Weekly Crypto Wrap: 25th January 2024

TLDR

• Unveiling Immutable X (IMX): Revolutionising NFTs and tackling crypto pain points.
• BTC Markets CEO Caroline Bowler joins Livewire Markets as a contributor.
• Decoding the Bitcoin Halving: Strategic insights for traders.
• Grayscale Bitcoin Trust outflows hit US$2.8 billion.
• FTX offloads 22 million GBTC shares, totalling US$1 billion.
• Bitcoin sees US$12b in trading volume following SEC's approval of 11 ETFs.

BTC Markets in the news

BTC Markets CEO Caroline Bowler joins Livewire Markets as a contributor.

We are excited to announce that BTC Markets CEO Caroline Bowler has joined Livewire Markets as a contributor. Livewire, an Australian-based investment platform, is committed to providing access to high-value investment insights by featuring ideas and analyses from top-tier money managers and investment professionals. In her inaugural article, Bowler delves into the implications of the US Security and Exchange Commission's (SEC) approval of Bitcoin ETFs for Australian investors.

“The integration of cryptocurrency into mainstream financial institutions is generating significant attention and raising important questions for Australian investors. As crypto takes centre stage, particularly with the recent developments in US regulations regarding spot Bitcoin ETFs, the impact on Aussie investors and their portfolios has become a crucial consideration.”

Read the full article here.

BTC Markets announcements.

Unveiling Immutable X (IMX): Revolutionising NFTs and tackling crypto pain points.

Asset: Immutable X (IMX).
Category: Blockchain gaming.
BTC Markets listing date: Early February 2024

In 2023, Immutable X (IMX) marked an exceptional year, showcasing an impressive 455% price growth, boasting a market cap exceeding US$2.7 billion and solidifying its position as one of the largest layer2 networks globally. Functioning as a player in both the gaming and nonfungible tokens (NFT) sectors, Immutable X is focused on advancing digital ownership on a global scale through NFTs. As a prominent figure in the gaming industry, Immutable X is committed to democratising digital ownership for all players, ensuring a secure and user-friendly experience in crafting cutting-edge web3 games.

Read the full blog here.

AUD card deposits are now available.

Recently we announced that you can now deposit AUD directly into your BTC Markets account using your Australian issued Visa or Mastercard credit or debit card.

This new deposit method makes it even easier and faster to fund your account, all without leaving the exchange. Simply log in to your BTC Markets account and enter your card details. Your funds will be available in your account instantly, ready for you to start trading.

Here are some of the benefits of using AUD card deposits:

• Fast and convenient: Deposit funds instantly without having to leave the exchange.
• Flexible: Use your Visa or Mastercard credit or debit card.
• Secure: We use industry-leading security measures to protect your card information.

In addition to card deposits, we also offer a variety of other deposit methods, including:

• Osko (PayID)
• Direct deposit

We are committed to providing you with a convenient trading experience. We believe that adding AUD card deposits will make it even easier for Australians to access digital assets.

To learn more about AUD card deposits, please visit our Help Centre.

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The Bitcoin Halving

Decoding the Bitcoin Halving: Strategic insights for traders.

As the anticipated Bitcoin Halving event approaches, traders stand at a juncture where they can extract valuable insights from the well-established pattern frequently witnessed in Bitcoin Halving cycles. Over the course of Bitcoin's three halving events, marked by significant reductions in block rewards, the cryptocurrency has experienced price fluctuations.

Halving #1: Occurred on November 28, 2012.

marked a reduction in the block reward from 50 BTC to 25 BTC. The price at the time was US$13, and the subsequent peak in the following year reached US$1,152. Prior to this event, Bitcoin was relatively unknown, gaining attention only after its price surged to over US$1,000.

Read more here.

State of crypto

• Bitcoin registers US$12 billion in first-week trading volume.
• Grayscale Bitcoin Trust outflows hit US$2.8 billion.
• FTX offloads 22 million GBTC shares, totalling US$1 billion.
• Grayscale shifts 16,712 BTC (over US$726 million) for ETF redemptions.
• Bitcoin ETFs eye options as the next frontier.

Bitcoin sees US$12b in trading volume following SEC's approval of 11 ETFs.

The recent endorsement of spot Bitcoin ETFs by the SEC is viewed as a transformative development, offering mainstream investors a regulated avenue for Bitcoin investments. Despite cautious remarks from SEC Chairman Gary Gensler, this move is perceived as a stride toward legitimising and digital currency.

