Regulatory ramp-up

Bitcoin and the rest of the crypto market continued to slip after Federal Reserve Chairman, Jerome Powell, said at the annual Jackson Hole Economic Symposium on Friday that fighting inflation may “bring some pain”, and “another unusually large increase could be appropriate”.

At the time of writing, bitcoin is trading at US$20,090. Ethereum was down for the week, -6.73% vs bitcoin’s -6.24% loss.

Bitcoin’s market cap is down to US$384.4B, with the total crypto market falling to $971B. Bitcoin’s market dominance is at  39.58%.

Price High Low Change from previous week
BTC (in US$) $20,090 $21,804 $19,890 -6.24%
ETH (in US$) $1,500 $1,698 $1,454 -6.73%

Source: CoinMarketCap. As at 28 August 2022. Past performance is not indicative of future performance. Performance is shown in US dollars and does not take into account any USD/AUD currency movements.

Source: Glassnode. Past performance is not indicative of future performance.

Crypto news we’re watching

Token mapping to become priority

The Australian government plans a regulatory ramp-up of crypto tokens. To help regulate and understand the industry, “token mapping” will identify the tokens being used and how they should be regulated.

 

On the list of things to look at regarding crypto assets are gaps in Australia’s regulatory and licensing frameworks, consumer safeguards, custody obligations for third-party custodians and the review of organisational structures. A consultation paper on the matter will be released soon.

 

Treasurer Jim Chalmers said: “With the increasingly widespread proliferation of crypto assets – to the extent that crypto advertisements can be seen plastered all over big sporting events – we need to make sure customers engaging with crypto are adequately informed and protected.”

Ethereum Foundation announces merge date

In what is considered the most significant upgrade in Ethereum’s history, the Ethereum Foundation has finally announced the date of the Ethereum 2.0 launch, 6 September 2022. The upgrade from proof-of-work (PoW) to proof-of-stake (PoS) was technically launched in December 2020 with the launch and activation of the Beacon Chain. The Beacon Chain is a separate chain from the original Ethereum Mainnet, running side-by-side with the latter, and not affecting anything on it.

 

The current PoW consensus mechanism requires a huge amount of computing power for minting and verifying transactions. By moving to PoS, validators will now be required to pledge a ‘stake’ (similar to collateral or a security deposit) of 32 ETH in order to continue validating transactions, which should reduce energy consumption by around 99% and speed transactions up. The excitement around the merge has pushed ETH prices higher over the last month.

 

To finalise, the merge will be completed over two stages. On 6 September, the “Bellatrix” upgrade will bring the Beacon Chain into a state ready to merge. The final stage called the “Paris” upgrade will switch the Ethereum network from PoW to PoS and will take place between 10 and 20 September.

 

The Ethereum Foundation blog states: “Following years of hard work, Ethereum’s proof-of-stake upgrade is finally here! The successful upgrade of all public testnets is now complete, and The Merge has been scheduled for the Ethereum mainnet.”

Largest provider of bitcoin ATMs to go public

Bitcoin Depot, the world’s largest crypto ATM operator according to data from coinatmradar.com, announced plans last week to go public via a SPAC (special purpose acquisition company). The $885 million deal will see Bitcoin Depot merge with GSR II Meteora Acquisition Corp (GSRM) and trade under the ticker symbol BTM on the Nasdaq. The deal is expected to close some time in Q1 2023. Bitcoin Depot currently runs over 6900 machines globally according to the data.

The machine allows people to exchange cash for various cryptocurrencies such as bitcoin, ether and Litecoin. According to the release, over the past 12 months Bitcoin Depot has generated over $623 million in revenue with net income of over $6 million. In a statement, CEO and founder Brandon Mintz said: “We’re excited about numerous growth opportunities and believe a public listing enhances our ability to scale and evolve to achieve our goal of providing a convenient and secure way to purchase cryptocurrency.”3

On-chain metrics

Bitcoin (BTC): Percent of Supply Last Active 5+ Years Ago

Percent of supply last active 5+ years ago reflects the percent of circulating supply that has not moved in at least five years. Taking a look at this particular metric can give a sense of the sentiment amongst long-term holders.

Looking at data from on-chain analytics company Glassnode, 24.5% of circulating supply has not moved in over five years. This is a new all-time high.

Source: Glassnode. Past performance is not indicative of future performance.

Bitcoin (BTC): Realised Price

Realised Price is the average cost basis for all coins on the network. The realised price can act as both major support and resistance levels. Historically, market price trading below realised price has tended to indicate cyclical bottoms for bear markets.

Looking at the data on Glassnode, the price of BTC is once again below the realised price of $21,635.

Source: Glassnode. Past performance is not indicative of future performance.

Altcoin news

In altcoin news, Uniswap, the world’s largest decentralised exchange (DEX) by trading volume, passed a proposal to form a Uniswap Foundation based in the United States at a price tag of $74 million. The foundation will aim to streamline Uniswap’s Grant Program (UPG) and reduce friction in the protocol’s governance system.

According to the Uniswap website: “The foundation saw more than 86 million, or 99% of total votes, in favour of the proposal. Of the $74 million, the Uniswap Foundation plans to distribute $60 million to the Uniswap Grant Program (UGP) and the remaining $14 million to cover the operating budget.”

Investing in crypto assets or companies servicing crypto-asset markets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto-asset markets.

Investing in crypto assets or crypto-focused companies is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment.

Any investment in crypto assets or crypto- focused companies should only be considered as a very small component of an investor’s overall portfolio.


1. https://www.bloomberg.com/news/articles/2022-08-22/australia-to-map-crypto-tokens-as-part-of-regulatory-ramp-up?sref=6EQWk76O

2. https://blog.ethereum.org/2022/08/24/mainnet-merge-announcement

3. https://bitcoinmagazine.com/business/bitcoin-atm-firm-to-list-on-nasdaq

4. https://cointelegraph.com/news/it-s-a-go-uniswap-foundation-becomes-reality-after-86m-votes-in-favor


Off the Chain will be published every Tuesday. It provides the latest news on bitcoin and the rest of the crypto market along with analysis and insights into the world of crypto.It provides general information only and is not a recommendation to invest in any crypto asset, crypto-focused company or investment product.

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Written by

Justin Arzadon

Director, Adviser Services & Head of Digital Assets.

C4 Certified Bitcoin Professional (CBP) and Blockchain Council Certified Bitcoin Expert™ with over 18 years’ experience in the ETF market. Passionate about the future of money.

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