Weekly Crypto Wrap: 13th July 2023

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TLDR

• Standard Chartered predicts Bitcoin to reach US$120,000 by 2024.
• Staked Ethereum now accounts for 20% of the total supply.
• XRP Ledger (XRPL) has shown significant growth in Q2 of 2023.
• Australian consumer sentiment increased whilst US inflation falls.
• Institutional adoption continues to rise in the crypto space.
• Bitcoin held by US whales increases according to Glassnode.

State of crypto

Bitcoin (BTC) remains range bound since hitting a recent high of US$31,431 on June 23rd, after price surged off the back of BlackRock’s Bitcoin ETF announcement the previous week. 

According to data from Glassnode, the number of BTC whales, which are organisations or individuals holding a significant amount of BTC, reached a one-month high of 1,685 on July 7th.

A whale is typically defined as an entity that holds at least 1,000 BTC, which is equivalent to a value of US$10 million or more. This increase in the number of BTC whales suggests that larger players, such as institutions, are accumulating or holding substantial amounts of BTC, indicating their growing involvement in the market. 

At the weekly close on Monday, Bitcoin concluded at US$30,160.71, reflecting a loss of 1.49%. Ethereum declined 3.85%, closing at US$1,862.80. Similarly, XRP lost 3.41%, settling at US$0.4680. Litecoin encountered a significant downturn, with a 16.29% drop during the trading week, concluding at US$95.08. ADA closed the week at US$0.2844, losing 2.47% in value.

Bitcoin's market capitalisation saw a minor increase of 0.79%, as it maintains its dominant position at 51.50%. The overall cryptocurrency market capitalisation suffered a loss of 2.21%, concluding the week at US$1.138 trillion.

When evaluating the year-to-date performance of the market majors, Bitcoin has exhibited remarkable growth, emerging as the market leader with an impressive 83.88% surge. Ethereum, on the other hand, has secured the second position with a solid gain of 56.70%. XRP has maintained a steady growth of 39.13% throughout the year, while Litecoin has shown a commendable increase of 37.35%. Lastly, Cardano has sustained a respectable annual gain of 17.41%.

*The weekly trading stats as of Monday, July 10th at 10:00 am AEST, based on data from Tradingview in USD.

The week ahead: upcoming economic events

July 13th: China’s Balance of Trade. United Kingdom GDP MoM. United States Producer Price Inflation MoM.

July 15th: United States Michigan Consumer Sentiment.

July 17th: China GDP Annual Growth Rate and Industrial Production.

July 18th: RBA meeting minutes. Canada Inflation Rate. U.S. Retail Sales MoM.

July 19th: United Kingdom Inflation Rate. United States Building Permits.

July 20th: Japan’s Balance of Trade.

Economic Calendar (tradingeconomics.com)

Market reflections

Australia

The Reserve Bank of Australia (RBA) is undergoing significant changes in its operations, with Governor Phil Lowe confirming this in his response to an independent review. The RBA will reduce the number of times it meets to set interest rates from 2024, but the meetings will be longer to allow for more in-depth discussions.

The changes aim to improve the examination of issues and decision-making processes related to monetary policy. Governor Lowe's speech, which may be one of his last, will outline the RBA's plans to implement the review's recommendations. Treasurer Jim Chalmers will soon announce the future leader of the RBA, with Lowe's term ending in September.

In July, Australian consumer sentiment increased but remains pessimistic, with the Westpac Consumer Sentiment index reaching a three-month high. The outlook for future family finances and the economy improved but buying major household items remained low.

The National Australia Bank’s monthly business survey showed that confidence also improved in June, with steady conditions and strong sales, employment, and profits.

Trade surplus in Australia expanded, driven by higher exports and increased shipments to China. Imports also rose, indicating strong domestic demand. Overall, there are positive signs in consumer sentiment, business confidence, and trade in Australia, but cautiousness and challenges remain.

Global

US

US annual inflation fell to 3% in June, driven by lower prices for fuel, used cars, hotels, and airfares. While this decline was better than expected, it is unlikely to affect the Federal Reserve's plan to raise interest rates this month. The drop in core inflation, which excludes food and energy prices, was also noted, reaching 4.8% annually, lower than economists' forecasts. Financial markets still anticipate a rate hike at the Fed's upcoming policy meeting. However, the latest data could lead to discussions among Fed officials about the need for further rate hikes in the future. Overall, consumer prices rose slightly in June, and core inflation is expected to continue receding in the coming months.

