Weekly Crypto Wrap: 15th June 2023

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TLDR

• New trading pair: XRP / USDT is now live on BTC Markets!
• Aussie consumer confidence increases whilst business confidence falls.
• The United States Federal Reserve holds rates steady.
• Ripple's legal strategy and the future of the blockchain industry.

BTC Markets announcements

New trading pair: XRP / USDT is now live on BTC Markets!

The XRP / USDT trading pair is now fully live and available to trade on BTC Markets. Place your buy and sell orders today.

Trade XRP / USDT

BTC Markets responds to Commonwealth Banks announcement on payment restrictions.

BTC Markets is closely monitoring the recent announcement by the Commonwealth Bank of Australia regarding crypto payment restrictions. As advocates of reasonable regulations and enhanced fraud prevention measures, we remain committed to fostering a collaborative approach in the fight against scams. Read the full press release here.

Watch our crypto tax webinar with Koinly.

If you couldn't join us for our live stream featuring our CEO Caroline Bowler and Koinly's Head of Tax, Danny Talwar, don't worry you can watch the recorded session on YouTube.

Plus, take advantage of a special offer: get 30% off your first Koinly tax report by using the code BTC23 at checkout on Koinly.com.au. This offer is valid until October 31, 2023. Terms and conditions apply. See the tax webinar blog.

Mobile app withdrawals testing

Testing is underway for our latest major and long-awaited mobile app feature: AUD and crypto withdrawals.

If you'd like to join other BTC Markets clients and have your say on this feature and future developments, click the link below and register to join the BTC Markets mobile testing group.

Register as a tester now!

Want to transfer your crypto from Binance to your BTC Markets account? 

We have created a comprehensive guide on transferring your cryptocurrency from Binance to your BTC Markets account for clients who have been asking. Follow our step-by-step instructions to ensure a seamless transfer process.

The week ahead 

Upcoming Economic Events:

June 15th: China’s Industrial Production, Euro Area's Deposit Facility Rate, the ECB Interest Rate Decision and press conference, and the US Monthly Retail Sales Figures.

June 16th: Bank of Japan’s Interest Rate Decision. 

June 17th: Michigan Consumer Sentiment report 

June 20th: RBA Meeting Minutes and US Building Permits.

June 21st: UK Inflation Rate.

Economic Calendar (tradingeconomics.com)

State of crypto

After a turbulent week in the market, Bitcoin concluded with a 4.39% decline, reaching a closing price of US$25,925. Ethereum also closed in the red, experiencing a loss of 7.26% and settling at US$1,752.76. XRP struggled to overcome the prevailing negative sentiment in the market, declining by 2.82% and closing at US$0.5208. Litecoin, on the other hand, witnessed a significant downturn of 17.53%, reaching US$77.68. ADA had a challenging week, closing down by 27.91% and ending at US$0.2720.

Despite the price fluctuations, Bitcoin's market capitalisation remained steady, registering a 3.43% gain over the week, and concluding with a dominance level of 49.15%. Conversely, the total cryptocurrency market capitalisation experienced a decline of 7.51%, closing the week at US$1.024 trillion.

In terms of year-to-date performance, Bitcoin has gained 51.43% and is currently trading at US$25,206. Ethereum trailing closely behind with a 37.63% increase, trading at US$1,655. XRP maintaining stability, with a 40.75% gain for the year and trading at $0.4818. Cardano holding onto a gain of 5.90%, trading at $0.2647. Lastly, Litecoin displayed a gain of 4.02% and is currently trading at US$73.77.

*Prices from Tradingview and are accurate as of 10:00am AEST.

Market reflections

Australia

Australia's yield curve has inverted, a phenomenon not witnessed since the financial crisis. This occurrence reflects traders' growing concerns over the likelihood of an economic downturn. Notably, the difference between yields on 10- and three-year government bonds declined to minus one basis point on Thursday, a level unseen since 2008.

Australia's trade surplus decreased in April 2023, falling to AU$11.15 billion from AU$14.82 billion in March. This decline was primarily driven by a 5% decrease in exports, reaching a nine-month low of AU$56.18 billion, with a significant drop in exports to China. Conversely, imports increased by 1.6% to a three-month high of AU$45.02 billion due to strong domestic demand.

The trade balance, reflecting the gap between exports and imports, impacts job opportunities and economic growth. A smaller surplus suggests a shift in trade dynamics, potentially affecting industries and overall economic performance.

