Newsletter

Weekly Crypto Wrap: 2nd March 2023

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BTC Markets
Weekly Crypto Wrap: 2nd March 2023

TLDR

  • Australia's economic growth slowed to 0.4% in Q4 2022.
  • RBA's interest rate decision due.
  • Ethereum gas fees are increasing as the NFT market rebounds.
  • XRP proposes a cross-chain bridge to boost network and token utility.
  • Asset tokenisation is trending, with funding rounds led by PayPal, Morgan Creek, and a16z.
  • Dark mode is coming to the mobile app!

Payment solutions

XRP’s On-Demand Liquidity (ODL) solutions for cross border payments.

The challenges with cross-border payments are widely acknowledged, particularly in Australia where businesses frequently need to process payments to suppliers situated outside the country. XRP functions as a bridge that connects conventional financial institutions with the emerging world of fintech. By utilising XRP, the transaction fees can be reduced, and same-day payments can be made, offering tangible advantages, and resolving roadblocks in the current payments system.

On-Demand Liquidity (ODL) uses XRP as a bridge currency, allowing funds to be sent from one currency and instantly converted into another currency on the other side of the transaction.

BTC Markets supports the use of ODL, as it provides liquidity to ease fund movement for our traders. When businesses use XRP for faster and cheaper cross-border payments, this drives volume through the exchange, providing a unique competitive advantage. The ODL integration with BTC Markets enables customers to convert fiat currency into XRP and then back into fiat currency on the other side of the transaction, with minimal transaction fees and settlement times.

The week ahead

March 2nd: US Manufacturing PMI report to be released which provides insight into the health of the manufacturing sector and can affect markets, as it reflects changes in employment, production, and new orders. Also, due out is the Japanese Consumer Confidence report, which is important for gauging consumer sentiment, and can have a significant impact on consumer spending and, ultimately, economic growth. Finally, the Eurozone unemployment and inflation rates will be released which are crucial indicators of the overall health of the Eurozone economy, with unemployment being a lagging indicator of economic performance and inflation being a leading indicator of changes in monetary policy.

March 4th: US Non-Manufacturing PMI data will be released. This report provides information on the state of the services sector, which makes up a significant portion of the US economy. The data can affect markets as it reflects changes in employment, production, and new orders in the services sector. Non-Manufacturing PMI is also used to forecast future economic activity, as the service sector is closely linked to consumer spending and can indicate the overall health of the economy.

March 7th: The Reserve Bank of Australia (RBA) will release its interest rate decision. Australia’s January trade balance, exports, imports, retail sales data and China's trade balance to released. These reports will be closely watched by investors and analysts alike, as they provide valuable insights into the health of the Australian and Chinese economies and their respective monetary policies.

March 8th: Fed Chair Powell testimony to US Congress. This is a highly anticipated event as it provides valuable insights into the future direction of the US economy and monetary policy.

Economic Calendar (tradingeconomics.com)

Market reflections

Australia

Australia's economic growth slowed to 0.4% in the final quarter of 2022, down from 1.9% in Q3, due to the impact of rising interest rates on the property market and consumer spending. The Reserve Bank of Australia raised rates twice in the second half of 2022, contributing to a decline in housing and construction activity, which typically drives economic growth. The report showed that business investment grew 2.2% in Q4, but exports and household spending slowed.

Economists expect growth to continue to be moderate in 2023, with rising interest rates and global supply chain disruptions weighing on the economy. The RBA is expected to continue its gradual rate hike cycle in the coming months, with the official cash rate currently at 1.25%. The bank has also expressed concern about the impact of the coronavirus outbreak on the economy, as well as inflation pressures and wage growth.

USA

US stock futures declined on Wednesday as investors braced for higher US interest rates following a month of losses in major averages. The Dow saw a 4.19% decline in February, turning negative for the year, while the S&P 500 and Nasdaq Composite also experienced drops. These losses followed stronger-than-anticipated US economic data, which suggested the Federal Reserve would need to tighten policy further to control surging inflation.

Investors are now awaiting US manufacturing and construction data, as well as earnings reports from major companies. Wholesale inventories decreased by 0.4% from the previous month in January, the first decline in inventories since July 2020, while the US trade deficit in goods increased to US$91.5 billion in the same month.

State of crypto

The last trading week saw all digital asset majors decline, closing out the week in the red. Bitcoin lost 2.95% in value, Ethereum experienced a 2.29% drop, and XRP closed down 2.17%. At time of writing, Bitcoin is trading at US$23,592, reflecting a 42.60% gain on the year. Similarly, Ethereum is currently trading at US $1,657, a 38.58% gain on the year, and XRP is trading at US $0.3815, a 12.57% gain on the year.

