CAM | Market Update | June 2023

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Dear Reader

May was relatively quiet for Bitcoin and crypto in general price-wise. At the beginning of the month, the Bitcoin price traded at ~USD 29,250, dropped to ~USD 27,190 by the end of the month, and is currently at ~USD 26,520. Meanwhile, Ethereum remained largely stable with an initial price of ~USD 1,870, a final price of ~USD 1,875 in May, and is now at ~USD 1,840. High ordinal traffic (NFTs) on the Bitcoin network has caused fees to rise sharply, which could make mining more attractive, assuming the need for blockspace remains. On the Ethereum network, about 1.55 million ETH were withdrawn from the staking pool. Despite these significant withdrawals, this did not affect the price as demand for deposits remained high.

In the financial world, the focus was on raising the US debt ceiling. A tentative agreement was reached at the end of May, giving a boost to the markets, including Bitcoin. Looking ahead to the 2024 U.S. presidential election, Ron DeSantis, known as a Bitcoin proponent and CBDC opponent, is a major Republican candidate. June has gotten off to a tumultuous start with indictments against crypto exchanges Binance and Coinbase, as well as a civil indictment against Binance CEO Changpeng Zhao "CZ." It will be exciting to see how these developments impact the market and what the regulatory framework will look like.

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China Opens Blockchain Center (11.05.23)
China is establishing a national blockchain center to train half a million DLT specialists in three years. The center aims to promote the country's blockchain expertise and establish China as a global blockchain superpower. Despite restrictive crypto regulations, this initiative demonstrates China's continued commitment to the digital economy and desire to reduce its dependence on U.S. semiconductors.(Source)

Tether Buys Bitcoin (05/17/2013)
Tether announced it will invest up to 15% of net profits in Bitcoin to diversify its reserve portfolio. The company already has about $1.5 billion in BTC in its reserves. Paolo Ardoino, CTO of Tether, emphasizes the strength of Bitcoin as an asset. Tether plans to maintain its strict risk management practices and explore innovative opportunities in the digital asset space.(Source)

Chinese State TV Deletes Video (5/25-23).
Chinese state television CCTV released a video on retail investor access to Bitcoin in Hong Kong, but later deleted it. The securities authority in Hong Kong allows licensed service providers to provide retail investor access, but they have yet to be approved. China's stance on digital assets remains unclear, but the application for a trading license in Hong Kong by state-owned 'Greenland' is seen as a positive step. (Source)

MiCa regulation approved by Council (05/16/2013)
The EU Council has unanimously approved the MiCA regulation, a milestone for the crypto sector. The framework covers some aspects regarding digital assets, but still lacks regulations for NFTs, Staking, Lending and DeFi. It provides companies with a clearer path in Europe, while the U.S. has opaque guardrails. Implementation is planned for mid-2024 to early 2025. The attractiveness of the European market to companies will be seen.(Source | Source 2)

Strike expands from three to 65 countries (05/19/2013)
Strike is rolling out its bitcoin payment app in 65 countries and now supports USDT. Users can use BTC for payments by converting fiat currencies in real time. The in-tegration of USDT provides further opportunities for digital transac- tions with the stability of a token tied to the U.S. dollar. This expansion demonstrates the growing potential of bitcoin and cryptocurrencies in global payments.(Source | Source 2)

Coinbase CEO calls for clarity in U.S. (05/31/2013) Coinbase CEO Brian Armstrong stresses that Hong Kong is seizing the opportunity to benefit from strict regulations in the U.S. and drive innovation in the crypto space. He warns that the U.S. could fall behind in global crypto competition if it does not catch up quickly and create clear regulations. Hong Kong could further strengthen its position as an emerging player in the crypto world as a result.(Source)

SEC sues Binance and Coinbase (07.06.23)

In an unprecedented action, the U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against crypto exchanges Binance and Coinbase. Binance, the largest global crypto marketplace, is accused of mismanaging customer funds and violating securities laws, including illegal sales activities of securities and failure to properly register. Another allegation against Binance and CEO Changpeng Zhao is aggressively soliciting U.S. investors despite announcing a withdrawal from the U.S. in 2019. The SEC is also charging Binance's staking services and the Binance smart chain token BNB with being unregistered securities. Meanwhile,

Coinbase, which did not go public until 2021, is also under fire from the SEC. The regulator accuses it of 'escaping a securities markets disclosure regime' and operating as an unregistered broker since 2019. Regarding the Coinbase case in particular, the authorities are accused of never having clearly defined the guidelines that the exchange could have followed. A part of the crypto community finds it somewhat contradictory that exactly the US exchange that is used for crypto transactions or for sales of seized crypto assets by the US government is accused.(Source | Source 2

Did you know...? 

