In markets

Bitcoin surged to a new high for the year above A$58,000 (US$38.2K) on Friday, and markets have just seen the first 10-day streak of positive stablecoin growth since February, indicating as analyst Dogetoshi noted that “Money is once again reentering the system.” The market has pulled back since, with Santiment reporting last night that two-thirds of the top 100 coins have retraced and “several have lost a large chunk of their November profits.” Bitcoin finished the week down 1% at $56,575 (US$37,260), while Ethereum was flat at $3,082 (US$2,029). XRP lost 1% for the week, Solana (-2%), and Cardano (-1%), while Dogecoin was flat. Despite the crypto market wobbles, the broader picture is looking positive, with Coinbase stock surging to its highest level since early 2022 and institutional crypto funds adding US$346 million (A$524M) of inflows, the highest amount since late 2021. The Crypto Fear and Greed Index is at 66 or Greed.

Crypto Market Update 2023 Nov 28

From the OTC desk

Profit-taking continues to emerge. While the euphoria remains, it naturally makes sense to see some pricing lethargy following such a prolific November move. Whether this theme lasts until the end of the year is yet to be seen. It may well be related to last week’s Thanksgiving break (in the US), which saw a general reduction in wholesale liquidity.

For now, this breather somewhat makes sense. It also makes sense that price appreciation enables more token listings, as well as more project announcements. Expect this to be a theme of 2024 if the market can remain on a firm footing. This has been particularly evident on SOL – the broad leader of the most recent cryptocurrency rally.\

As we head into the end of the year, news flow (in general) will begin to slow. In turn, this generally reduces cryptocurrency liquidity, with the smaller market cap tokens seeing the most noticeable change. 

In a bear market, receiving volatility into the end-of-year period has historically made sense. This year, however, looks less clear and will be much more dependent on how illiquidity pockets exacerbate market moves. This is something to keep in mind for the next month. 

In the economic calendar, this week, we receive the Australian monthly CPI indicator for October (Wednesday at 11:30am AEDT), as well as US PCE inflation for October (Friday at 12:30am AEDT).

Critical to the December monetary policy meeting for the Reserve Bank of Australia (RBA), the AU monthly CPI indicator for October is forecast to print at 5.2% YoY, relative to 5.6% in September. With the RBA instructing sweeping changes that will begin calendar year 2024, their current tolerance for above forecast realised inflation, is limited. The beneficiary to this change in stance from the RBA, has been the AUD/USD. ‘The Aussie’ has significantly appreciated on the back of: a change in stance from this change in stance from the RBA, as well as softening US data. AUD/USD is currently trading at USD 0.6600, up from USD 0.6550 earlier in the week.

The critical data this week remains US PCE inflation data – this is the Federal Open Market Committees preferred measure of inflation and is the most important input to their decision-making process on interest rates. Market expectation is for October Core PCE inflation YoY to print at 3.5% relative to 3.7% in September. Watch this space.

On the OTC desk, the buy-to-sell ratio has balanced. This is representative of the price action and is a further indicator of profit-taking. Liquidity in the atls has reduced, following their stellar run. Client enquiry into smaller market cap tokens remains, although lesser than the previous few weeks. We continue to track the ETH/BTC ratio closely, and with the more balanced flow over the course of the week, remain unsurprised that ETH/BTC continues to trade near to levels last week of 0.0540. 

For any further information, please feel free to reach out.

In headlines

Singapore’s MAS strengthens regulatory measures for Digital Payment Token Services

In a bid to protect retail customers, the Monetary Authority of Singapore (MAS) published the final set of responses on the regulations. Key measures include prohibiting retail customers from using local credit cards to buy cryptocurrencies from regulated Digital Payment Token Service Providers (DPTSPs), mandatory risk assessments for retail customers, and a ban on offering financing, leverage options, and trading incentives. Additionally, MAS introduced a business conduct code for DPT service providers, focusing on conflict of interest management, regulatory policy disclosure, and effective complaint resolution procedures.

Lasanka Perera, CEO of Independent Reserve Singapore, the first crypto exchange licensed by MAS, commended these guidelines as a positive step for a more responsible and regulated crypto industry. “In our view, the latest measures published by the MAS would further raise the bar for DPTSPs in Singapore and be an exemplary reference for other jurisdictions,” he added. 