The market capitalisation of Bitcoin witnessed a loss of 0.24% by the end of the week, resulting in a current dominance of 43.86%. The overall crypto market cap has also come off by 2.75% during the last trading week, with the total market capitalisation currently at US$1.04 trillion.

Alt action

Decentraland's 2nd Metaverse Fashion Week

Decentraland (MANA) is set to host its second annual Metaverse Fashion Week (MVFW) next month, featuring global brands showcasing their digital wearables. The event, running from March 28-31 in Decentraland's Luxury District, will see Dolce & Gabbana and Tommy Hilfiger return with new collections, while Coach, Adidas and DKNY will debut their digital wearables on the popular metaverse platform.

This year's focus is on open metaverses and Web3 interoperability, with Decentraland collaborating with digital fashion company UNXD, metaverse platform Spatial and augmented reality firm OVER, to put on the event. Its "Future Heritage" theme emphasises traditional fashion houses taking their first steps into Web3.

As part of the event, brands will host immersive digital experiences on and off the runway. For example, Dolce & Gabbana will showcase works from its Future Reward digital design competition, Tommy Hilfiger will release new wearables daily alongside AI-powered products, DKNY will open its pop-up art gallery and restaurant DKNY.3, and Adidas will feature its first series of digital wearables for holders of the ‘Into the Metaverse’ non-fungible token (NFT) collection.

Decentraland's inaugural Metaverse Fashion Week was held in March 2022, with brands such as Estée Lauder and Forever 21 participating. NFT-native brands and fashion houses teamed up to bring pop-ups, fashion shows, and digital experiences to test their footing in Web3.

Trade MANA now on BTC Markets

The Big 3

What are Bitcoin Ordinals?

Bitcoin ordinals are a type of non-fungible token (NFT) that are unique digital assets issued on the Bitcoin blockchain. They are created by encoding information about the token's ownership and attributes into a Bitcoin transaction output script, which serves as a proof of ownership.

Ordinals have a fixed supply of 210,000, which represents the maximum number of Bitcoin blocks that can be mined, and each ordinal corresponds to a specific block height. They are considered a valuable collectible for Bitcoin enthusiasts and are traded on various marketplaces. With the increasing popularity of NFTs, ordinals have become an exciting way for people to participate in the Bitcoin ecosystem beyond just buying and holding the cryptocurrency.

Trade BTC now on BTC Markets!

Ethereum gas fees are slowly climbing as NFT market rebounds.

The recent surge in NFT trading activity across Ethereum's network appears to be driving a return to form in the platform's fee market. Glassnode, an on-chain analytics firm, has reported that the median price for gas powering Ethereum transactions has risen from roughly 10 to 20 gwei over the past nine months to 38 gwei this month, indicating a rise in network activity.

Gas prices increase with network demand, which in this case is being driven by the growing activity in Ethereum's NFT market. Specifically, the gas used by Ethereum NFT transactions has risen by 97% for two months straight, with much of the activity being attributed to the popularity of the NFT marketplace, Blur.

Other factors driving NFT activity include the launch of new projects by the industry's biggest names. However, Ethereum's network adoption rate remains low, with the recent revival in NFT activity being driven primarily by existing NFT users.

The competition between OpenSea and Blur is also constricting cash available to many NFT projects that relied on secondary royalties for revenue, according to Doodle CEO Julian Holguin in an interview with Decrypt.

Trade ETH now on BTC Markets!

XRP proposes cross-chain bridge to boost network and token utility.

XRP Ledger (XRPL) and Ripple development lab RippleX have proposed a new standard for a cross-chain bridge that would enable interoperability between different networks. The proposed standard would allow tokens from one blockchain to be locked in an account on the XRP Ledger while an equivalent number of tokens is issued on another blockchain.

This potentially could increase the use cases and adoption of the XRP Ledger. The proposal defines how transactions can be made on the XRP Ledger to ensure the movement of tokens between XRP Ledger and associated sidechains and ensures the movement of tokens in a secure and efficient manner.

Trade XRP now on BTC Markets!

Crypto news

Asset tokenisation is shaping up to be crypto’s theme of the year.

Blockchain technology is disrupting traditional financial institutions as more legacy companies are embracing digital assets. Tokenisation, the process of representing ownership and other rights on a blockchain-powered asset, is being adopted rapidly across various blockchain ecosystems. This year, more than five corporations have utilised tokenisation to increase the efficiency of transactions. Bob Ras, co-founder of XRP protocol Sologenic, said that the traditional method of buying, selling, and trading company shares is outdated. These legacy methods involve restrictions such as limited market hours and slow settlement times, making the cost of continuing to rely on them excessive.

Ras suggested tokenising assets like Tesla or Microsoft stock and enabling them to be traded 24/7 on-chain, allowing investors to trade a fraction of the tokenised stock. This would be much cheaper because blockchain can foster transparency and auditability immediately without relying on trusted third parties. Ras predicted that the value of tokenised assets could grow to trillions of dollars over the next few decades.

