Market Update 16/06/23

Bitcoin did well to starve off the regulatory woes that dominated headlines last week. Following the release of the latest CPI data, Bitcoin teetered below the $26k mark as investors assessed the possible outcomes of Thursday’s FOMC meeting. Despite leaving rates unchanged, the Fed’s suggestive comments of further hikes were enough to send BTC down 4%, trading below the $25k for the first time since March of this year. In spite of the notable increase in volatility, on-chain indicators portray long-term investor optimism. Whale activity (wallets holding 100 - 10,000 BTC) has seen a significant uptick as Bitcoin dominance reached a 2-year high of 49%. Data by Santiment suggests that whales have accumulated more than 57,578 BTC since April, whilst the BTC supply on exchange has slipped to a 3-year low. Seemingly, these metrics reinforce the narrative of a deep-rooted HODL mentality, which, despite recent turbulence, depict the unphased investor sentiment of recent regulatory and market developments.

Ethereum traded downwards falling by 9.9% (7D) as the Fed’s uncertain outlook brought instability to the markets. Despite the recent price consolidation, the Bank of China’s BOCI subsidiary issued a $28m structured note on the Ethereum blockchain. Working alongside UBS, the tokenisation of the structured product reflects the ongoing work to institutionalise digital assets and simplify its market access, a move also being trialled by interbank messaging system, Swift. These developments follow Ethereum founder, Vitalik Buterin’s recent outline of the network’s roadmap, detailing the need for further scalability, privacy and security. Whilst the network withstood this week’s AWS outage, the need for decentralisation across all tenets of the technology’s function was once again made clear. On the ecosystem front, stablecoin issuer tether has successfully converted $750m of Tron-based USDT to the Ethereum network. This comes after more than $1bn in USDT was minted on the network as part of the company’s inventory replenishment, cited to be used during the next period of issuance requests and chain swaps.

Uniswap Labs has unveiled its plans for its v4 DEX, asking community members for feedback and collaboration prior to release. Launching Uniswap v3 back in 2021, the AMM-pioneering network of DeFi apps has processed more than $1tn in transactions since its inception in 2018. As the largest decentralised exchange, Uniswap has underlined its commitment to decentralised governance seeking community input on its proposed upgrades. Included in its v4 outline, the DEX aims to create newly structured liquidity pools, thereby expanding the possibilities offered to both traders and liquidity providers (LPs). Via the introduction of hooks, Uniswap is revolutionising the way in which its pools, swaps, fees and LPs interact. The new levels of customisation afforded by hook-passing AMMs will result in endless opportunities for developers, with Uniswap highlighting several ongoing experimental features such as; time-weighted average market makers (TWAMMs), dynamic fee models (volatility based), on-chain limit orders, customised oracles, internalised MEV profit distributions, and auto compounding LP fees into LP positions. Coming soon after the SEC’s charges against the leading Binance and Coinbase exchanges, Uniswap activity began to spike, with whale transactions (> $100,000 in value) reaching a 3-month high.

BNB made a small recovery after falling to a 6-month low as a result of the SEC’s regulatory clampdown against the largest exchange by volume. Amidst the ongoing legal battle, Binance announced that it was removing 10 of its native BNB trading pairs, citing operational improvements as the cause. Meanwhile, progress in negotiations between the SEC and Binance.US have translated into a potential agreement that will see the exchange avoid having all its assets frozen, thereby circumventing the market disruption of such an event. In spite of these challenges, BNB futures have seen a flurry of interest, reaching a 5-month high. Indeed, Binance appears to be optimistic about its regulatory outcome, stressing that Binance.US exists as a separate entity to its global offering, with worldwide users not going to be impacted by the challenges facing its U.S. operations. 

Comment: Markets reacted bearishly to the Fed’s hawkish comments, despite signs of cooling inflation. On the back of the SEC’s securities classification of several crypto assets, the Solana foundation voiced its disagreement with the body’s characterisation, welcoming the engagement of policymakers for constructive regulatory development. Coins cited in the lawsuits (including $SOL, $ADA, $ATOM, and $BNB) fared disproportionately to the already  downwards trending market movement. All else considered, just another week in the crypto space.