Binance dragged into compliance

The process of clearing out all of the last cycle’s main characters is almost complete, with Binance founder CZ joining SBF, Do Kwon and Su Zhu as potential mackerel traders. The Department of Justice announced a US$4.3 billion (A$6.5B) settlement in the CFTC’s money laundering and compliance case, allowing Binance to continue operating with super strict compliance measures in place. CZ is facing 18 months inside, has to hand over US$150M (A$227M) and won’t have any involvement in the exchange for three years. For now, CZ is also stuck in the US as a potential flight risk. “I made mistakes, and I must take responsibility,” he said. Former regulator Richard Teng is the new CEO and is already making the right noises about imposing proper corporate governance. Although loose controls saw stolen funds and sanctioned individuals use the exchange, Binance noted the settlement did not allege the exchange had stolen user funds or manipulated markets. The SEC was a notable absence from the settlement, and its case against Binance is ongoing. The regulators also appear to be taking control at Tether, with the news it has given the FBI and Secret Service access to its systems. 

Bitcoin ETF

The Binance settlement appears positive for the prospects of a Bitcoin ETF, as SEC concerns over market manipulation were the reason it denied previous ETF applications. Galaxy Digital CEO Mike Novogratz called the settlement “super bullish”, while Matrixport argued the deal meant “expectations for a spot Bitcoin ETF might have increased to 100% as the industry will be forced to follow the rules that TradFi firms must follow.” Black Rock and Nasdaq met with the SEC this week to discuss the proposed rule change enabling an ETF, and so did Grayscale. Grayscale’s share price discount to the value of the Bitcoin it holds is down to just 8%, signalling increasing optimism the ETF will finally be approved. 

SEC takes a second swing at Kraken

The SEC has sued US exchange Kraken, alleging it commingled user funds and failed to register as a securities exchange, broker, dealer and clearing agency. The case is very similar to the SEC’s case against Coinbase in the New York Federal courts (which isn’t looking too good for the SEC), so there is speculation that going after Kraken in the San Francisco Federal courts gives it another shot to get the outcome/precedent it wants. Kraken founder Jesse Powell was furious as the exchange had already shelled out US$30M (A$45.4M) to settle the SEC’s staking complaint in February. “USA’s top decel is back with another assault on America… The message is clear: $30M buys you about 10 months before the SEC comes around to extort you again.”

ATO’s new crypto rules unclear

The Australian Tax Office has refused to clarify whether its new guidance imposing CGT on wrapping tokens and liquidity provision, also means that staking ETH on Lido or sending tokens to an L2 via a bridge are CGT events. If they are, that would mean if you bought ETH for $100 and then transferred it via a bridge when ETH is $1,000, you’d need to pay tax on $900 worth of non-existent profits. Instead of answering Cointelegraph’s direct questions the ATO instead said the answer “will depend on the steps taken on the platform or contract, and the relevant surrounding facts and circumstances of the taxpayer who owns the cryptocurrency assets.”

ARK sells GBTC

A week after Ark Invest founder Cathie Wood cited Grayscale’s Bitcoin Trust as her top stock pick, news emerged that ARK has dumped 700,000 GBTC shares in a month. To be fair, it still holds 4.3 million shares and given the GBTC price has increased by 75% since August, it may simply be a way to rebalance ARK’s portfolio and collect a little profit.

Media back on Bitcoin train

If you needed another sign a new bull run is on its way, the media is once again starting to focus on Bitcoin’s stellar price performance, rather than on bear market FUD. The Australian noted that Bitcoin’s 125% price rise in 2023 has seen it outperform every other asset class and reported that eToro found crypto was now the most attractive asset class among retail investors. The 2023 ASX Australian investor survey also reported that while only 15% of investors currently hold crypto, 29% are interested in investing in crypto in the next 12 months.

Independent Reserve goes the distance to raise funds for individuals with special needs

This week, a team of runners representing Independent Reserve will be taking part in various categories in the Standard Chartered Singapore Marathon to raise funds for a non-profit local charity Extraordinary People. The charity empowers individuals with special needs through integrated therapy and skills development, including vocational training and employment programmes in Singapore.

Please lend us your support by donating today.

Until next week, happy trading!