In Markets
Bitcoin put in a strong showing this week and is up 8.3% to trade around A$70,400 (US$52.5K). According to Glassnode, the total amount of Bitcoin held on exchanges has hit a 2021 low. Ethereum did twice as well and is up 17.7% to trade just below A$5,300 (US$4K). It’s now within 10% of its all time high price of approximately A$5,645 (US$4.4K) set on May 12. To flip Bitcoin in market cap the price would need to double from here. Everything else was up: Cardano (0.7%), Ripple (20.6%), Dogecoin (9.3%), Polkadot (26%). The Crypto Fear and Greed Index is at 79, or extreme greed.
From the IR OTC Desk
As we move closer to the September 21-22nd Federal Open Market Committee (FOMC) meeting, US economic data is now particularly critical for the Committee to review any reduction in their Bond Purchase Program (QE tapering). This week saw US employment (non-farm payrolls), which missed on the headline job creation number for August (235k versus 750k exp), however saw positive revisions for the prior two months and a fall in the unemployment rate to 5.2%. Does slowing employment growth change the timing horizon for taper? Time will tell…
Domestically, it was Australia’s Q2 GDP print that gained attention. While positive relative to expectation, economists have suggested Q3 data will better highlight the impacts of lockdowns. We hear from the RBA today regarding their interpretation.
On the OTC desk, stable coins have been a surprising theme. Interestingly, we have seen good flow selling USDT back to AUD. It’s unclear whether this flow relates specifically to the broader move in the AUD currency, which has bounced circa 4.8% from its yearly low (on the 20th August) – the timing is interesting however. We have also continued to see much more interest in BTC and ETH. Last week we noted that while the more recent buy side demand had continued, it was at a somewhat lesser pace on the week – as the broader rally in mid-market coins, particularly L1 blockchains became more in focus. This week, despite supportive market price action in the older ALTs (their turn in the rotation), BTC and ETH still saw good interest.
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In Headlines
Bitcoin becomes legit
The Bitcoin Law goes into effect making it legal tender in El Salvador today. The President tweeted a few hours ago that the country has just bought 200 Bitcoin, presumably to help fund the US$30 (A$40.34) airdrop for everyone that downloads the official Chivo app. The Legislative Assembly last week approved a US$150 million (A$202M) fund to support the development of crypto infrastructure and services across the country. However, a new survey found that 70% of locals are still opposed to Bitcoin becoming legal tender.
Doge of stake
Ethereum co-founder Vitalik Buterin – who is also a member of the Dogecoin Foundation – wants Dogecoin to adopt proof of stake. On Twitter he said: “Personally, I hope that Doge can switch to PoS soon, perhaps using Ethereum code. I also hope they don’t cancel the 5B/year annual PoW issuance, instead they put it in some kind of DAO that funds global public goods.” Given that Ethereum isn’t on PoS yet, this is presumably some way off.
Lobby lobsters raise $4m
A month or so ago Synthetix founder Kain Warwick and Uniswap lead dev Hayden Adams cooked up a scheme to raise money for DeFi political lobbying efforts with NFTs. Lobby Lobsters went live yesterday and raised US$4 million (A$5.38M) in an hour.
Uniswap gets probed
The SEC has begun an investigation into Uniswap Labs, the dev studio behind the decentralised Uniswap platform. The Wall Street Journal reports the SEC launched the probe to find out how investors use the platform and how it is marketed. While DeFi itself is technically unstoppable, the team members working on the projects are vulnerable, as SEC boss Gary Gensler has noted.
Ethereum deflating
Ethereum recorded its first ever day of deflation on September 3, with the supply falling by 333 ETH. Since the London upgrade implemented a new system in which fees are burnt, around 200,000 ETH has gone up in metaphorical smoke. While burning ETH makes hodlers slightly wealthier in theory, the only reason it’s deflationary at this point is because fees are through the roof due to NFT minting making the network extremely expensive for most everyday purposes.
Dumb contracts
The launch of the first DApps on Cardano have been mocked by Ethereum maximalists who claimed the system could only handle one transaction per block and that only one user could interact with a contract at a time. The SundaeSwap devs wrote a blog post addressing the “inaccurate” claims and to “dispassionately explore some upsides, downsides, misconceptions, and finally, present some potential solutions.” Another dev studio working on Cardano, IOG, also took aim at the claims.
Cross-border CBDC trials
The central banks of Australia, Singapore, Malaysia and the Republic of South Africa have set out to test whether state-issued digital currencies can simplify transactions and make them cheaper in a cross-border payment trial. The Bank for International Settlements (BIS) is leading the task intending to establish if these prototype platforms can enable the following: direct transactions between financial institutions, elimination of intermediaries, decrease in transaction costs and times. The participants will also explore various designs in terms of technology, governance, and operation.
September is the bad month
September has historically been Bitcoin’s worst month and the price dived in four of the past five years. The coin has only gone up in two of the years since 2013 and even then it was a tiny 6% increase. Jake Wujastyk, chief market analyst of TrendSpider said: “if Bitcoin can hold above $50k, watch for a quick move through the ‘volume gap’ up to around $54k.”
Bull market back on
Bloomberg’s crypto analyst Mike McGlone has hailed the resumption of a “revived and refreshed bull market”. He believes Ethereum is on course for US$5,000 (A$6,274) and Bitcoin for US$100,000 (A$134K). He said: “Portfolios of some combination of gold and bonds appear increasingly naked without some Bitcoin and Ethereum joining the mix”. He added the big threat to the bull run was a “macro risk-off decline”.
10 million monthly active users on Metamask
Last week, digital currency wallet Metamask announced that the platform had surpassed 10 million monthly active users (MAUs) with a staggering 1,800% growth since July 2020. Metamask described some of the reasons pushing this growth: on the whole, the wallet is considered the “primary way” global DeFi users interact with 17,000 unique Web3 domains, its use to access the expanding NFT space, the token swap feature and mentions of the mobile software providing the extra bump in September 2020. Co-founder Dan Finlay stated, “Metamask defined a new kind of cryptocurrency wallet, where users don’t just interact with currencies, but with decentralized applications, and we are constantly making these new kinds of applications more safe and accessible to a broader audience.”
Until next week, happy trading!
