14 Aug, 23

Weekly Crypto Market Wrap, 14th August 2023

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Week in Review

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.

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* Index used:

  Bitcoin    EthereumGoldEquities        High Yield Corporate Bonds      CommoditiesTreasury Yields
BTCETHPAXG        S&P 500, ASX 200, VT      HYG  SPGSCIU.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.

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