The considerable trading volumes, with approximately US$12 billion exchanged among the 11 approved funds, has elicit varied opinions in both the crypto industry and traditional financial markets. While concerns persist regarding management fees and their impact on decentralised assets, speculation arises about Australia potentially following suit, with the ASX contemplating a revaluation of its stance on Bitcoin ETFs.

Despite large inflows into spot Bitcoin ETFs in the US, Grayscale’s Bitcoin Trust (GBTC) has seen US$2.8 billion in outflows since the fund converted to an ETF. Market participants are speculating that the cause is associated with their high fees. Even with a reduction from a 2% fee to 1.5%, Grayscale maintains the highest fees, surpassing those of funds like Bitwise and iShares, which range from 0.20% to 0.80%.

Further adding to the downward pressure on Bitcoin’s price, FTX sold 22 million GBTC shares (worth US$1 billion) post ETF conversion, reducing their ownership to zero. Grayscale transferred thousands of Bitcoins to Coinbase for ETF redemptions, totalling 16,712 BTC (over US$726 million).

On a brighter note, options are anticipated as the next step for Bitcoin ETFs, with CBOE Global Markets filing for Bitcoin ETF-linked options, expected to commence trading later this year. Options are seen as crucial tools for investors, offering downside hedging and risk-defined exposures to Bitcoin.

Future of crypto

Top narratives to watch in 2024.

A closer look at Render Token (RNDR) and Akash Network (AKT).

In a review of top narratives for the upcoming year, the integration of Artificial Intelligence (AI) into various industries, including the crypto space, takes centre stage. This exploration delves into two innovative platforms revolutionising AI operations: Render Token (RNDR) and Akash Network (AKT).

Render Token (RNDR)

Render Token (RNDR) is a decentralised GPU rendering platform introduced in 2017. It operates as a blockchain marketplace for idle GPU, enabling artists to efficiently scale GPU rendering work globally. The platform, backed by OTOY, addresses challenges in the digital creation market by democratising GPU cloud rendering. RNDR users can contribute GPU power, earn rewards, and participate in a decentralised system connecting render job seekers with idle GPU providers. The focus on digital rights management, scalability, and Ethereum-based RNDR tokens for secure transactions positions Render Token as a powerful solution in the GPU rendering services market.

Akash Network (AKT)

On the other hand, Akash Network (AKT) operates as an open-source, decentralised cloud computing platform on the Cosmos blockchain. It empowers users to securely buy and sell computing resources through a community-centric approach. Akash's unique "reverse auction" system results in competitive prices, often up to 85% lower than other cloud services. With features like a Supercloud model, community-driven management, integration with Kubernetes, and blockchain underpinnings using the AKT native token, Akash ensures scalability, reliability, and cost-effectiveness in the cloud computing landscape.

The weekly crypto close

As we close out the second consecutive week in the red, Bitcoin is holding support in the US$39.8k range, reflecting a nearly 16% decrease since the SEC's approval of 11 spot Bitcoin ETFs on January 10th. This level aligns with that of December 3, 2023, and a breach may signal a revisit to US$35k. Various factors contribute to this downturn, anticipated following the mid-October 2023 uptrend, including Grayscale Bitcoin Trust outflows and FTX's divestment of GBTC shares.

At Monday's close trading session, Bitcoin wrapped the week at US$41,580.33, with a marginal 0.36% decline. So far for 2024, Bitcoin has lost 5.87%, in stark contrast with the impressive 155.61% gains witnessed in 2023.

The weekly performance of top altcoins:

• Chainlink (LINK): +4.34%
• Litecoin (LTC): +2.82%
• Ethereum (ETH): -0.64%
• Solana (SOL): -2.90%
• Cardano (ADA): -4.17%
• XRP (XRP): -5.19%
• Avalanche (AVAX): -7.79%

The total crypto market cap closed the week at US$1.59 trillion, reflecting a 0.79% decrease. Bitcoin’s dominance closed in the green, up 0.38% from the previous week, settling at 51.24%.

Concurrently, the cryptocurrency market sentiment resides in the Neutral sone, currently at 48 on the Crypto Fear & Greed index, down from 50 yesterday. The last instance of the market being in the Neutral sone dates to October 2023, coinciding with the commencement of the market's upward trend.

Year-to-date in the crypto space

The year-to-date performance in the crypto space:

• Ethereum (ETH) +10.83%
• Chainlink (LINK) +4.88%
• Bitcoin (BTC) +0.98%.
• Solana (SOL) +0.85%
• Avalanche (AVAX) -6.61%
• XRP (XRP) -7.83%
• Cardano (ADA) -11.40%.