The US services sector showed strong growth, with the ISM Services PMI increasing to the highest in four months. Businesses are cautious about inflation and the economic outlook but overall see stable conditions. Job vacancies in the US decreased but remain higher than pre-pandemic levels, suggesting a tight labour market. The unemployment rate slightly decreased indicating a consistently tight labour market, providing flexibility to the US Federal Reserve in controlling inflation. Whilst the average hours worked during the week has decreased, raising concerns about potential job losses in certain sectors.

China

Consumer prices in China unexpectedly remained unchanged, contrary to market expectations and a slight increase in May. It was the lowest reading since February 2021, primarily due to declining non-food prices and a further drop in transportation costs, whilst education costs also showed signs of slowing.

Germany

Germany's ZEW Economic Sentiment Index fell to its lowest level since December 2022, with investors anticipating a worsening economy due to rising interest rates and weak export markets, particularly to China. The industrial sectors heavily reliant on exports are expected to be greatly affected, leading to a decline in profit expectations. The assessment of the current economic situation also worsened, indicating a more challenging environment overall.

United Kingdom

The unemployment rate in the United Kingdom rose to the highest level since late 2021, however, employment also increased by 102,000, mainly in part-time roles. Wages saw a significant increase of 7.3%, the largest outside of the pandemic, and total pay growth surpassed expectations.

Canada 

The Bank of Canada raised interest rates to 5% in July 2023 to control inflation. Strong consumer spending and a tight job market were the reasons behind the rate hike. The bank expects inflation to stay around 3% before easing to 2% by 2025. The bank will monitor core inflation and the economic outlook to ensure stable prices for Canadians.

The Ivey Purchasing Managers Index in Canada showed a slight decline, but employment numbers were strong, indicating a healthy job market. Although the unemployment rate increased slightly, it remains lower than before the pandemic. The Canadian economy added more jobs than expected, but some sectors experienced declines. Overall, Canada shows signs of growth and employment despite the small increase in unemployment.

Alt action

Uniswap v3 introduces Oku: A user-friendly interface.

Uniswap v3, a decentralised exchange, has introduced a new user interface called Oku. Developed by GFX Labs, Oku aims to combine the user experience of centralised exchanges with the complexity of decentralised finance (DeFi). It offers features such as order books, price charts, live trading history, and limit orders.

Unlike other decentralised exchanges, Oku showcases all existing and new pools available on Uniswap v3 without the need for token listing requests. It supports limit orders, allowing users to apply specific conditions to their trades.

Oku has received funding from the Uniswap Foundation and is deployed on Ethereum, Polygon, Arbitrum, and Optimism, with plans for expansion to other blockchains. The goal is to provide a user-friendly interface that bridges the gap between traditional exchanges and DeFi.

Uniswap is a platform that allows people to trade digital tokens directly from their wallets, matching buyers, and sellers, it uses automated smart contracts to facilitate trades. Users can become liquidity providers by depositing tokens into a pool, and they receive tokens representing their share of the pool.

UNI is currently trading at US$5.326.

The Big 3

Bitcoin predicted to reach US$120,000 by 2024 according to Standard Chartered.

Standard Chartered predicts that the value of Bitcoin could reach US$50,000 this year and US$120,000 by the end of 2024. The bank suggests that the rise in Bitcoin's price might encourage miners to hold onto their assets for an extended period. By doing so, they can maximise their potential profits from mining and reduce the need to sell immediately, thus ensuring a steady cash flow. Consequently, this could reduce the overall supply of Bitcoin, creating increased demand and driving prices higher.

In the past, Standard Chartered forecasted a US$100,000 price for Bitcoin by the end of 2024. The bank's analysis suggests that miners currently sell all their newly mined coins but may only sell 20-30% if the price reaches US$50,000. The reduction in Bitcoin supply could be around 250,000 coins per year.

In other news, if a spot Bitcoin exchange-traded fund (ETF) is approved in the US, it could be one of the largest launches ever, according to industry experts. Such a development could lead to a significant reallocation of assets from Grayscale Investments' Bitcoin Trust (GBTC) and Canadian Bitcoin ETFs. Analysts predict that investors may move around US$10 billion into spot Bitcoin ETFs within two weeks.

