fees and faster processing times. Unlike other layer-2 rollups (which assume transactions are correct), zkSync technology uses zero-knowledge proofs to confirm the validity of the transaction without disclosing the evidence which supports them.

According to 'The Crypto Times' zkSync should launch its final stage full alpha by the end of 2022, assuming the prior two implementations are successful.

Bank of America says “investors may view Bitcoin as a relative safe haven.”

Bank of America digital asset strategists claims that “investors may view Bitcoin as a relative safe haven as macro uncertainty continues and market bottoms remain to be seen.” Bitcoin’s correlation to gold has been on a steady rise since mid-August, with the last 40 day moving average of the asset pair growing to 0.50. The S&P 500 and Nasdaq have a higher correlation to gold at 0.69 and 0.72 respectively, although both have come off record highs in previous months. 

Demand for Bitcoin is on the increase despite price consolidation since mid-September which has since range bound behaviour from US $18,000-$21,020. We see this exemplified through Bitcoins hashrate difficulty reaching a new all-time high recently which indicates increased competition amongst Bitcoin miners. The hashrate refers to the total combined computational power that is being used to mine and process transactions on a Proof-of-Work blockchain. The higher the hashrate, the more machines working to discover the next block which in turns secures the network and reduces the possibility of a malicious attack. 

BTC Markets updates

ETHW airdrop distributed to eligible recipients

BTC Markets has now airdropped ETHW to the accounts of all eligible clients (those that held ETH on BTC Markets at the time of the Merge). We have enabled withdrawals for ETHW, however ETHW deposits and trading will not be supported on the exchange. Eligible clients will now see their ETHW balance in their portfolio and will have received an email confirming the airdrop.

Take advantage of our tax partner discounts.

Completed your taxes yet? With the tax deadline for filing individual returns fast approaching, we have secured tax partner discounts to help you organise your crypto documentation. Don’t forget to check out our tax support page to assist with EOFY reporting.

When security matters, trade with confidence at BTC Markets.

Your account and asset security are our main priorities. We have institutional-grade security and compliance processes in place including an onshore client service team available to assist you seven days a week. We are 100% Australian-owned, keep your assets on shore, and do not trade against you for our own profit. You can trade with confidence knowing that you have partnered with a fully licensed, compliant, and self-regulated crypto exchange. If you have any questions about how we manage your assets, please feel free to contact us at any time or visit our FAQ page to learn more about how we keep your account secure.

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