*The weekly trading stats as of Monday, January 21st at 11:00 am AEDT, based on data from Tradingview in USD.

**Year-to-date performance as of Thursday, January 25th at 11:00 am AEDT, based on data from Tradingview in USD.

Crypto news

DigitalX's Bitcoin fund, delivers 150% returns in 2023.

In 2023, DigitalX's Bitcoin fund, managed by Lisa Wade, achieved outstanding returns of nearly 150%, propelled by Bitcoin's remarkable rally exceeding 160% in the past 12 months. Wade emphasises strategic asset discernment amid evolving market dynamics in 2024, expressing caution but foreseeing potential upside for Bitcoin and smaller tokens. She notes the performance gap between Bitcoin and the S&P 500, anticipating its closure and a narrowing of the underperformance gap in the broader crypto space. Wade underscores the importance of thorough research and specialised asset management, highlighting geopolitical risks as potential catalysts for Bitcoin's growth.

Buy Bitcoin on BTC Markets.

Analysts doubt near-term approval for spot XRP ETF amid ongoing SEC case.

Analysts suggest that a spot XRP ETF is unlikely to receive regulatory approval soon. The SEC's ongoing case against Ripple, coupled with the absence of an approved XRP futures ETF, poses significant hurdles. CoinShares' Townsend Lansing notes that SEC acknowledgment that XRP is not a security would be a prerequisite for an XRP ETF.

The recent court ruling on XRP's status adds complexity to the situation. Analysts express scepticism, citing the lack of approved XRP futures ETFs in the U.S. and the SEC's vigilance in ensuring surveillance agreements. Despite this, some XRP enthusiasts remain hopeful, with recent comments from Ripple CEO Brad Garlinghouse and Franklin Templeton's Sandy Kaul hinting at potential developments. However, the industry is closely monitoring the potential approval of spot Ether ETFs, with a 70% likelihood predicted for May.

Revolutionising Defi on Ethereum with 'gasless' swaps and enhanced user experience.

0x, a prominent player in Ethereum's web3 infrastructure, has introduced the Tx Relay API, a groundbreaking solution for decentralised finance (DeFi) users. This API enables "gasless" swaps, allowing cryptocurrency transactions without the usual ETH gas fees, addressing a major pain point for DeFi participants. Tx Relay covers gas costs within the transaction, significantly reducing the likelihood of transaction failures during network congestion.

Coinbase, an investor and beta tester for the API, reports a substantial decrease in failed trades. The innovation not only streamlines the trading experience but also introduces MEV protection, safeguarding users against advanced tools and bots. With potential widespread adoption, this development could significantly improve the overall user experience and lower entry barriers for new participants in the crypto space.

Buy ETH on BTC Markets.

The week ahead: economic events

January 25th: Germany Ifo Business Climate Index.

January 26th: Euro Area Deposit Facility Rate and Interest Rate.US Durable Goods Orders and GDP Growth Rate. Germany GfK Consumer Climate

January 27th: US Core PCE Price Index MoM, Personal Income and Personal Spending.

January 30th: France GDP Growth Rate and GDP Annual Growth Rate. Italy GDP Growth Rate and GDP Annual Growth Rate. Euro Area GDP Growth Rate and GDP Annual Growth Rate.

January 31st: US Job Openings. Australia Inflation Rate. China NBS Manufacturing PMI. Japan Consumer Confidence. France Inflation Rate. Germany GDP Growth Rate and GDP Annual Growth Rate.

February 1st: Germany Inflation Rate. US Fed Funds Interest Rate.

Economic Calendar (tradingeconomics.com)

Market reflections

Overview

In December 2023, Australia experienced a marginal improvement in business confidence, marking the third consecutive month of negative readings. Globally, key highlights include the US building permits demonstrating resilience as consumer sentiment surges. Japan's inflation rate retreated whilst the Bank of Japan maintained rates while revising CPI projections amid economic uncertainty. Meanwhile, the United Kingdom witnessed a significant decline in retail sales in December, marking the largest drop since January 2021.

Australia

• Marginal improvement in Australian business confidence in December.
• Recovery in mining and retail sectors softens economic downturn.
• Despite challenges, businesses maintain cautious optimism.

Australian business confidence inches up in December 2023.