Macro & Markets 🏦💱

The Week Behind: 🗓️⬅️

13/06: U.S CPI rose 0.1% in May (4% annualised), the lowest in 2-years
14/06: The Fed leaves interest rates unchanged but alluded to possible further hikes
14/06: UK GDP rose 0.2% (April) as a result of a rebound in consumer spending
15/06: U.S. retail sales increased 0.3% (May) despite continued inflationary pressures
15/06: ECB raised deposit rates to 3.5%, its highest in 22-years

The Week Ahead: 🗓️➡️


19/06: CNY PBoC Loan Prime Rate
21/06: UK CPI (YoY & MoM)
22/06: UK BoE Interest Rate Decision (Jun)
22/06: U.S. Initial Jobless Claims
22/06: U.S. Existing Home Sales (May)
23/06: UK Retail Sales (MoM) (May)

23/06: GER Manufacturing PMI (Jun)

Valour News 🎆🌟

Valour announced the launch of its physically backed Bitcoin Carbon Neutral Product (ETP) on the Börse Frankfurt (Xetra) exchange. The 1Valour Bitcoin Physical Carbon Neutral ETP (ISIN:GB00BQ991Q22) offers investors exposure to Bitcoin and presents a trusted investment method that benefits the environment and aligns with ESG goals through the funding of certified carbon removal and offset initiatives. Valour has partnered with leading climate action infrastructure provider Patch in the structuring of the ETP, ensuring all carbon emissions linked to the investment will be targeted to achieve a carbon neutral output. As the 13th ETP offered by Valour and the first product on its physically backed platform, Valour anticipates the launch of further innovative products, offering investors trusted access to decentralised finance and Web3.

For more information, please visit: https://valour.com/products/valour-bitcoin-carbon-neutral

Fear & Greed Index 😨🤑

The multifactorial index looks at investor sentiment across Bitcoin and other large cap crypto markets, covering volatility, volume, momentum, dominance, and social trends. A score closer to 0 represents ‘Extreme Fear’ whilst a score closer to 100 is linked to ‘Extreme Greed’. Still within neutral territory, the index fell 3 points, down to 47. Despite leaving interest rates unchanged, the Fed’s anticipated further rate hikes saw increased levels of volatility across the crypto markets, causing a slight blip in the short-term investor sentiment.

CBOE VIX Index 📉🦘

The CBOE VIX Index measures the implied volatility of S&P 500 Index options, traditionally following an inverse relationship. Resultant of Wednesday’s unchanged interest rate policy, the VIX fell to its week’s low of 13.89. Now up 5.5% (5D), markets traded flat upon the FOMC’s indication of further rate hikes this year, with volatility increasing ahead of yesterday’s retail sales and jobless claims data.


BTC/DXY Correlation 💵📈

The DXY provides an indication of the value of USD relative to a basket of U.S trade partner currencies. Keeping the benchmark federal fund rate unchanged (5.00% - 5.25%), the DXY dropped below the 103.00 mark, having reached a monthly high of 103.38 on Wednesday. With the ECB raising rates for an eighth consecutive time, the greenback slid lower whilst BTC markets made a 2.8% recovery. Recent across the board volatility has seen Bitcoin’s correlation(s) with TradFi indicators change. At close this week, BTC/DXY 1Y correlation stood at -0.1, with its 6M correlation at -0.80.

Market Dominance 📊👑

Bitcoin dominance: 47.9% (+1.2%)
Ethereum dominance: 19.30% (-0.8%)

Bitcoin EU Crypto ETP dominance: 54.5% (+1.3%)
Ethereum EU Crypto ETP dominance: 28.4% (-0.6%) 


Risers & Fallers 📈🚀

⬆️ $KuCoin Token ($KCS) led the gains this week, rising 6% to $7.16. Whilst markets have predominantly kept in the red, the native token of the KuCoin exchange saw an 18% (24h) rally. Having fallen to a 1Y low last week amidst the SEC’s regulatory clampdown, $KCS has made a strong recovery, fuelled by the upcoming Spotlight IMVU token sale due to take place on the KuCoin platform. 

⬇️EOS ($EOS) has crashed more than 29% (7D) trading down at $0.63. The open-source blockchain platform has been subject to community criticism following the SEC’s regulatory purge. Launched via ICO in 2017, EOS raised over $4bn for development before settling with the SEC for $24m in 2019. Reaching an all-time high of $22.71 (2018), investors have cited disappointment with the project’s development and roadmap delivery.

Upcoming Conferences

23/06/23 - 25/06/23: ETHGlobal Hackathon, Toronto,
25/06/23 - 29/06/23: Solana Hacker House, Tel Aviv

That’s all for this week! 

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