Several corporations have announced asset tokenisation projects, including Goldman Sachs with its Digital Asset Platform built using a private blockchain stack called Canton. The platform enables the issuance, registration, settlement, and custody of digital assets, and the European Investment Bank collaborated with Goldman Sachs for its first digital bond. Hamilton Lane, a global investment manager, also tokenised some products via the Polygon blockchain, with a minimum investment of $20,000. In February, Hong Kong's government issued its first tokenised green bond worth $100 million, and German manufacturing giant Siemens issued its first €60M digital bond on Polygon. DeFi infrastructure firm Swarm Markets launched tradable, DeFi-compatible stocks and bonds on Polygon this month.

Tokenisation has the potential to significantly improve transparency, auditability, and efficiency, and to grant access to traditional markets to individuals who may not otherwise have such access. Transactions done at scale using tokenisation can make markets far more efficient, said Daniela Barbosa, Executive Director of Hyperledger Foundation.

Crypto funding rounds led by PayPal, Morgan Creek, and a16z.

Investment in privacy, security and decentralised communication technology is increasing, with US$254m being committed to the cryptocurrency ecosystem in the past week, up from US$183m the previous week. According to Blockworks, 25 companies received funding, with a focus on decentralised finance, gaming and blockchain infrastructure firms. Chain Reaction, an Israeli semiconductor and blockchain privacy firm, secured US$70m in a series C funding round led by Morgan Creek Digital.

Here Not There received US$25.5m in series A funding led by Andreessen Horowitz, and Chaos Labs secured US$20m in funding co-led by PayPal and Galaxy Digital.

The investments are important for the development of blockchain technology, allowing individuals to have more control over their data and communications. They will also improve security measures in the blockchain and DeFi space as the ecosystem continues to grow.

Mitsubishi and Fujitsu venture into the metaverse.

A group of Japanese technology, manufacturing, and finance firms, including Fujitsu, Mitsubishi, and Mizuho, are collaborating to create an infrastructure for an open metaverse called RYUGUKOKU, which will expand the “Japan Metaverse Economic Zone.”

Coindesk has reported the project aims to provide corporations with a framework for tapping into Web3 marketing, work reform, and consumer experience initiatives. RYUGUKOKU will serve as a virtual world to connect users to different Web3 services created by companies and government agencies. It will implement "Auto-Learning Avatars," which will provide personalised metaverse experiences, and "Pegasus World Kit," which will allow users to create gamified metaverse experiences.

The platform will also include "Multi-Magic Passport" to facilitate interoperability within the metaverse space. The move comes as Japan aims to integrate Web3 technology into its national agenda. In October, Prime Minister Fumio Kishia said the country would be investing in digital transformation services, including non-fungible tokens (NFTs) and the metaverse. In November, the country's Digital Ministry laid plans to create a decentralised autonomous organisation (DAO) to help government agencies enter Web3.

Regulation roundup

Australian government looks to regulate Web3!

Web3 is a new way of building the internet that uses blockchain technology to create a safer and more transparent online experience. It allows apps to work directly with each other without needing middlemen, such as Google and Meta, giving users more control over their online interactions.

If you are in Web3, make sure your voice is heard and submit your response to the ‘Treasury consultation paper’ today. The industry needs to advocate for transformational policy changes and new laws that will enable everyone to work, bank, game, recreate, trade, and thrive in Web3. The deadline for submission is March 3rd, and the decisions made by policymakers can make or break the future of Web3 in Australia.

BTC Markets updates

Dark mode is coming to the mobile app!

We’re excited to announce that dark mode display theme is coming to the mobile app. The feature will be included in the upcoming release and will be available for download via the App Store for iOS and the Google Play Store for Android.

Supplementary article image

Dark mode uses light text on a dark background, providing a good viewing experience in low-light environments, while also emitting less blue light and using less energy, which can help prolong battery life.

Stay tuned for further updates!

Scam watch!

Beware of scams targeting cryptocurrency users.

ASIC’s has a great resource which outlines the ‘Top-10 best ways to spot a crypto scam’.

According to ASIC’s investigators, the signs of a likely crypto scam could be the following:

  • You receive an offer out of the blue.
  • You see a celebrity advertisement that is a fake.
  • A romantic partner you only know on-line asks for money in crypto.
  • You get pressured into transferring crypto from your current exchange to another website.
  • You’re asked to pay for a financial service with crypto.
  • The app you’re using or directed to isn’t listed on the Google Play Store or Apple Store.
  • You need to pay more to access your money.
  • You are ‘guaranteed’ returns, or free money.
  • Strange tokens appear in your digital wallet.
  • The provider withholds investment earnings ‘for tax purposes.'

To learn more, visit ASIC's website.

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 11:00 AM AEDT, on 02/03/2023


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