Market Update 25/08/23

Bitcoin briefly bounced to the mid 26k range following another tumultuous week in the crypto markets. Having fallen to June lows after last week’s series of liquidations, BTC rose some 2.1% to make up lost ground. The recent price activity has seen the 30D BTC/USD volatility rise from 0.64% to 1.52% after prolonged periods of stability. Notably, this has resulted in the largest YTD change in the short-term holder cost basis, with more than 83% falling into the unrealised loss territory (Glassnode). Seemingly, Bitcoin’s prevailing lack of market liquidity has resulted in its inability to break away from the downwards selling pressure caused by that very lack of liquidity. Indeed, BTC’s RSI signifies that the asset is largely in the oversold category, with daily readings reaching 2020 lows. Meanwhile, Bitcoin mining difficulty continues to rise, reaching an unparalleled high of 56.62tn hashes despite declining miner profitability. Coupled with recent on-chain activity in which a single entity has amassed > 118,000 BTC ($3bn) to become the 3rd largest BTC holder, investors are hopeful for a trend reversal amidst growing institutional interest as the spot Bitcoin ETF race continues. At the week's close, BTC was trading at $26.1k, down 0.84% (7D).

Ethereum found respite in the $1.6k range after last week’s Bitcoin-led downtrend. Underpinned by regulatory dynamics, European-based Bitstamp announced its decision to halt its Ethereum staking services for its U.S. customers. Despite a recent increase in similar regulatory-driven decisions, including by the likes of the Kraken exchange, on-chain indicators point towards increasing interest across the network. According to data by CryptoQuant, Ethereum’s total stake has risen 5.7% month-on-month, reaching a total of 28m ETH. Meanwhile, competition in the Ethereum futures ETF space continues to intensify with several new issuers filing for single ETH and hybrid BTC/ETH futures exchange traded funds. This comes despite recent market apprehension as reflected by a rise in short positions. Even with ETH whale activity on the rise, the divergence in market sentiment has resulted in Ethereum’s open interest falling to a 13-month low. On the ecosystem front, Ethereum’s Layer-2 networks have seen rampant growth, with the combined throughput of the scaling solutions outperforming Ethereum’s TPS by 400%. Reaching an average of 52.45 transactions per second (1Y), the evolving L2 landscape has seen combined TVL rise to $9.6bn, bringing reduced fees and greater speed to the smart contracts blockchain.
At the week's close, ETH was trading at $1.65k, down 1.48% (7D).

Solana celebrated several notable ecosystem developments after a troublesome few months. In spite of dwindling NFT sales since the start of the year, Solana managed to overtake Polygon, becoming the second largest blockchain for NFTs. Meanwhile, native payment protocol, Solana Pay, announced its integration with eCommerce giant Shopify to bring USDC payments to the platform. Utilising Solana’s blockchain, users will be able to settle payments with merchants using the native USDC-SPL stablecoin. In addition to facilitating immediate settlement, the partnership will enable merchants to deploy the offering as a gateway for Web3 enabled experiences, including token-gated offers and cross border payments. This development comes as technology gateway architects Membrane Finance announced the launch of the first Euro stablecoin on Solana. Expanding its MiCA compliant EUROe to the network, the native 1:1 digital Euro offering will bring a myriad of new use cases to the Solana network, including FX opportunities, Euro-denominated debit payments and blockchain-native value storage offerings. At the week's close, SOL was trading at $20.7, down 5.45% (7D).

BNB continues to navigate the effects of increasing levels of scrutiny and turbulence faced by the Binance exchange. Sliding to a 1Y low, BNB reacted to reports of the exchange’s role in facilitating cross-border transfers for Russian users despite ongoing international sanctions. Coupled with an accusation of the exchange selling its BTC reserves to support the price of its native token, BNB slid down to June 2022’s low of $204. Having been the target of several SEC actions this year, the exchange was forced to suspend USD deposits on its Binance.US platform after losing support from its banking partners. Following its partnership announcement with MoonPay earlier this week, U.S-based users are now able to benefit from an alternative USD on-ramps, easily accessing the platform’s recently announced USDT base asset. Notwithstanding these regulatory hurdles, Binance remains amongst the largest daily spot exchanges, with daily trading volumes of > $6n (24h). At the week’s close, BNB was trading at $216.4, down 0.81% (7D).

