In Markets

Moonvember‘ isn’t quite as catchy as ‘Uptober’ but Bitcoin and Ethereum have still been making new all time highs. On November 10, Bitcoin hit AU$93,450 (US$68,514) before plunging 10%. It’s currently 3.9% down for the week and is trading around AU$87,100 (US$64K). ETH’s new ATH that same day was AU$6,612 (US$4,834) and it is currently 4.3% down for the week at AU$6,238 / US$4,563. Cardano lost 4.8% during the past week, XRP lost 8% and Dogecoin (-7.2%). The Crypto Fear and Greed Index is at 72, or ‘Greed’. Onchain analyst Willy Woo thinks high expectations are holding back a bigger price run. “Whenever everyone’s bullish, it’s very difficult for the price to run upwards because you get a whole lot of speculative long positions in the markets and that makes it very, very profitable to take the other side and short it,” he said. “The majority is very seldom right.”

Market Update

From the IR OTC Desk

Last week’s US CPI print proved to be one of the most significant data points in recent memory. For months now, there has been growing debate as to whether the outside of mandate inflation data will remain persistent or begin to soften and become transitory. This month’s data release delivered a YoY headline inflation print (October) of 6.2%, with core inflation YoY at 4.6%. This is the seventh consecutive month, where inflation has remained well above the Federal Reserve’s target level.

In an update on the upcoming announcement for the Fed Chair position, it was reported that the White House interviewed both Jerome Powell and Lael Brainard this week. Jerome Powell’s current term as Fed Chair is due to end in February 2022. Expectation is that an appointment announcement will occur before Thanksgiving (25th November) – this will likely prove significant for asset markets.

On the OTC desk this week, the dominant flow continues to be profit taking in BTC and sell side flow in USDT. ETH customer enquiries have lightened, as interest in the layer 1’s has shifted to market movers DOT and Solana. In the alternatives market, Dogecoin has remained incredibly popular. We continue to see a high volume of enquiries out of our Singapore office, with an investment focus. As the market continues to digest the most recent US inflation data, the range for BTC has continued to remain captive – with funding rates in general softening post the short term CPI print squeeze.

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In Headlines

Taproot upgrade

On November 14 the Taproot upgrade went live – the first big upgrade since Segregated Witness. First proposed in early 2018 Taproot improves transaction efficiency, network privacy and paves the way for smart contract initiatives with the Tapscript programming language. The Schnorr signature scheme makes smart contract transactions look like all other transactions on the network, enhancing privacy. Quantum Economics founder Mati Greenspan says the upgrade is incremental and the average user won’t notice a big difference: “The main benefits include a modest reduction in fees and load on the network per transaction and slightly improved privacy features and abilities to implement things like multi-signature wallets,” he said. Previous upgrades like SegWit were followed by significant price rises. “The market has not priced in the massive Bitcoin Taproot upgrade,” Charles Edwards, CEO of investment firm Capriole, said.

Infrastructure bill now law

President Joe Biden signed the Infrastructure Bill into law today, with the controversial definition of a ‘broker’ now in the hands of the Treasury Department. The definition could see node operators and miners classified as brokers and forced to comply with onerous tax reporting requirements. A separate clause means all crypto transactions above $10K need to be reported to the IRS. Senators Ron Wyden (OR-D) and Senator Cynthia Lummis (WY-R) are introducing an amendment bill to reverse some of the cryptocurrency provisions.

Satoshi mystery unlikely to be solved at trial

Bitcoin’s “trial of the century” is back on again in Florida with the estate of Dave Kleiman suing Australian Craig Wright over a share of 1.1 million Bitcoin they allegedly mined together. It’s getting a lot of attention from the mainstream press, including the Wall Street Journal which said Satoshi “could be unmasked” at the trial. However for various reasons both sides already concur that Wright invented Bitcoin (even though the vast majority of the crypto community disagree) and it’s in neither side’s interest to disprove it. A panel of 10 jurors will have three weeks to hear evidence and decide what to do with the Bitcoin. It’ll be interesting to see what happens if Wright is forced to hand over a share, as he has never proven he actually controls the keys. Law360’s Carolina Bolado is live Tweeting the case from court.