The National Australia Bank (NAB) reported a marginal improvement in business confidence in December 2023. This marks the third consecutive month of negative readings but indicates a softer economic downturn, attributed to recoveries in the mining and retail sectors.

Although business conditions eased, they remained above the long-run average. Labor and purchase cost growth decreased, and retail prices dropped sharply to 0.6%, the lowest since late 2020. NAB's chief economist, Alan Oster, noted that economic growth slowed considerably at the end of 2023, leading to improvements in inflation indicators. Despite challenges, businesses remain cautiously optimistic about the future, expecting subdued growth.

Global

• US building permits rise by 1.9% in December 2023.
• Single-family home construction declines, multifamily rebounds.
• Overall, US housing starts fall by 4.3%, reflecting a mixed performance.
• University of Michigan’s consumer sentiment index surges in Jan.
• Japan's inflation rate decreases to 2.6% in December 2023.

US building permits resilient amid single-family home construction dip.

In December 2023, US building permits demonstrated resilience, rising by 1.9% to 1.495 million, exceeding expectations. Despite a significant 8.6% decline in single-family home construction to 1.027 million units, multifamily projects rebounded. The overall housing starts fell by 4.3%, indicating a mixed performance. Notably, permits for future single-family construction increased by 1.7%, highlighting ongoing support for new construction.

US consumer sentiment soars to highest level since July 2021.

In January, the University of Michigan's consumer sentiment index surged to 78.8, the highest since July 2021. This substantial increase reflects growing confidence driven by perceptions of improved inflation and expectations of strengthened income. Decreased inflation expectations to 2.9% contribute to an overall positive outlook, potentially providing a soft landing for the economy.

Japan's inflation rate retreats to 2.6% in December 2023.

In December, Japan's annual inflation rate decreased to 2.6%, down from the prior month's 2.8%, marking the lowest level since July 2022. The moderation was attributed to minimal increases in food prices, healthcare, and communication costs. Core inflation also dipped to 2.3%, the lowest in 18 months, remaining outside the Bank of Japan's 2% target for the 21st month. Housing and education prices remained unchanged, while transportation, clothing, furniture, household utensils, and culture & recreation saw accelerated inflation.

Despite monthly consumer prices edging up by 0.1% in December, the overall trend reflects a slowdown in inflation, aligning with the government's call for businesses to raise wages amid a slowing inflation trend and the 21st consecutive month of surpassing the inflation target.

Bank of Japan holds rates, revises CPI projections amid economic uncertainty.

The Bank of Japan maintains status quo with short-term rates at -0.1% and 10-year bond yields at 0%. CPI projections for FY 2024 are revised to 2.4%, and 2023 GDP growth forecast is lowered to 1.8%. Governor Kasuo Ueda remains cautious, citing no immediate policy changes. The recent earthquake complicates ending negative rates. In December 2023, Japan unexpectedly shifts to a trade surplus of JPY 62.10 billion, fuelled by record exports to the US and China. For 2023, Japan's trade deficit halves to JPY 9.29 trillion, driven by robust exports and a slump in energy imports.

UK retail sales plummet 3.2% in December, largest monthly drop since January 2021.

In December, the United Kingdom witnessed a significant 3.2% month-on-month decline in retail sales, surpassing expectations and marking the largest drop since January 2021. Non-food store sales saw a sharp 3.9% decrease, influenced by early November gift purchases. Year-on-year, trade was down by 2.4%, missing the expected 1.1% growth, culminating in a 2.8% decline for the full year of 2023—the lowest since 2018.

Germany experiences service downturn as manufacturing recovers.

In early 2024, Germany faces economic complexities. The service sector witnesses a downturn at 47.6 in the Services PMI, driven by hesitancy due to high costs and geopolitical uncertainty. Meanwhile, manufacturing shows signs of recovery, with the HCOB Flash Germany Manufacturing PMI at an eight-month high of 46.0. Despite progress, the overall Manufacturing PMI at 45.4 indicates a lingering recession. Employment varies, with stability in services and notable job losses in manufacturing. Dr. Cyrus de la Rubia notes a sluggish start, influenced by supply chain disruptions and inflation. The short-term outlook is cautiously mixed, reflecting sector-specific recovery amid ongoing challenges.

Bank of Canada maintains 5% interest rate, anticipates rate cuts amid inflation concerns.