The Westpac Consumer Confidence report showed a slight increase of 0.2% after a significant decline in May. Perceptions of personal finances compared to a year ago improved, as did expectations for economic conditions in the next five years. However, confidence regarding finances in the next 12 months and expectations for economic conditions next year declined. Purchasing sentiment for major household items also dropped.

Meanwhile, the National Australia Bank's business confidence index unexpectedly fell to -4 in May, with most industries experiencing declines in sales, profitability, and employment. Forward orders and capacity utilisation painted a concerning picture, posing challenges to economic stability.

Global

US

The Federal Reserve kept the target for the fund's rate unchanged but signalled a potential increase to 5.6% by year-end if the economy and inflation don't slow. This pause follows ten consecutive rate hikes. The Fed will assess additional information and adjust policy if needed. GDP growth was revised upward for this year but lowered for 2024 and 2025. PCE inflation projection for this year decreased to 3.2%.

In May, US producer prices for final demand fell 0.3% month-on-month, with goods prices dropping significantly and services costs slightly increasing. Year-on-year, producer prices rose 1.1%, the lowest since December 2020.

In May 2023, the United States experienced a decline in its annual core consumer price inflation rate, reaching a 1-1/2-year low of 5.3%. Monthly core consumer prices increased by 0.4%, matching the pace of the previous two months. The overall consumer price inflation in the United States decreased to 4.0%, the lowest level since March 2021, primarily driven by lower energy prices. These figures suggest a slowdown in consumer price growth, supporting the argument for the Federal Reserve to consider pausing its current monetary tightening cycle.

China

Chinese monetary authorities have implemented two policy rate cuts to strengthen counter-cyclical adjustment and market expectations. The People's Bank of China (PBOC) reduced the seven-day reverse repo rate and interest rates of its standing lending facility. These actions aim to stabilise the market and support China's economic recovery in the second half of 2023. The rate cuts are accompanied by plans to lower financing costs for businesses and increase loans to small and micro firms.

In May 2023, China's inflation rate increased slightly, driven by higher food prices and stable non-food inflation. Core consumer prices grew year-on-year, while monthly consumer prices declined for the fourth consecutive month, contrary to expectations.

Japan

Japan's trade deficit fell again in May 2023, resulting in the 22nd straight month of a trade shortfall for the Japanese economy and the longest sequence since 2015. Exports edged up 0.6%, the softest pace of increase since a drop in February 2021. Meanwhile, imports declined by 9.9%, the second straight month of drop, as a stronger yen and easing commodity prices, including oil, reduced costs.

Canada

In May 2023, Canada's unemployment rate rose to 5.2%, breaking a streak of five months at 5%. Joblessness among individuals aged 55 and older increased to 4.1%, while the core-aged working population remained relatively unchanged at 4.3%. The Canadian economy lost 17,300 jobs instead of gaining as expected. The labour force participation rate also declined to 65.5%.

Germany

Germany's ZEW Economic Sentiment Index improved, surpassing expectations but remaining negative. The index indicates limited optimism for the country's economic outlook in the second half of the year. The assessment of the economic situation significantly declined, reflecting a more pessimistic view of the current state of the German economy.

UK

In the UK, unemployment benefits declined in May 2023, with the unemployment rate at 3.8%. Employment levels reached a record high of 33.09 million, and wages excluding bonuses increased by 7.2%. The British economy expanded by 0.2% in April, driven by a rebound in the services sector, while production and construction output contracted. Over the three-month period leading up to April, GDP grew by a modest 0.1%.

Alt action

Unlocking new realms: The Sandbox COO applauds Apple's VisionPro as a gateway to the metaverse.

During Apple's recent Worldwide Developers Conference (WWDC2023), the company unveiled its latest device, the Apple VisionPro Augmented Reality Headset. While Apple did not explicitly mention the term "metaverse" during the launch, Sebastien Borget, Chief Operations Officer for The Sandbox, expressed his excitement about the headset and its potential impact on digital worlds.

Describing the Apple VisionPro as "groundbreaking", Borget praised the device's technological capabilities and its ability to redefine the mixed reality (MR) category. Although the headset comes with a hefty price tag of US$3,499, Borget remained optimistic about its prospects.

Despite Apple's avoidance of the term "metaverse" during the unveiling, Borget emphasised that the VisionPro headset is not intended to compete with the metaverse concept. Instead, he sees it as a new device that can help users explore and understand the metaverse concept more effectively. Borget clarified that The Sandbox's focus is not solely on building the metaverse itself, but rather on creating the necessary technology to facilitate and expand its accessibility.

