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Weekly Crypto Wrap: 1st June 2023

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Rachael Lucas
Weekly Crypto Wrap: 1st June 2023

TLDR

  • Don’t forget tomorrow is $0 Fees on BTC for our 10th birthday!
  • Register for our crypto tax webinar with Koinly.
  • Australian inflation rate rises to 6.8% up from 6.3%.
  • Is Solana (SOL) the Apple of crypto?
  • Bitcoin’s decreasing correlation with equity markets peaks interest.
  • Dormant Ethereum (ETH) whale wallet activates after eight years.
  • Traders’ mass exodus from Binance after loss of AU payments.

BTC Markets announcements.

$0 Fees on BTC for our 10th birthday!

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T&Cs can be found here $0 fees on BTC for our 10th birthday.

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“Crypto Tax in 2023: What's New?” webinar brought to you by BTC Markets & Koinly.

Join us for an exclusive live stream on Wednesday, June 14th from 11am-12pm AEST.

BTC Markets and Koinly have teamed up to bring you all the latest updates on crypto tax in Australia.

Read all about the event on our blog or register now to save your spot.

The week ahead

A run-down of major economic events coming up:

June 1st: 8pm Euro Area Inflation Rate and Euro Area Unemployment Rate.

June 2nd: United States ISM Purchasing Managers Index (PMI) and Unemployment Rate and non-farm payrolls.

June 5th: Germany Balance of Trade.

June 6th: Australia Interest Rate and United States ISM Services PMI.

June 7th: Australia GDP Growth Rate. Canada’s Ivey Purchasing Managers Index. Balance of Trade for China, US and Canada.

June 8th: Australia Balance of Trade.

Economic Calendar (tradingeconomics.com)

Market reflections

Australian Inflation Rate: CPI Rises to 6.8% up from 6.3%.

The latest data released by the Australian Bureau of Statistics (ABS) reveals that inflation in Australia remains persistently high, with the Consumer Price Index (CPI) rising to 6.8% in the twelve months leading up to April. This marks an increase from the previous month's figure of 6.3%, and it raises the likelihood of the Reserve Bank of Australia (RBA) raising interest rates at their upcoming meeting.

The ABS data indicates that prices for new dwellings increased by 9.2% in the year to April, while rents rose by 6.1%, up from 5.3% in March. The cost of food and non-alcoholic beverages increased by 7.9%, and transportation costs were up by 7.1%, with fuel prices experiencing a significant surge of 9.5%.

There is some positive news in the data. When volatile items such as automotive fuel, fruit and vegetables, and holiday travel are excluded, the annual movement of the monthly CPI indicator was 6.5% in April, lower than the 6.9% recorded in March. The ABS emphasises that excluding these volatile items provides a clearer view of underlying inflation trends.

In addition to the inflation data, recent reports from investment bank UBS indicate that food and grocery prices at major Australian retailers Coles and Woolworths rose by 9.6% in April. The report challenges the belief that inflation has already peaked, with the official inflation rate currently at 7%.

The Australian government's recent budget measures have further fuelled the debate around inflation. Treasurer Jim Chalmers stated that the government's cost-of-living measures would not contribute to broader inflationary pressures and predicted a return to the RBA's target band of 2-3% by 2024-25. Economists at Goldman Sachs and Capital Economics are expecting a cash rate of 4.35% by July.

Global

In May 2023, China's Caixin Manufacturing PMI unexpectedly contracted for the second month in a row due to weak domestic and global demand. This led to declines in output, new orders, buying activity, export sales, and employment, putting downward pressure on input costs and output charges. The report triggered a market sell-off across major indices as the US took a step forward in passing the debt limit bill.

On the other hand, the US labour market remained resilient, with job openings increasing and layoffs dropping. The number of job vacancies rose to 10.1 million, surpassing expectations. This signals a strong and competitive job market, potentially paving the way for more interest rate hikes by the Federal Reserve.

In the US, durable goods orders performed better than expected, while personal consumption expenditure (PCE) prices exceeded expectations in April, indicating higher inflationary pressures. This reinforces the Federal Reserve's hawkish stance. Personal spending saw a significant surge of 0.8%, driven by higher wages and a tight labour market, particularly in services and goods spending.

