7 Aug, 23

Weekly Crypto Market Wrap, 7th August 2023

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Week in Review

  • Navigating the next 12 months in Bitcoin – Zerocap presents three strategies. (Article) (Fact Sheets) *This offer is available for wholesale investors only.
  • SEC asked Coinbase to halt trading of every crypto but Bitcoin before suing – Exchange market share spiked 61% despite SEC’s lawsuit.
  • Tether (USDT)’s reserves hit record $86.5 billion in second quarter.
  • Binance denies WSJ report of $90 billion in crypto trades in China – US prosecutors concerned current charges could bring a run on the exchange.
  • Curve (CRV) hacker behind $62 million exploit begins returning funds.
  • Former Twitter X now seeks to embed trading platform into its social media.
  • Bankrupt FTX releases its restructuring plans, including an offshore reboot.
  • SEC files complaint against HEX (HEX) founder Richard Heart for allegedly offering unregistered securities.
  • Tether unveils mining software “Tether BTC” to boost capacity and efficiency.
  • OpenAI Sam Altman’s crypto project Worldcoin suspended in Kenya, as government raises concerns for citizens’ safety regarding eye-scanning orb. 
  • Meta to launch AI chatbots with different personalities, including Abraham Lincoln’s, in new effort to retain user base – Goldman Sachs believes AI boom will beat electricity and PCs by 2025.
  • Michael Saylor’s MicroStrategy in profit again, now holding $4.4 billion in BTC.
  • Bank of England raises interest rates by 25 bps, no longer sees recession.
  • US job openings hit two-year low, as labour market still tight; JOLTS.

Winners & Losers

Data source: TradingView

Market Highlights

  • The price of Bitcoin remained relatively stable over the past week, closing just under $29,200, while the broader crypto market pared some of the gains from last week. Ripple’s XRP led the decline among large-cap digital assets, dropping nearly 5% to trade at its lowest price since the court ruling last month. Major cryptocurrencies, aside from the drama surrounding Curve Finance, saw minimal news and price movement. We’re expecting sideways trends in the crypto market for the foreseeable future until the first batch of BTC ETF rulings are held in early September.
  • Last week, the SPX recorded its largest weekly decline since March, falling by 2.27%, while the DXY continued its upward movement, rising 0.3%. Volatility has been increasing in long-dated bonds, with the US 30-Year Treasury bonds falling 3.32%. Inflationary concerns have begun to resurface in the market, driven by strong US hourly earnings data and a recent rebound in oil and energy prices. This week, the market’s attention will be focused on inflation data due at the week’s end, with the consumer price index (CPI) and producer price index (PPI) set to be released on Thursday and Friday, respectively. The market is anticipating a rise in CPI to 3.3% from 3%. As the market begins to respond to inflationary pressures, a higher-than-expected print could likely push risk assets lower and bond yields higher.

Key Data Releases – Last Week
EU Inflation Rate – Actual: 5.3%, Previous: 5.5%
RBA IR Decision – Actual 4.1%, Previous: 4.1%
BoE IR Decision – Actual 5.25%, Previous: 5%
US NFP – Actual 187k, Previous: 185k

Key Data Releases – This Week
Thurs | US CPI – Forecast: 4.8%, Previous: 4.8%
Fri | GB GDP – Forecast: 0.1%, Previous: -0.1%
Fri | US PPI – Forecast: 0.2%, Previous: 0.1%

  • The race for the first approved Ethereum ETF has begun, with six entities filing applications with the SEC to launch ETH futures-based ETFs, following the surge of interest in bitcoin spot ETFs.  If the SEC does not deny these applications, the Ether ETFs will launch 75 days from the filing date, the first set to be on October 12. Historically, the SEC has never approved ETF applications tracking Ethereum futures, with a handful being denied in prior years. The wave of interest in crypto-related ETFs was sparked by big names like BlackRock filing for their spot BTC ETF last month, with Grayscale arguing that the SEC should approve all spot bitcoin ETF applications simultaneously to ensure equal treatment. The positive impacts to Ethereum may be equally beneficial, although there are a few hurdles to overcome before we see a spot ETF, particularly with the SEC’s treatment of ETH as a potential security. 
  • The Implied Volatility (IV) of Bitcoin continues to drop, reflecting the absence of price catalysts that are putting consistent selling pressure on IV. The 180-day IV has reached its lowest level since January 2017, and IV still seems expensive for near-term expiries, as volatility continues to materialise lower than IV in previous weeks. With the ETF rulings not expected until the beginning of September, there are few catalysts to spur near-term volatility buying. However, longer-dated maturities, especially those extending beyond the next Bitcoin halving in June of the following year, appear to offer more value.