By acknowledging the potential of the Apple VisionPro headset, Borget highlights the role it can play in introducing more users to digital worlds and fostering the development of the metaverse.

SAND is currently trading at US$0.3885

Trade SAND now on BTC Markets

The Big 3

Coin Metrics' breakthrough report sheds light on Bitcoin's energy secrets.

Coin Metrics, a crypto intelligence firm, has released a report offering insights into Bitcoin's energy consumption and its implications for the global economy. The report proposes a new method of measuring Bitcoin's energy usage by analysing the blockchain for clues and linking network activity to specific high-powered machines. By examining the data generated by miners' guesses to solve Bitcoin blocks, researchers can deduce the overall electricity consumption of the network and account for the efficiency of each machine.

This approach provides a more accurate assessment of Bitcoin's power draw compared to previous studies that lacked ASIC-level data. In fact, Coin Metrics' estimate for miners' power consumption in May was 16% lower than the industry's current benchmark, the University of Cambridge's Bitcoin Energy Consumption Index. While acknowledging the groundbreaking work of Cambridge researchers, Coin Metrics aims to refine their methodology and capture a more precise representation of energy statistics.

Beyond energy consumption, the report also highlights the importance of assessing hardware efficiency and encourages miners to compare their rigs' efficiency against competitors. By tracking the popularity of ASICs over time, potential points of centralisation can be identified, contributing to network security.

Coin Metrics' method allows for estimating e-waste generated by ASIC replacements. As environmental concerns surrounding crypto increase, these nuanced insights provide a basis for data-driven discussions on Bitcoin's energy use and its environmental impact.

Overall, Coin Metrics' report not only addresses the contentious topic of Bitcoin's energy consumption but also offers a comprehensive understanding of the network's dynamics. By providing accurate energy statistics and promoting efficiency comparisons among miners, this research contributes to a more informed dialogue about the global implications of cryptocurrency mining.

Trade BTC now on BTC Markets

Ethereum remains unscathed as AWS outage sends shockwaves.

While Amazon Web Services (AWS) experienced a brief outage, Ethereum continued its uninterrupted operation, raising questions about its reliance on Lido for staking. Despite AWS being a major hosting provider for the Ethereum network, the outage had no impact on its nodes.

On June 13, AWS encountered a temporary disruption that lasted approximately three hours. The company initially reported increased error rates and latencies in certain parts of the United States at 12:08 pm PDT. Numerous mainstream news organisations, including the Associated Press, were affected and unable to publish articles.

Evan Van Ness, a prominent Ethereum advocate, noted that the Ethereum network remained unaffected by the outage. However, according to Ethernodes, around 64.5% of the Ethereum network relies on Amazon hosting providers. Van Ness pointed out that the impact might have been more substantial if the outage occurred in Europe, given the significant amount of Ether staked on Lido, which currently stands at approximately 7.1 million (35% of the total).

Criticism has previously been directed at Ethereum for its centralisation concerns, particularly due to its reliance on infrastructure provider Infura, which offers network nodes to companies and organisations. Many of these entities, including the liquid staking platform Lido, heavily depend on AWS for cloud hosting services.

AWS later identified the root cause of the problem as an issue with AWS Lambda, a service that enables customers to run code for various applications. The company confirmed the resolution of the issue over three hours after the initial disruption, stating that all AWS services were operating normally.

With AWS dominating the cloud hosting provider market share at 34%, the incident has sparked global implications, prompting discussions on the potential risks associated with Ethereum's reliance on centralised infrastructure providers.

As the global economy becomes increasingly interconnected, safeguarding the stability and decentralisation of blockchain networks like Ethereum becomes paramount to mitigate potential vulnerabilities arising from such incidents.

Trade ETH now on BTC Markets

Ripple's legal strategy and the future of the blockchain industry.

The unsealing of the "Hinman docs" in the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has sparked discussions about its implications for the blockchain industry. Ripple is accused of conducting an illicit sale of $1.3 billion worth of XRP, which the SEC considers a security.

While Ripple believes the documents show the SEC's unfair targeting, their conclusive evidence is still debated. The internal messages from SEC higher-ups reveal the agency's lack of clarity regarding the regulation of post-Bitcoin cryptocurrencies.

In 2018, William Hinman, the former Director of the SEC's Corporate Finance Division, argued that Ethereum's native token, Ether (ETH), should not be classified as a security due to its "sufficient decentralisation." However, Ripple finds Hinman's reasoning unhelpful and questions the basis of his theory, claiming a lack of understanding of securities law.

