After a shaky first quarter, Bitcoin hit a new high for the year on March 29 around AU$65.6K. Glassnode reports that over the past week a net US$1.5 billion (AU$2B) worth of Bitcoin and US$1.7B (AU$2.25B) of Ethereum departed exchanges, while a net US$451.8M (AU$599M) of USDT flowed in. The Bitcoin price however finished the week down 5% at AU$61,650 (US$46.5K), while Ethereum increased 1% to AU$4,650 (US$3.5K). Cardano was down 2%, XRP lost 8% and Dogecoin also finished flat despite a spike in the aftermath of Elon Musk buying a slice of Twitter. The Crypto Fear and Greed Index is at 52, or Neutral.
From the IR OTC Desk
Offshore sentiment remains the dominant driver of Australian markets this week. With a federal election announcement date drawing near (to be held on/before the 21st of May), sentiment from the Reserve Bank of Australia (RBA) continues to be one of ‘patience’. Of interest, the RBA Board meeting today will highlight their current view on the Russia/Ukraine conflict (now of lesser concern for global equities markets), the AUD relative to Australia’s core trading partners, and the pathway of inflation and monetary policy post the election. Specifically relating to AUD, the RBA has historically been highly sensitive to an appreciating currency, particularly in a world where global central banks have an active undertaking of quantitative easing. With the emergence of more structured inflation, and the beginning of the tightening cycles for the US Federal Reserve, Bank of England and Reserve Bank of New Zealand et al., today’s meeting feels more critical to the performance of the currency than usual and whether a sustained move above US75c holds.
In the US, we highlighted the importance of two specific data events last week. Firstly, the core personal consumption expenditure price index data (Core PCE) YoY (Feb) which printed at 5.4% relative to a 5.5% market expectation, and the US unemployment rate (Mar) which lowered to 3.6% from 3.8% previous. In isolation, these two data points continue to highlight an incredibly strong US economy, as market pricing remains unwavering that the FOMC will consider a 50bp increase to the federal funds rate at their upcoming meeting (5th of May).
On the OTC desk, the majors appear to have taken a breather this week. ETH/BTC has resumed its upward trajectory to trade above 0.075 and eyeing the next key level of 0.078 – as ETH momentum from the pending merge continues to be absorbed positively by the crypto community. This should maintain the positive sentiment in alts, and in particular layer 1s. We have seen strong interest in BTC, ETH, USDT, USDC, EOS and LTC across the desk: with flows in the majors appearing less directional than the consistent buying of staking coins – a consistent theme for a number of weeks now. Keep an eye on the 200dma, for BTC/USD around USD 48,300 and ETH/USD at USD 3,490.
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EU goes rogue
The crypto community has hit back at plans by the EU to block ‘unhosted wallets‘. An EU finance committee this week voted to approve a proposal to require exchanges to KYC private wallets or block them, and to report any transaction worth more than 1,000 euros. A big lobbying effort will now commence getting legislators to reverse the plans before they are finalised. Ledger CEO Pascal Gauthier called the plans: “a massive surveillance regime over Europe‘s financial landscape.”
The Merge and The Price
Ethereum’s transition to Proof of Stake (the Merge) is expected mid-year and former BitMEX CEO Arthur Hayes has crunched the numbers on the supply becoming deflationary and ETH2 stakers earning up to 11.5% annually. He wrote a short novel on the topic, the upshot of which is he thinks ETH “will be trading north of $10,000” (AU$13,250) by year’s end and he’s now put 75% of his portfolio into ETH. Former Messari analyst Qiao Wang argued the Merge will not be a ‘buy the rumor sell the news” because institutions will only start buying afterwards given the “career risk” before in case it fails. “I expect ETH to continue to outperform months after the merge,” he wrote.
IR lists Decentraland (MANA)
Trading in Decentraland (MANA) has just gone live on Independent Reserve. The currency is the native token of the metaverse platform and facilitates the purchases of goods and services within Decentraland. We have an introductory trade fee of 0.2% for the first two weeks, so don’t miss out!
Greenpeace takes aim at Bitcoin
Ripple co-founder Chris Larsen has teamed up with Greenpeace for a “change the code, not the climate” campaign, in an attempt to achieve the impossible and get Bitcoin to embrace Proof of Stake. “If only 30 people — the key miners, exchanges and core developers who build and contribute to Bitcoin’s code — agreed to reinvent proof-of-work mining or move to a low-energy protocol, Bitcoin would stop polluting the planet,” the campaign argues. The Intergovernmental Panel on Climate Change also labelled crypto mining a “growing concern” in a new report.
UK Government embraces crypto
The UK Government has announced that it will make stablecoins a recognised form of payment as part of plans to “make Britain a global hub for crypto-asset technology and investment,” according to the Treasury. A ‘Financial Market Infrastructure Sandbox’ is due to start operating by 2023 “to enable firms to explore the potentially transformative benefits of the distributed ledger technology that underpins financial markets.” The Royal Mint will also create an NFT.
BTC could hit millions
It’s hard to call a prediction, but US investment giant VanEck has attempted to work out how much Bitcoin would be worth if it took over from USD as the global reserve asset. Their best estimate is between US $1.3M to $4.8M (AU$1.72 to $6.36M). Before you get too excited, the analysts think it’s more likely the Chinese yuan is the heir apparent to USD.
The USDN stablecoin fell off its peg this week and traded as low as US 68 cents. Neutrino USD, an algorithmic stablecoin on the Waves blockchain, has been plagued by doubts over manipulation and rumours that Alameda Research was shorting it. In other stablecoin news The Wall Street Journal reports that in recent months investment firms have been shorting Tether in case it falls off its peg, over doubts about the investments that make up its backing. However Tether hasn’t traded lower than 99.9 cents against USD for the past year.
Bits and pieces
The 19th millionth Bitcoin was mined late last week, which means there are just 2 million Bitcoin to be mined before it hits the total supply of 21 million. Due to the bitcoin “halving” process, the 21 millionth bitcoin is not due to be mined for approx 120 years. Large volume transactions on Cardano – over $100K – increased by 50X so far in 2022. IntoTheBlock said this showed there was institutional demand for the blockchain. Convenience store giant OTR (On The Run) has announced it will accept crypto payments at 170 outlets across South Australia, Victoria and Western Australia and parent company Peregrine Corporation will also accept crypto at its C Coffee, Subway, Oporto, Wokinabox, Smokemart and Giftbox stores. Blockchain game Axie Infinity’s Ronin Network (which connects it to Ethereum) lost more than $620 million in one of the largest crypto hacks on record. OpenSea announced the integration of Solana NFTs on the platform later this month. And finally Ethereum cofounder Vitalik wrote a surprisingly persuasive April Fools Day essay In Defence of Bitcoin Maximalism.
Until next week, happy trading!