Weekly Crypto Market Wrap, 14th August 2023

Download the PDF

Zerocap provides digital asset liquidity and digital asset custodial services to forward-thinking investors and institutions globally. For frictionless access to digital assets with industry-leading security, contact our team at [email protected] or visit our website www.zerocap.com

Week in Review

• PayPal launches stablecoin PayPal USD (PYUSD) aiming for fast settlements.
• US judge orders FTX founder and former CEO Sam BankmanFried to jail following witness tampering, revokes bail.
• Huobi exchange sees $105 million outflows amidst rumors of insolvency.
• Binance drops majority of USDC stablecoin reserves to buy BTC and ETH.
• DREX, Brazilian CBDC gets official name and logo – Meanwhile, Congress moves to submit higher taxes onto cryptocurrencies. 
• Maple Finance (MPL) gets SEC exemption for on-chain treasury pools.
• BlackRock insiders claim Bitcoin ETF is likely 6 months away.
• Australian banks Westpac and CBA use digital australian dollars to trade and pay for real certificates of deposit.
• Curve Finance (CRV) vows to reimburse users following $62 million hack.
• White House launches cybersecurity challenge with $20 million in rewards.
• Daily trades of crypto bots on Telegram hit a monthly record of $10 million.
• China stocks fall, consumer prices drop for the first time in more than 2 years. 
• US inflation rises less than expected while unemployment remains low, putting economy at “unchartered waters.”
• US consumer sentiment dips in August, while inflation expectations improve.

Winners & Losers

Data source: TradingView

Market Highlights

• Bitcoin (BTC)’s price action remained relatively constrained throughout the week, seeing new weekly support established around 29,350 BTC/USD. Traders appear to be airing on the side of caution, unsure as to the directionality and magnitude of a potential breakout. BTC trading volumes dipped to one of their lowest points since November 2020 – corresponding with BTC’s 30d volatility plummeting to a near 5-year low. Despite its reduced trading volume, BTC closed the week up marginally at +0.84%, outperforming Ethereum’s +0.64% Wow gain. 

• The SPX has continued its move downward recording a -0.31% loss on the back of higher-than-expected PPI data. The US dollar strengthened amid rising inflationary concerns, while many major currencies experienced significant falls. We anticipate that the markets will likely continue to shift into a risk-off stance as inflationary pressures exert further influence on both the stock and bond markets. US retail sales data will be released this week, along with Consumer Price Index (CPI) figures for the EU and England.

Key Data Releases – Last Week
Thurs | US CPI – Actual: 4.7, Forecast: 4.8%
Fri | GB GDP – Actual: 0.4%, Forecast: 0.1%
Fri | US PPI – Actual: 0.3%, Forecast: 0.2%

Key Data Releases – This Week
Tues | GB Unemployment – Forecast: 4%, Previous: 4%
Tues | GB Inflation Rate – Forecast: 6.9%, Previous: 7.9%
Fri | JPY Inflation Rate – Forecast: 3.4%, Previous: 3.3%

• PayPal announced its entrance into the cryptocurrency market with the introduction of PayPal USD (PYUSD), a U.S. dollar-pegged stablecoin, to be issued by Paxos Trust. The ERC-20 token, fully backed by U.S. dollar deposits and similar cash equivalents, will be made available to PayPal’s U.S. users and is the first stablecoin issued by a major financial firm. Users will have the ability to transfer, use, and convert PYUSD within PayPal and supported external digital wallets. To alleviate concerns about unbacked tokens, PayPal committed to providing monthly reserve reports and third-party attestation beginning in September 2023.
• Bitstamp, one of the longest-running crypto exchanges, will suspend the trading of seven tokens in the U.S. from August 29. The affected tokens, including Polygon (MATIC) and Solana (SOL), have been labelled as unregistered securities by the SEC. While Bitstamp did not explicitly state the reason for the halt, the recent SEC lawsuits against various firms for these tokens cast doubt over their tradability across venues. Bitstamp’s move aligns with a trend among trading platforms like Revolut, eToro, Robinhood, and Binance, which have also recently halted or adjusted trading conditions of these tokens due to regulatory concerns. The cases against these tokens are yet to be formally filed, with the XRP ruling against the SEC still serving as the ecosystem’s barometer on what to expect from the SEC. 

• 80.5 million SAND (equivalent to $32.5 million USD) from ‘The Sandbox: Genesis’ wallet was transferred to Binance, OKX, and Gemini on Friday, with an additional 333 million SAND set to unlock on the 14th of August. These steep unlocks, particularly in SAND’s vesting schedule, often lead to speculative positioning in the weeks leading up to and occasionally after the event. The open interest in the SAND perpetual contract on Binance has increased by 50% WoW, and the funding rates across the major derivatives venues have flipped to negative, sitting at an annualised rate of -50%. While the bias is understandably towards the short side, being late to short in this scenario may result in getting caught offside when these initial positions start to unwind.