Ripple's aim in obtaining and releasing these documents is to highlight inconsistencies. The company alleges that the SEC filed the lawsuit without a solid legal foundation and violated its due process rights by failing to provide "fair notice" of potential securities regulation violations.

The Ripple case carries significant implications for the blockchain industry. The delisting of XRP by major U.S. exchanges in 2020, following the SEC's allegations, was a significant development. The case centres around the SEC's interpretation of cryptocurrencies under the Howey Test, with Ripple disputing that XRP qualifies as a security and instead asserting its resemblance to commodities.

Ripple's legal strategy focuses on challenging the SEC's allegations rather than emphasising decentralisation concerns. The outcome of the case remains uncertain, but its impact on the regulation and development of the blockchain industry is significant.

Trade XRP now on BTC Markets

Crypto news

SEC requests extension to respond to Coinbase's appeal for crypto regulatory clarity.

The United States Securities and Exchange Commission (SEC) has sought additional time to address Coinbase's plea for clear regulatory guidelines regarding cryptocurrencies. Coinbase, a leading cryptocurrency exchange in the US, had previously requested comprehensive guidance on the regulatory framework for digital assets. In response, the SEC has asked for an extension to provide clarity on crypto and formulate its official response, leaving the crypto industry and market participants in a state of uncertainty.

The securities regulator has stated that it will provide a recommendation on Coinbase's rulemaking request within 120 days, dismissing the action as lacking merit. In a letter submitted to the US Court of Appeals for the Third Circuit, the SEC stated its need for additional time to address Coinbase's request for new rules and enhanced clarity on cryptocurrency laws.

The SEC clarified that it had not decided against the petition, either in its entirety or in part. The regulatory body stated that Coinbase's request for a writ of mandamus holds no merit, indicating a lack of legal basis for immediate action.

Coinbase's Chief Legal Officer, Paul Grewal, criticised the SEC's letter, highlighting its failure to acknowledge the clear statements made by SEC Chair Gary Gensler regarding the absence of intent to issue new rules.

This ongoing regulatory ambiguity hampers the growth of the crypto market, hinders innovation, and may drive businesses to seek more favourable jurisdictions. The outcome of the SEC's response will undoubtedly shape the future of the industry, determining how cryptocurrencies are embraced and regulated in the United States.

Compliance conversations 

Smishing: The threat of SMS phishing.

In today's digital landscape, the dangers of phishing are well known. But have you heard of smishing? Smishing, also known as SMS phishing, is a social engineering attack that preys on individuals through text messages. Instead of relying on emails, smishers use SMS messages to deceive recipients into revealing sensitive information or taking certain actions.

These attacks are often orchestrated by impersonating trustworthy entities like banks, government agencies, or renowned organisations. The text messages employed in smishing attacks are carefully crafted to trigger urgency or alarm, coercing the recipient into immediate action. The tactics employed include enticing the recipient to click on malicious links, call specific numbers, or disclose personal details such as passwords, account numbers, or medicare numbers.

Smishers exploit the inherent trust and curiosity of individuals, counting on them to unknowingly divulge sensitive information or unwittingly install malware on their devices. To achieve their malicious goals, they deploy a variety of techniques. These can range from creating a sense of urgency to offering fake rewards or assuming the identity of someone familiar to the recipient.

Protecting oneself from smishing attacks requires vigilance, particularly when receiving text messages from unfamiliar or suspicious sources. Messages requesting personal information or demanding immediate action, should be approached with scepticism. Avoid clicking on links or calling numbers provided in unsolicited messages. If you receive a suspicious text, it is advisable to directly contact the organisation through a verified phone number or their official website to authenticate the message's legitimacy. Regularly updating your mobile devices and apps with the latest security patches can also help mitigate the risk of smishing attacks.

The implications of smishing extend beyond individual privacy and security. As these attacks become more prevalent, the global economy faces the consequences. Loss of trust in digital communications, financial fraud, and compromised personal information all contribute to a climate of uncertainty and financial instability. It is crucial for individuals, organisations, and regulatory bodies to remain vigilant, educate themselves about smishing threats, and take proactive measures to combat this evolving cyber threat.

ASIC has provided a checklist of common scams and ways to avoid them. To learn more, visit ASIC’s website.

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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 within this email. Past performance is not an indicator of future performance. We note that we may, at any time, change the characteristics of the product. The information provided is intended for recipients in Australia. This information is not to be reproduced without permission.

Prices are accurate as of 10:00 AM AEST, on 15/06/2023.