Market cap around $3T

According to CoinGecko, the total market cap for all cryptocurrencies broke the US$3 trillion barrier (AU$4.08T) for the first time this week (Coinmarketcap’s data however suggests it fell about $20 billion short.) Bitcoin’s market cap of US$1.2 trillion (AU$1.64T) is still more than double Ethereum’s at US$541B (AU$736B) meaning the flippening remains some way off.

Crypto total market cap

Bitcoin ETF rejected

The SEC has rejected VanEck’s spot Bitcoin ETF application based on concerns around fraud and market manipulation, maintaining an eight year long streak of refusals. Matias Dorta, vice president of marketing at asset manager Roundhill Investments, commented: “The SEC first rejected a $BTC ETF in 2013. They successfully protected investors from +12,700% gains,” he said. VanEck will still be entering the market later today, with a futures ETF on CBOE called the VanEck Bitcoin Strategy ETF.

New York and Miami’s crypto competition

New York City Coin (NYCCoin) has just commenced mining, with Mayor Eric Adam’s giving the community coin an unofficial endorsement. If the city officially partners with NYCCoin, it’ll get 30% of the mining rewards. Over in Miami mayor Francis Suarez intends to spend the mining rewards from Miami Coin on buying Bitcoin to give to residents who download the official city wallet. So far he has about US$21 million (AU$28.6M) in Bitcoin to give away, and an estimated US$80M (AU$108M) annually.

Musk sells off Tesla, will he buy Bitcoin?

Elon Musk lived up to his recent Twitter poll this week and has sold off around US$6.9 billion (AU$9.4B) in Tesla stock so far. Filings show he’s been planning the sale for months, but the poll suggests he intends to sell 10% of his holdings, which would require the sale of another 10M shares. Some of the proceeds will be used to pay his tax bill, but the crypto community is hoping he might store his funds in Bitcoin. Microstrategy’s Michael Saylor encouraged Musk to buy BTC with the proceeds.

Bull market distribution has begun

According to analyst Will Clemente the main phase of the bull market is only just getting started. He told his almost 400K Twitter followers that “long-term holders buy BTC into weakness and sell into strength” and according to on-chain data long term hodlers have started to sell more than they buy for the first time in six months. “This is natural bull market behavior; as you can see in 2020 this distribution began in October and peaked out in January of this year,” he said, noting transaction fees were up, and exchange outflows were too, both indicating bullish sentiment.

Glassnode Bitcoin distribution

Discord circus

Last week, Discord CEO Jason Citron tweeted a hint of what would have been crypto integration with the platform… although this idea was short-lived. In response to a blog post tweeted by author Packy McCormick, Citron replied with a screenshot of what appeared to be MetaMask wallet integration found in the Discord user settings. The blog discussed the idea of a native crypto wallet on Discord, an idea that dates back to August.

Whilst McCormick was enticed by the idea, Citron backtracked only days later, tweeting that Discord has “no current plans to ship” this wallet integration. Reasons for this change? The near-instant backlash from Discord’s core audience of gamers. In a surprise reaction, negative comments flooded in response to this potential update, citing environmental concerns, and the frequently used mockery that crypto is a “pyramid scheme”.

One user responded with “don’t make me do it, Jason,” posting a screenshot edging to cancel their Discord premium ‘Nitro’ subscription. Across the thousands of negative replies, this Nitro cancellation also took a trend. From what can be seen from this fiasco, Discord’s crypto integration seems to have taken a back seat, for now.

The real flippening?

Digital asset manager Grayscale hit a milestone of US$60 Billion in assets under management (AUM) last week. This surpassed the AUM of SPDR Gold Shares – the largest and most liquid gold ETF in the world, which held a total of US$58.3 billion at the time. The Grayscale Bitcoin Trust (GBTC), with ambitions of converting into a spot ETF, accounts for the largest share of Grayscale’s AUM, at US$43.6 Billion. Is this the flippening that was least anticipated?


Until next week, happy trading!