In Canada, the economy exceeded expectations, growing by 3.1% in Q1 2023, driven by international trade and household spending. Japan saw an increase in consumer confidence as the economy recovered from the pandemic, although sentiment towards income growth weakened slightly. India's economy grew by 4.4% in Q4 2022, below expectations.

Whilst in Europe, Germany's annual inflation decreased primarily due to food prices, while the GfK Consumer Climate Indicator reached a high level. UK retail sales rebounded in April, while France's consumer price inflation dropped. Italy's annual inflation rose, driven by non-regulated energy goods and services.

State of crypto

Bitcoin’s price is retesting the US$27,000 support level on the final day of trading in the month of May, confirming the first monthly drop in 2023, prompting speculation about what lies ahead. The selling pressure faced by Bitcoin persists, mirroring the downward trend observed in US equities. Although, according to a report by crypto research firm K33, Bitcoin's decreasing correlation with stocks is renewing its appeal for investors seeking portfolio diversification.

In the previous trading week, the cryptocurrency market experienced a breakthrough, ending a three-week downtrend and concluding on a positive note. Bitcoin closed the week at $28,065, marking a gain of 4.92%. Ethereum also followed suit, closing in the green at $1,908.64, representing a gain of 5.75%. XRP continued to outperform, achieving a second consecutive weekly close with a gain of 5.36% and closing at $0.4820. On the other hand, Litecoin struggled to hold its ground, ending the week with a loss of 0.79% at US$91.45.

Moving to the year-to-date performance, Bitcoin has maintained its dominance, currently trading at US$27,149 and holding a strong gain of 64.13%. Ethereum has achieved a yearly gain of 56.18%, trading at US$1,868, while Cardano has recorded a gain of 52.85% and is trading at $0.3756. XRP has remained stable with a gain of 52.38% for the year, trading at $0.5166, while Litecoin has secured a gain of 27.62% and is trading at US$89.53.

Bitcoin's market capitalisation closed the week on a positive note, gaining 0.94% and currently maintaining a dominance level of 47.87%. The overall cryptocurrency market capitalisation also ended in the green, rising by 4.01% to reach a valuation of US$1.1 trillion.

Alt action

Is Solana (SOL) the Apple of crypto?

Solana, the layer-1 blockchain, is aiming for significant growth through small business and infrastructure partnerships, according to co-founder Raj Gokal. In an interview with TechCrunch, Gokal emphasised the importance of partners who are agile and willing to experiment, rather than larger established companies with a set view. He highlighted the partnership with Boba Guys, a San Francisco-based Cafe chain, which is exploring a loyalty program built on Solana using non-fungible tokens (NFTs) and other tokens to drive sales.

Solana also focuses on infrastructure partnerships and previously partnered with Google Cloud to deploy Solana nodes. Gokal mentioned a potential partnership with Stripe, noting that most Stripe's supported apps are based on Solana. The company is striving to become the "Apple" of crypto by prioritising user experience (UX) and performance, like the tech giant. Solana is even developing its own smartphone called Saga to enhance infrastructure for third-party projects.

Gokal compared Solana's focus on a seamless user experience and performance to Apple's relentless pursuit of perfection. He sees Solana as a platform that can deliver a financial internet experience akin to the regular internet. The core engineering and ecosystem of Solana have this focus, and Gokal believes in empowering new businesses, projects, and independent developers within the optimistic crypto community.

Solana's commitment to small business partnerships and infrastructure development positions it as a blockchain with growth potential. By prioritising UX, performance, and creating accessible crypto products and services, Solana aims to carve out a unique position in the crypto industry. The company's partnerships and ecosystem focus contribute to its ambition to become a significant player in the evolving landscape of decentralised finance.

SOL is currently trading at US$20.77.

Trade SOL now on BTC Markets

The Big 3

Bitcoin’s decreasing correlation with equity markets peaks investor interest.

Bitcoin's (BTC) decreasing correlation with stocks is renewing its appeal for investors seeking portfolio diversification, according to a report by crypto research firm K33. The 30-day price correlation between BTC and the NASDAQ index has reached its lowest level since December 2021, falling to 0.26.

Similarly, BTC's correlation with the S&P 500 index has also dropped to levels not seen since late 2021.