The Bank of Canada has opted to retain its key overnight interest rate at 5%, marking the fourth consecutive decision and sustaining benchmark borrowing costs at a 22-year high. Governor Tiff Macklem acknowledges discussions shifting from "how high" to "how long," emphasizing the need for a sustained higher interest rate. Inflation concerns persist despite a recent decline, prompting caution in considering rate cuts. Economists anticipate a rate cut in June 2024, emphasizing the impact on variable-rate loans, mortgages, and potential challenges if interest rates remain high. The Bank's stance reflects ongoing economic intricacies, with a neutral interest rate expectation around 3%. Despite a foreseeable increase, rates are projected to surpass pre-pandemic levels.

Regulation roundup

Crypto industry faces regulatory scrutiny following SEC's approval of spot Bitcoin ETFs.

The recent SEC approval of 11 spot bitcoin ETFs marked a watershed moment for the crypto industry. Despite record-breaking Day 1 trades of over US$4.6 billion, controversies and challenges lie ahead. The maturation of the crypto industry and regulatory scrutiny have become prominent, reflecting the aftermath of the "crypto winter" in 2022.

As institutional engagement grows, projects are adapting to regulatory demands, with a focus on compliance and best practices. The regulatory landscape in 2024 is expected to focus on anti-money laundering, DeFi, financial intermediaries, and conflicts of interest, shaping the future of institutional and traditional financial engagement with crypto.

Compliance conversations

Valentine's day is not all hearts and roses: unveiling the dark side of a ‘pig butchering’ scam.

Valentine's Day, a widely celebrated occasion symbolising love and affection, unveils a darker underbelly with the insidious emergence of the "pig butchering" or romance baiting scam. While the day is traditionally associated with romantic dinners and thoughtful gifts, this scam has left unsuspecting consumers with more than just a broken heart.

The perpetrators of this scam often assume the persona of an alluring, affluent individual, commonly portraying themselves as a "usually Asian man or woman" with purported investments in cryptocurrency or the stock market, as highlighted by police warnings. Over an extended period, sometimes spanning months or years, scammers meticulously craft an illusion of opulence, generously sharing details about their wealth, such as boasting about the substantial value in their cryptocurrency wallets.

AFP’s Acting Assistant Commissioner Cybercrime Command, Chris Goldsmid, sheds light on the modus operandi: "Once victims inquire about the source of their wealth, they are directed to a meticulously crafted replica of an investment site showcasing the apparent growth of an investment." The victims, entranced by the illusion, send money to invest, and in return, scammers provide fabricated weekly, monthly, or yearly investment statements, illustrating consistent growth in their supposed investments. Tragically, some victims, ensnared in the deceit, end up providing even more money in the hope of amplifying their returns.

The financial toll of romance scams is staggering, with Australians losing an average of AU$40 million in 2022, translating to up to AU$109,000 a day or AU$4500 an hour, according to the latest figures from ScamWatch. As Valentine's Day approaches, police issue a cautionary note, urging heightened vigilance, particularly as scammers might exploit the event, promising first dates or meetings, especially if they have already duped victims into parting with their money.

Chris Goldsmid emphasises that while financial gain is often the primary motivation for scammers, some have manipulated individuals into opening bank accounts, facilitating money laundering or even engaging in the trafficking of illicit drugs. "Organised crime gangs are manipulating Australians to send money offshore, which could be bankrolling other serious crime," he warns.

This is a stark reminder that amidst the quest for the perfect Valentine's Day celebration, consumers must remain vigilant. While the ‘pig butchering’ scam underscores the hidden dangers, it also underscores the importance of prioritising safety and well-being.

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

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Weekly prices are accurate as of 11:00 AM AEST on 21/01/2024.

Disclaimer: The information provided on this page is issued by BTC Markets Pty Ltd (BTC Markets, we, us, our). The information is general only and is not intended to constitute an opinion or recommendation with respect to its contents. Past performance is not a reliable indicator of future performance. Any reference to past performance is intended to be for general illustrative purposes only. The information cannot be relied upon for any purposes and is not intended to be a substitute for professional advice. The information does not purport to be complete, accurate or contain all of the information that a person may require to make a decision. It may also contain forward looking statements, which are subject to known and unknown risks, uncertainties and other factors. We recommend you obtain professional advice before making any decision with respect to the matters discussed in this document. To the maximum extent permitted by law, BTC Markets will have no liability for any loss or liability of any kind: (i) arising in respect of the information contained (or not contained) on this page; or (ii) arising from a person relying on any information or statement contained on this page. The information provided is only intended for recipients in Australia. This information cannot be reproduced without our prior written permission.