Macro & Markets 🏦💱

The Week Behind: 🗓️⬅️

21/08: U.S. bonds break 16-year highs as 10Y yields reached 4.35%

22/08: S&P 500 falls on Standard & Poor’s U.S. banking downgrade

24/08: Markets trail ahead of Fed’s Jackson Hole conference 


The Week Ahead: 🗓️➡️

29/08: U.S. CB Consumer Confidence (Aug)

29/08: U.S. JOLTs Job Openings (Jul)
30/08: GER CPI (MoM) (Aug)

30/08: U.S. GDP (QoQ) (Q2)

30/08: CNY Manufacturing PMI (Aug)
31/08: EUR CPI (YoY) (Aug)
31/08: U.S. Core PCE Price Index (MoM & YoY) (Jul)
31/08: U.S. Initial Jobless Claims

01/09: U.S. Unemployment Rate (Aug)
01/09: U.S. Nonfarm Payrolls (Aug)

Valour News 🎆🌟

Valour announced the launch of its physically backed Ethereum Staking ETP on the Börse Frankfurt (Xetra) exchange. The 1Valour Ethereum (ETH) Physical Staking ETP (ISIN:GB00BRBMZ190) provides investors with a simplified gateway to Ethereum staking while benefiting from robust security enhancements. With a fixed yield, undefined expiry and a 1.49% management fee, investors have the potential to earn passive returns for their network participation, sidestepping the technical difficulties involved with staking and actively contributing towards the continuously evolving DeFi landscape. Partnering with VQF registered Copper Markets (Switzerland) AG for custody, and leading infrastructure platform Blockdaemon for staking services, Valour guarantees its investors with paramount security, ensuring a consistently collateralised, non-custodial staking environment, maximising Ethereum exposure in the most accessible and safeguarded manner.

For more information, please visit: https://valour.com/products/valour-ethereum-staking

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’. Closing the week at 39, investors continue to show concern after last week’s liquidations. Still within the ‘Fear’ category, the gauge is up 2 points from last week, down 12 from last month’s ‘Neutral’ reading.

CBOE VIX Index 📉🦘

The CBOE VIX Index measures the implied volatility of S&P 500 Index options, traditionally following an inverse relationship. After a turbulent week led by several notable pullbacks, the VIX ended its losing streak on Thursday ahead of the Fed’s Jackson Hole conference. With both the S&P and Nasdaq down 1.35% and 1.87% (respectively), investors remain cautious of worsening macroeconomic pressures, with last year’s address leading to a 2.3% market correction. Ahead of trading today, the VIX stood at 17.05, up 7.2%. 


BTC/DXY Correlation 💵📈

The DXY provides an indication of the value of USD relative to a basket of U.S. trade partner currencies. Rising to an 11-week high, the DXY was spurred by anticipation of hawkish Fed commentary at Friday’s Jackson Hole Symposium. Coupled with recent strong U.S. employment data, the USD rose against its partner currencies ending the week at 104.08, with the 1Y BTC/DXY correlation at -0.22.


Market Dominance 📊👑

Bitcoin dominance: 48.2% (-0.2%)
Ethereum dominance: 19.0% (-0.1%)

Bitcoin EU Crypto ETP dominance: 55.9% (-1.0%)
Ethereum EU Crypto ETP dominance: 26.6% (+0.5%)

Risers & Fallers 📈🚀

⬆️ Sui ($SUI) rose more than 14.2% (7D), trading at $0.54. The L1 smart contracts platform aiming to redefine asset ownership has seen a notable uptick in trading volume, outperforming many of the larger digital assets. The spin-off from Meta’s Diem payment system launched earlier this year via ICO, with 595.4m tokens sold at a price of $0.1/SUI.

⬇️ Pepe ($PEPE) led the losses this week, tumbling 19.1%. The widely popular memecoin dropped amidst fears of a rug pull after developers sent more than 16tn tokens (circa 3.8% of total supply) to several exchanges. Together with a modification over the number of signatures required to transfer funds from the team’s multsig wallet, concerns have led to a substantial sell off. 

Upcoming Conferences

28/08/23 - 30/08/23: Stanford Blockchain Conference, California

30/08/23 - 03/09/23: Solana Hacker House, Berlin

That’s all for this week! 

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