Bitcoin has historically attracted investors looking for an asset that moves independently from traditional investment classes, particularly equities. This narrative shifted last year when the digital asset market experienced a significant downturn alongside stock markets. The correlation between cryptocurrencies and traditional markets surged as central banks raised interest rates aggressively to combat rising inflation. This monetary tightening resulted in a decline in the prices of stocks and cryptocurrencies, leading to a loss of Bitcoin's diversification appeal.

Bitcoin Ordinals

Bitcoin Ordinals, a groundbreaking protocol enabling NFT-like assets on the Bitcoin blockchain, has surpassed 10 million inscriptions, solidifying its position in the digital asset space. Casey Rodarmor, the project's visionary, has stepped down as lead maintainer and entrusted the project to pseudonymous developer Raph. Despite the transition, Rodarmor remains involved, ensuring a smooth handover.

Under Raph's stewardship, the focus will be on maintaining the codebase and improving documentation to address concerns about transaction fees. Bitcoin Ordinals attracted attention from cryptocurrency exchanges and NFT marketplaces. By integrating NFT-like assets with the security of the Bitcoin blockchain, it showcases the innovative potential of the Bitcoin ecosystem.

As Bitcoin Ordinals continues to grow in popularity and development, it cements its role in shaping the future of decentralised finance. This milestone demonstrates the protocol's ability to unlock new possibilities for digital asset creation and highlights its influence within the crypto community.

Trade BTC now on BTC Markets

Dormant Ethereum (ETH) whale wallet activates after eight years.

According to on-chain data, an Ethereum wallet that had remained dormant for an astounding eight years has suddenly become active on May 27th. In a surprising move, this wallet initiated a transfer of 8,000 ETH, which now holds an approximate value of US$15 million.

This occurrence is not an isolated event, as similar instances of previously inactive wallets resurfacing have been observed recently. For instance, on April 24, a wallet holding 2,365 ETH ($4.5 million) conducted its first transaction in eight years, with the owner transferring 2,360 ETH to a new address. Likewise, on March 5, another wallet that had been inactive for five years transferred 10,226 ETH ($19.6 million) to a new address.

Furthermore, on May 29th, Lookonchain reported that a significant ETH whale deposited 23,000 ETH, equivalent to an astonishing US$43 million at the time of writing. These events demonstrate the growing activity and engagement within the Ethereum market, with potential implications for the broader cryptocurrency landscape.

Ethereum to drive worldwide crypto adoption.

Roger Ver, an early Bitcoin investor and Bitcoin Cash advocate, believes that Ethereum, not Bitcoin, will lead the way in attracting new users to the cryptocurrency space. Speaking on a podcast, Ver praised the Ethereum ecosystem for its ability to drive worldwide adoption, despite scaling challenges and the emergence of other layer-one "clones."

He specifically highlighted the rise of Ethereum Virtual Machine-compatible blockchains and layer-2 scaling solutions like Polygon. Ver also discussed the "civil war" between Ethereum's co-founder, Vitalik Buterin, and Bitcoin core developers, which ultimately led to the creation of Ethereum.

Trade ETH now on BTC Markets

XRP experiences surge in network activity whilst price gains.

XRP, the cryptocurrency associated with Ripple, is currently experiencing a surge in network activity and price gains, signalling positive prospects for the token. Recent data reveals significant spikes in address activity on the XRP network, marking the second and third-largest surges in recent days. This uptick in address activity serves as an encouraging indicator for the token's price.

Notably, XRP's recent price gains have shown a decoupling from other altcoins. Additionally, historical trends have demonstrated a correlation between address activity and price surges, lending support to the possibility of continued adoption for XRP.

As of now, XRP is trading at US$0.5025, exhibiting a noteworthy increase over the past 24 hours and demonstrating a positive trend over the past week and month.

Trade XRP now on BTC Markets

Crypto news

Binance sees mass exodus of Australian crypto traders.

Binance Australia is experiencing a surge in customer withdrawals as users attempt to leave the platform following the loss of its banking partner. The exchange recently announced that it will no longer support Australian dollar withdrawals due to the termination of its partnership with Cuscal and restrictions imposed by Westpac.

In response, Binance has informed its 1 million Australian customers that any remaining Australian dollars will be converted into USDT, a cryptocurrency pegged to the US dollar. However, Binance cannot use its own stablecoin BUSD due to its severed ties with the issuer. This development has prompted many Australian investors to liquidate their crypto holdings on the Binance platform, resulting in downward pressure on prices.

