U.K. aiming to become a 'global crypto hub' | BetaShares

U.K. aiming to become a ‘global crypto hub’

BY Justin Arzadon | 12 April 2022

Despite mostly positive news throughout the week from regulators around the world, momentum to the upside fizzled this week with Bitcoin and the crypto market pulling back, with bitcoin trading at $42,694 at the time of writing.

Ether fell slightly less, down -6.98% vs bitcoin’s -7.87% over the last seven days.

Bitcoin’s market cap fell to $811B, market dominance remained at 41%, and the entire crypto market dropped to $1.98T.

Price High Low Change from previous week
BTC (in US$) $42,694 $47,313 $42,183 -7.87%
ETH (in US$) $3,245 $3,573 $3,155 -6.98%

Source: CoinMarketCap. As at 10 April, 2022. Past performance is not indicative of future performance. Performance is shown in U.S. dollars and does not take into account any USD/AUD currency movements.

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

News we are keeping an eye on

The U.K. has unveiled a detailed plan of reforms and initiatives in the digital asset space with the aim of becoming “a global cryptoasset technology hub and a hospitable place for crypto.” The Treasury announced that stablecoins will be regulated, paving their way as a recognised form of payment, the U.K. tax system will be made more crypto-friendly, and the U.K. will launch an NFT (although it is currently unclear what the NFT will be used for). “This is part of our plan to ensure the U.K. financial services industry is always at the forefront of technology and innovation,” said chancellor Rishi Sunak.1

The Australian Prudential Regulation Authority (APRA)  chair, Wayne Byres, addressed the American Chamber of Commerce in a speech, stating that the regulator wants to provide “more clarity” to institutions relating to crypto and financial regulation. APRA is in the final stages of issuing a letter to financial institutions that sets out its expectations for how digital assets in the country should be handled. The letter will not introduce new regulatory requirements, with Byres saying: “Much like our approach to climate risk, [the letter’s] underlying message is primarily one of: ‘by all means innovate, but proceed with care and in full knowledge of the risks’.”2

U.S. Treasury Secretary, Janet Yellen, made her first speech focused on digital assets, speaking at an event at American University in Washington, D.C. The focus of her address was on the need for clear regulatory guidelines around the industry. More specifically, Yellen expressed that further research and investigation are needed into the role that CBDCs may play in the U.S., and that issuers of stablecoins should be held accountable for maintaining reserves to prevent crashes. She also emphasised the need for ‘tech neutral’ regulation, protecting Americans over promoting business. Yellen also highlighted a payments program expected to launch in 2023 called FedNow, which “will enable payment in real time, around the clock, every day of the year within the U.S. payments system.”3

On-chain metrics

Bitcoin (BTC): Balance on Exchanges shows the total amount of coins held on exchange addresses. This metric can provide a measure of investor sentiment, as the assumption is the more BTC that is moved off exchanges, potentially to cold storage wallets, the more bullish investors are about the long-term value of their bitcoin holdings. Conversely, if BTC is being moved back onto exchanges, potentially in preparation to sell back to the market, investor sentiment may be bearish.

Looking at data from on-chain analytics company Glassnode, you can see that coins started being taken off exchanges fairly aggressively just prior to the price starting to rally on 4 March. The exchange balance fell by 104,519 BTC (approx. $4.4B), which is the largest drop in over 6 months and a level not seen since September 2018.

Source: Glassnode.

Bitcoin (BTC): Percent of Supply Last Active 1+ Years Ago shows the percent of circulating supply that has not moved in at least one year. One interpretation of this metric is that the more BTC that remain inactive, the more they are being held instead of traded, which could lead to a spike in price.

Based on the chart, the percentage of supply last active 1+ years ago is at 63.15% which is an all-time high. More bitcoin than ever is being held instead of traded, and in confluence with the low level of bitcoin held on exchange, might be interpreted as a bullish sign.

Source: Glassnode.

Altcoin news

NEAR Protocol (NEAR)  has cracked the Top 20 cryptocurrencies by market cap after doubling in price to $20 over the past four weeks and standing out as one of the top performers amongst coins with at least $1 billion market cap, according to data source Messari. According to its website, NEAR is a collective consisting of an ever-expanding network of thousands of community members around the world, a foundation existing for the purpose of fostering ecosystem development through grant funding, and a development platform built on a sharded, proof-of-stake, layer-one blockchain designed for usability.Applications for the NEAR protocol include decentralised finance (De-Fi), non-fungible tokens (NFTs) and decentralised autonomous organisations (DAOs).

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.gov.uk/government/news/government-sets-out-plan-to-make-uk-a-global-cryptoasset-technology-hub

2. https://blockworks.co/australian-regulator-asks-banks-to-proceed-with-care-over-crypto/?utm_source=Sailthru&utm_medium=email&utm_campaign=Daily%20NL%20Thursday%204.7.22&utm_term=Daily%20Newsletter

3. https://blockworks.co/yellen-warns-of-crypto-risk-in-first-digital-asset-speech/?utm_source=Sailthru&utm_medium=email&utm_campaign=Daily%20NL%20Thursday%204.7.22&utm_term=Daily%20Newsletter

4. https://near.org/

Off the Chain will be published every Tuesday, and provide 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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