Welcome to the latest edition of our Market Roundup, where we cover the highlights of the past week in the rapidly evolving world of blockchain and decentralized technologies.
The crypto market receded over the past week, despite the optimism about the US Securities and Exchange Commission taking a step to review bitcoin exchange-traded fund (ETF) applications, as well as the July 13 court ruling in favor of Ripple Labs, stating that it did not violate federal securities law.
(as of 1:30 AM UTC, July 21, 2023)
Crypto regulations are evolving around the world, enabling institutions and corporations to utilize crypto and blockchain infrastructure with clear rules. Over in the European Union, now that the Markets in Crypto-Assets (MiCA) regulation is in place, businesses have clear rules to reference to ensure their customers are protected. A subsidiary of financial services group Société Générale became the first firm in France to secure a license as a digital asset service provider. More will surely do the same.
BTSE’s weekly news roundups have tracked institutional adoption of cryptocurrency and blockchain technology, but our team also believes that digital assets will become part of everyone’s wealth-building journey. Others share the same idea: at EthCC in Paris on Wednesday, Coinbase protocols lead Jesse Pollak suggested that 8 billion people will go on-chain over the next decade.
That’s an ambitious target, but as regulations become clearer around the world, and as major financial institutions and corporations adopt blockchain technology, it’s becoming an increasingly realistic goal.
For more insights about market movements, be sure to check out the routine updates on BTSE’s blog.
- Polygon, a network aiming to scale Ethereum, has announced the launch of an upgraded token called POL as part of its transition to Polygon 2.0. POL is positioned as a “3rd generation token” and offers holders the opportunity to become validators within the network. The token will replace the existing MATIC token, with MATIC holders given ample time, around four years or more, to exchange their tokens. Polygon Labs developers shared their plan on Wednesday: an expansion of the Polygon Improvement Proposal (PIP) framework to involve all blockchains and applications on the Polygon network, a governance policy to facilitate upgrades to protocols and software that are implemented as smart contracts, and the formation of a mechanism for the Community Treasury to be governed by a Board (and the network’s community later on) to fund projects in the Polygon ecosystem.
- Polkadot founder Gavin Wood has unveiled plans for Polkadot 2.0, proposing an overhaul of the network’s resource allocation process. The current system of parachain auctions, where projects bid for limited parachain slots by locking up DOT tokens, has faced challenges, including high costs and volatility. Wood’s new framework suggests allocating “core time” through a marketplace using fractionalized NFTs, allowing owners to allocate computation on a Polkadot core. This approach aims to make the system more agile and encourage collaboration. Wood emphasizes an application-centric focus, envisioning seamless integration of apps across chains within the Polkadot ecosystem.
- The U.S. Securities and Exchange Commission (SEC) has initiated the review process for bitcoin exchange-traded fund (ETF) applications, which includes Wise Origin, WisdomTree, VanEck, Invesco Galaxy, ARK 21Shares, BlackRock iShares Bitcoin Trust, and Bitwise’s Bitcoin ETP Trust. If approved, these ETFs would allow investors to gain exposure to Bitcoin without directly holding the digital currency. While a Bitcoin futures ETF received approval in June, there is currently no spot Bitcoin ETF available in the United States. In other news, London-based Jacobi Asset Management is preparing to launch a Bitcoin ETF on Amsterdam’s Euronext exchange this month. Additionally, Coinbase saw a 16% increase in its shares after securing a surveillance-sharing agreement with the Chicago Board Options Exchange’s BZX Exchange for the five ETF applications.
- Celsius, the troubled cryptocurrency lending platform, has started liquidating its holdings to repay users. Last week, the company moved US$60 million worth of assets out of cold storage, including tokens like LINK, MATIC, SNX, AAVE, and BNB. These assets are being converted to Bitcoin (BTC) and Ethereum (ETH) for user repayments. It remains uncertain how this liquidation will impact the market, as Celsius may choose to sell its holdings through over-the-counter (OTC) channels, minimizing the effect on token prices. However, volatility is still possible. Celsius owes creditors US$4.7 billion, and its founder and CEO, Alex Mashinsky, was recently arrested on charges of market manipulation, securities fraud, and more.
- The 2023 Q2 Crypto Industry Report by CoinGecko provides insights into the crypto market landscape during the second quarter of the year. Despite the market consolidation during Q2, with a marginal increase in size by 0.14%, the total market cap reached US$1.24 trillion by June 30, 2023. Bitcoin (BTC) and Ethereum (ETH) saw price stability, with BTC gaining 6.9% and ETH increasing by 6.0% during the quarter.
Key highlights from the report include:
- BTC experienced volatility, ending Q2 with a 6.9% gain, reaching a yearly high of US$30,694 after BlackRock’s spot bitcoin ETF announcement.
- Stablecoins witnessed a 3.5% decrease in total market cap, with USDC and BUSD sliding the most. Tether (USDT) maintained its dominance.
- ETH staking grew by 30.3% in Q2, reaching a total of 23.6 million staked ETH. Lido remained the leading staking provider with a market share of 31.9%.
- NFT trading volume dropped by 35%, although Bitcoin Ordinals gained popularity, accounting for a significant portion of NFT trading volume.
- Spot trading volume on centralized exchanges fell by 43.2%, with Binance’s market share decreasing to 52%.
- Spot trading volume on decentralized exchanges declined by 28.1%, while Uniswap maintained its dominance in the DEX market.
Stories You Might Have Missed
- Inflows into cryptocurrency products have reached their highest level in nearly two years, with US$742 million flowing in over the four weeks leading up to July 17. This surge in investments coincided with asset management giant BlackRock and other fund issuers filing for spot bitcoin ETFs, initiating a streak of four consecutive weeks of inflows. Last week, bitcoin products accounted for 99% of the inflows, while instruments that shorted BTC experienced continued outflows. The majority of inflows went into North American products, with US$109 million and US$28 million allocated to the US and Canada, respectively. Although the SEC has not yet approved a spot bitcoin ETF in the US, ProShares, a fund issuer, has garnered the highest flows of any crypto-focused issuer tracked by CoinShares, posting US$390 million year-to-date. Overall, trading volumes for crypto investment products reached US$2.3 billion last week, surpassing the year average of US$1.4 billion.
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