The price disparity between Binance and other local exchanges has widened significantly. On Tuesday morning, Binance was selling one Bitcoin for around AU$36,000, while local exchanges were selling it for approximately AU$42,000. This price gap has reached as high as AU$14,000 in recent days.

According to reports, Binance has faced challenges in Australia, with its derivatives license being revoked by the Australian regulator last month. The exchange has also been hit with legal action by the US Commodity Futures Trading Commission, alleging illegal operations and a weak compliance program.

Despite the difficulties faced by Binance, Brisbane-based crypto broker Swyftx has stated that the inability to withdraw Australian dollars from Binance will not affect its operations. Swyftx converts Australian dollars to US dollars before utilising Binance's international services for Bitcoin transactions.

The regulatory environment for cryptocurrency exchanges is becoming increasingly stringent worldwide, with Binance being forced to cease operations in Canada due to new guidelines. This scrutiny reflects a broader trend of regulators seeking tighter regulations and disclosures to safeguard investors and customer funds in the crypto industry.

BTC Markets offers BTC/AUD trading pair plus 24/7 free and instant AUD deposits and withdrawals.

Regulation round-up

Cooperation on virtual asset regulations in Hong Kong.

The central banks of Hong Kong and the United Arab Emirates (UAE) have entered a collaboration to enhance cryptocurrency regulations and foster fintech development.

The Hong Kong Monetary Authority (HKMA) and the Central Bank of the UAE (CBUAE) have agreed to strengthen cooperation on virtual asset regulations and advancements. They also plan to facilitate discussions on joint fintech initiatives and knowledge sharing, particularly through their respective innovation hubs.

The collaboration aims to improve financial infrastructure and market connectivity between the two regions. This partnership between Hong Kong and the UAE has significant implications for the global economy, as it demonstrates the growing interest and cooperation in the cryptocurrency and fintech sectors.

Compliance conversations

Stay vigilant on phishing scams.

Phishing scams are becoming increasingly sophisticated and can be challenging to identify. It is crucial to understand how to spot these fraudulent attempts.

The Australian Competition and Consumer Commission (ACCC) reported that Australian’s lost $3.1 billion to scams in 2022, an 80% increase on total losses recorded in 2021.

If you come across a message or website that seems suspicious or off, exercise caution by refraining from clicking on any links, opening attachments, or downloading software.

Cybercriminals continuously adapt their tactics, such as leveraging current events to deceive victims. In some cases, they even impersonate trusted individuals or institutions like family members, banks, or workplaces to trick victims into revealing sensitive information or performing unauthorised actions.

To protect yourself from phishing attempts, it's essential to adopt four key anti-phishing behaviours:

  • Safeguard your personal data: Avoid sharing sensitive information like passwords, financial details, or government ID numbers with unknown individuals or unreliable websites. Doubts about a site's legitimacy should discourage you from providing your email address or phone number.
  • Avoid confirming passwords through links: When prompted to log in to a website after clicking on a link from a message, open a fresh browser tab or window and manually enter the website's URL. This precautionary measure prevents falling prey to fraudulent websites set up by hackers to collect your login credentials.
  • Be cautious with urgent messages: Scammers often pressure victims to act quickly, exploiting the element of surprise. If a message imposes time limits or urgency, exercise scepticism and refrain from responding or clicking on any links. Tax scams, for example, commonly employ such tactics.
  • Ignore too-good-to-be-true messages: Scams promising prizes, lottery wins, or financial opportunities that appear unsolicited should be treated with scepticism. Avoid engaging with the sender and report such messages to your email service provider.

Additionally, you can enhance your defence against phishing attacks by developing cybersecurity habits:

  • Use a password manager to generate and store strong, unique passwords for each account.
  • Enable multi-factor authentication to add an extra layer of security, requiring additional verification even if a password is compromised.
  • Review your browser settings and consider enabling features like safe browsing or enhanced protection to receive warnings about potential threats and malicious downloads.

To improve your ability to identify phishing attempts, take advantage of resources like Google's Jigsaw team's quiz, which provides visual examples of sophisticated phishing messages, or Cisco's phishing quiz designed for employees. These tools help enhance your awareness and understanding of the techniques employed by cybercriminals.

Ultimately, staying vigilant and employing best practices can significantly reduce the risk of falling victim to phishing scams.

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

Feedback

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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 01/06/2023.

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