This highlights the demand for a physically backed Bitcoin ETF and the potential impact it could have on the market. Financial advisers and institutional investors are eager for a Bitcoin ETF to bridge the gap between traditional finance and crypto.

Buy Bitcoin on BTC Markets

Staked Ethereum now accounts for 20% of the total supply.

Around US$45 billion worth of Ethereum (ETH), or 20% of the total supply, has been pledged to secure the network. Ethereum utilises a proof-of-stake consensus model, where validators pledge at least 32 Ethereum to validate transactions and earn rewards. Previously, staked Ethereum couldn't be withdrawn, but an upgrade in April changed that.

Lido Finance is the most popular choice for staking, accounting for nearly 32% of all staked Ethereum. Regulators in the US have raised concerns about how staking services comply with securities laws whilst financial institutions are also exploring staking to enhance their offerings.

Buy ETH now on BTC Markets

XRP Ledger (XRPL) has shown significant growth in the second quarter of 2023.

Despite concerns over the Ripple vs. SEC lawsuit, the XRP Ledger (XRPL) has shown significant growth in the second quarter of 2023. The circulating market cap of XRP has increased by 42.5% this year, although it declined by 10.7% in Q2. Transaction volume decreased, but there was a 12.7% increase in average daily nonfungible token (NFT) transactions.

The XRPL has expanded with the introduction of Coreum and Root Network, which enhance programmability and security. The total number of new addresses on the XRPL increased by 31.8% compared to last year.

Ripple Labs, a technology company known for developing and promoting Ripple, wants to apply a process called tokenisation to the real estate market. This involves turning real estate assets into digital tokens stored securely on the blockchain. These tokens represent ownership in the properties and can be bought, sold, and traded on decentralised platforms. Ripple aims to improve liquidity, make transactions easier, and reach a wider market by using blockchain technology and digital currencies. While tokenisation has many benefits, such as increased accessibility and transparency, there are challenges to overcome, including regulations and security concerns.

Buy XRP now on BTC Markets

Crypto news

Institutional adoption continues to rise in the crypto space.

In recent years, there has been a notable rise in institutional adoption within the cryptocurrency space. A study conducted by Coinbase and The Block reveals that more than half of the Fortune 100 companies have been involved in crypto, blockchain, or web3 initiatives since 2020.

The report indicates that 60% of these initiatives are in the pre-launch or already launched stages. Additionally, the research shows that 83% of surveyed Fortune 500 executives who are familiar with crypto or blockchain have ongoing or planned initiatives in this field.

These findings underscore the significance of these technologies in modernising the global financial system and staying ahead of competitors. It demonstrates how corporations recognise the potential of crypto and blockchain as transformative tools in today's rapidly evolving business landscape.

Compliance conversations

Romance scam "Pig Butchering" hooks victims with fake investments.

Investment scams are on the rise, and a troubling fraud called "Pig Butchering" is gaining traction in the cryptocurrency space. This peculiar scam combines elements of romance and investment schemes to exploit unsuspecting victims.

Scammers establish relationships through dating apps, gradually building trust before convincing their targets to invest in fake projects. Once the victim invests money, the scammer vanishes, taking the funds with them.

In the US alone, the FBI reports annual losses of over $3 billion from romance scams. Cybersecurity experts emphasise the risks of online financial investments, which make it challenging to apprehend the scammers. The key advice is to be vigilant online and avoid trusting strangers with personal or financial information.

To avoid falling victim:

• Be cautious and sceptical: exercise caution when someone you've met online asks you to invest in any financial scheme. Remember, genuine relationships take time to develop.
• Protect your information: Never share sensitive information such as bank account details or credit card numbers with someone you've met online.
• Do your own research: as with any investment, thoroughly research the platform or service being promoted and seek independent financial advice.

By staying cautious, protecting your personal information, and conducting thorough research, you can significantly reduce the risk of falling prey to romance scams and fake investments. Remember to report any suspicious activity to the appropriate authorities to help prevent others from becoming victims. 

To stay up to date, visit our Compliance conversations page or for more information on how to spot a scam, visit ASIC’s website.

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Prices are accurate as of 10:00 AM AEST, on 13/07/2023.