Data source: Velo Data

  • Following the recent exploit at Curve Finance that led to the theft of 7 million CRV tokens and $14 million in wrapped ether (WETH), the decentralised exchange’s response and its subsequent impact on the DeFi sector have come into focus. The immediate fallout was a significant increase in CRV’s open interest and heavy shorting on centralised exchanges, with on-chain withdrawals from Aave V2 totalling $500 million within hours. Michael Egorov, Curve’s founder, managed to prevent the liquidation of his CRV-backed loans by selling millions of CRV in over-the-counter transactions and taking other strategic measures to manage his outstanding loans. However, the situation remains precarious, with his liquidation price now lowered to 0.276 on Aave. The complex interplay between various parties and market dynamics illustrates the fragility and interconnected risks within the DeFi ecosystem.

Data source: DeFi Llama

What to Watch

  • China’s CPI report, on Tuesday.
  • US’ CPI and unemployment claims, on Thursday.
  • UK’s CPI and US’ preliminary consumer sentiment, on Friday.

Insights

In the world of Bitcoin, six to twelve months can bring about significant change. Capture the next 12 months of Bitcoin’s potential through three tailored investment strategies – whether you’re a conservative, optimistic, or aggressive investor. Learn how upcoming events like Bitcoin’s halving, potential US spot ETFs, changes in Central Bank policies, and the Ripple-SEC case could affect Bitcoin’s price and your portfolio.

*This offer is available for wholesale investors only.

Research Lab

Immerse yourself in the world of virtual machines and Turing completeness with Beau Chaseling, Innovation Analyst at Zerocap’s Research Lab. Learn about the profound influence of these concepts on blockchain technology and modern computation. From the Ethereum Virtual Machine’s role in executing smart contracts to the theoretical framework of Turing machines, this article illuminates the intricate workings of these fascinating subjects.

* Index used:

  Bitcoin    EthereumGoldEquities        High Yield Corporate Bonds      CommoditiesTreasury Yields
BTCETHPAXG        S&P 500, ASX 200, VT      HYG  SPGSCIU.S. 10Y

FAQs

What were the major events in the crypto market during the week of 7th August 2023?

The week saw various significant events such as Coinbase being asked by the SEC to halt trading of every crypto but Bitcoin, Tether’s reserves hitting a record $86.5 billion, Binance denying a report of $90 billion in crypto trades in China, and Curve’s hacker returning $62 million in exploited funds. Additionally, there were developments related to bankrupt FTX’s restructuring plans, SEC’s complaint against HEX founder, and Tether unveiling mining software.

How did the major cryptocurrencies perform, and what are the expectations for the near future?

Bitcoin’s price remained relatively stable, closing just under $29,200, while Ripple’s XRP led the decline among large-cap digital assets, dropping nearly 5%. The broader crypto market saw minimal news and price movement, and sideways trends are expected until the first batch of BTC ETF rulings in early September.

What are the key data releases and market highlights for the week?

The market highlights include the price stability of Bitcoin, the decline in Ripple’s XRP, and the anticipation of BTC ETF rulings. Key data releases included EU Inflation Rate, RBA IR Decision, BoE IR Decision, and US NFP. The upcoming week will focus on inflation data, with the consumer price index (CPI) and producer price index (PPI) set to be released.

What are the insights and research provided by Zerocap for the week?

Zerocap provided insights on navigating the next 12 months in Bitcoin through three tailored strategies, focusing on events like Bitcoin’s halving, potential US spot ETFs, and changes in Central Bank policies. In the research lab, an article on virtual machines, Turing completeness, and the capacity for infinite computation was featured.

What are the key developments to watch in the coming week?

Investors should watch for China’s CPI report on Tuesday, the US’ CPI and unemployment claims on Thursday, and the UK’s CPI and US’ preliminary consumer sentiment on Friday. Additionally, the race for the first approved Ethereum ETF and the recent exploit at Curve Finance are topics of interest in the crypto community.

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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.

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