Data source: TokenUnlocks

What to Watch 

• Australia’s monetary policy and meeting minutes, on Monday.
• US retail sales report and manufacturing index, on Tuesday.
• FOMC meeting minutes, on Wednesday.
• US unemployment claims, on Thursday.

Research Lab

• Blockchain’s Evolution From Individual Servers to a Shared Cloud – Celestia:

Join Zerocap Innovation Lead Nathan Lenga in understanding the future of blockchain technology, using Celestia Labs as a reference. From the congestion problem to Celestia’s innovative approach to data availability and consensus, this Zerocap Research Lab piece offers a fresh perspective on the evolution from individual servers to a shared cloud.

* Index used:

Bitcoin	Ethereum	Gold	Equities	High Yield Corporate Bonds	Commodities	Treasury Yields
BTC	ETH	PAXG	S&P 500, ASX 200, VT	HYG	SPGSCI	U.S. 10Y

FAQs

What is PayPal’s new stablecoin, and how will it work?

PayPal has launched a U.S. dollar-pegged stablecoin called PayPal USD (PYUSD). Issued by Paxos Trust, PYUSD is an ERC-20 token fully backed by U.S. dollar deposits and similar cash equivalents. It will be available to PayPal’s U.S. users, allowing them to transfer, use, and convert PYUSD within PayPal and supported external digital wallets.

What significant events occurred in the crypto market during the week?

Some highlights include PayPal launching PYUSD, FTX founder Sam Bankman-Fried being ordered to jail, Huobi exchange seeing $105 million outflows, Binance using USDC reserves to buy BTC and ETH, and Curve Finance vowing to reimburse users following a $62 million hack.

How did Bitcoin and Ethereum perform during the week?

Bitcoin’s price action remained constrained, with new weekly support around 29,350 BTC/USD. BTC closed the week up marginally at +0.84%, slightly outperforming Ethereum’s +0.64% week-over-week gain.

What are some upcoming key data releases and events to watch in the financial market?

Some key events to watch include Australia’s monetary policy and meeting minutes, US retail sales report and manufacturing index, FOMC meeting minutes, and US unemployment claims. Key data releases include GB Unemployment, GB Inflation Rate, and JPY Inflation Rate.

What actions did Bitstamp take regarding certain tokens, and why?

Bitstamp will suspend the trading of seven tokens, including Polygon (MATIC) and Solana (SOL), in the U.S. from August 29. These tokens have been labeled as unregistered securities by the SEC, and Bitstamp’s move aligns with recent regulatory concerns and actions by other trading platforms.

DISCLAIMER

Zerocap Pty Ltd carries out regulated and unregulated activities.

Spot crypto-asset services and products offered by Zerocap are not regulated by ASIC. Zerocap Pty Ltd is registered with AUSTRAC as a DCE (digital currency exchange) service provider (DCE100635539-001).

Regulated services and products include structured products (derivatives) and funds (managed investment schemes) are available to Wholesale Clients only as per Sections 761GA and 708(10) of the Corporations Act 2001 (Cth) (Sophisticated/Wholesale Client). To serve these products, Zerocap Pty Ltd is a Corporate Authorised Representative (CAR: 001289130) of AFSL 340799

This material is intended solely for the information of the particular person to whom it was provided by Zerocap and should not be relied upon by any other person. The information contained in this material is general in nature and does not constitute advice, take into account financial objectives or situation of an investor; nor a recommendation to deal. . Any recipients of this material acknowledge and agree that they must conduct and have conducted their own due diligence investigation and have not relied upon any representations of Zerocap, its officers, employees, representatives or associates. Zerocap has not independently verified the information contained in this material. Zerocap assumes no responsibility for updating any information, views or opinions contained in this material or for correcting any error or omission which may become apparent after the material has been issued. Zerocap does not give any warranty as to the accuracy, reliability or completeness of advice or information which is contained in this material. Except insofar as liability under any statute cannot be excluded, Zerocap and its officers, employees, representatives or associates do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this material or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this material or any other person. This is a private communication and was not intended for public circulation or publication or for the use of any third party. This material must not be distributed or released in the United States. It may only be provided to persons who are outside the United States and are not acting for the account or benefit of, “US Persons” in connection with transactions that would be “offshore transactions” (as such terms are defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)). This material does not, and is not intended to, constitute an offer or invitation in the United States, or in any other place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or invitation. If you are not the intended recipient of this material, please notify Zerocap immediately and destroy all copies of this material, whether held in electronic or printed form or otherwise.

Disclosure of Interest: Zerocap, its officers, employees, representatives and associates within the meaning of Chapter 7 of the Corporations Act may receive commissions and management fees from transactions involving securities referred to in this material (which its representatives may directly share) and may from time to time hold interests in the assets referred to in this material.  Investors should consider this material as only a single factor in making their investment decision.

Past performance is not indicative of future performance.