...how Bitcoin Ordinals differ from Ethereum NFTs . The Ordinals protocol allows for the transmission of Satoshis - the smallest units of Bitcoin - with additional data attached, a process known as "inscription." The data attached to Satoshis can take various forms, such as text, images, or videos, making them a "kind of" Non-Fungible Tokens (NFTs) within the Bitcoin blockchain. All data is entered directly on the blockchain, unlike most Ethereum NFTs, which require off-chain data storage. Thus, ordinals can be said to be digital artifacts that can no longer be changed. 

Some projects update NFTs by changing metadata to improve image quality. This off-chain data dependency makes NFTs appear "incomplete." In contrast, ordinals, the invention of Justin Rodarmor, are "complete" because all of their data is stored directly on the blockchain. However, this innovation is controversial within the Bitcoin community. While some see it as a significant and beneficial advancement, others see it as an unnecessary increase in complexity and waste of block storage space

More videos in the new short format

In addition, as usual: short, crisp and informative - our new short videos on cryptocurrencies offer the best from the crypto world. If you don't have time to watch long videos but still want to stay informed about the latest developments, perspectives and trends on the cryptocurrency market, this is the ideal format.

You can find the new format and all videos on our homepage under Videos or on Youtube, Instagram or Facebook. Follow us on your preferred platform.

Whether you are a beginner or an interested professional, this video provides a clear introduction to the basics of the crypto world.

00:00 Introduction
00:12 What can cryptocurrencies do?
01:02 What are cryptocurrencies?
01:14 What is a blockchain?
01:59 How are cryptos different from traditional currencies?
03:18 What are cryptocurrencies mainly used for?
03:56 How is the value of a cryptocurrency determined?
04:13 How is a cryptocurrency created?
05:34 How are transactions processed?
06:16 The biggest and most popular cryptocurrencies
06:35 Challenges of digital currencies
07:00 How will cryptocurrencies change in the future?
07:38 The biggest risks related to cryptocurrencies
08:13 Summary

Market cycle

With interest rates possibly remaining high, a potential recession in the U.S., and Bitcoin halving imminently in 2024, the question of the correlation between Bitcoin and equities arises. Recent performance shows a reduced correlation between Bitcoin and the U.S. S&P 500 and Nasdaq stock indices. At the same time, Bitcoin investors continue to focus on accumulation and the number of addresses with at least 1 BTC has exceeded 1 million for the first time. Meanwhile, slightly declining holdings of stablecoins show potential headwinds. Central bank gold purchases published for the first quarter are mentioned as potential support in the argument for Bitcoin as a possible additional reserve currency for central banks. Despite a clumsy communication from hard wallet service provider Ledger, confidence in the crypto industry is boosted as the number of crypto hacks decreased in the first quarter, even though this observation period tends to be too short for a fundamental statement.

Ethereum On-chain analysis

Due to the successful Shapella upgrade last month, it is worth taking a look at the Ethereum network's on-chain data. The data base suggests that most withdrawals from staking are from centralized exchanges, particularly Kraken, as the US entity had to close its staking service due to regulatory pressure. Individual stakers, on the other hand, have made few full withdrawals and appear to be reorganizing and re-staking the rewards they received. At the same time, Ether holdings on centralized exchanges have fallen to a five-year low, which is seen as bullish as these balances tend not to be for sale. These are encouraging developments as they suggest that many ETH are being staked, reducing selling pressure and signaling medium- to long-term confidence in the asset.

Macro

Tech stocks, especially companies related to artificial intelligence, have driven the current rally in U.S. equity markets. The debt ceiling agreement is also supporting traditional financial markets. However, mixed economic data points to a slowdown in the economy. Purchasing managers' indexes in the services sector suggest a more positive outlook compared with the industrial sector. The probability of further interest rate hikes in mid-June has meanwhile decreased again significantly, suggesting a pause, while a 0.25% hike is expected again for the July meeting. A look at Figure 4 shows that a breach of the 100-week moving average of initial jobless claims usually indicates a recession in the next 6-12 months. Currently, the level is still about 25,000 claims below that, but could soon reach that level.

Market Commentary

The confidence of Bitcoin investors may still be described as strong and they are very cautious about reducing their investments as the opportunity cost of selling is too high from their point of view. Although the macroeconomic environment presents challenges, signals from China about a possible opening for cryptocurrencies and interest from institutional investors show positive signs. Despite market volatility and short-term price fluctuations, Bitcoin and crypto seem to be an attractive long-term investment option for many investors.

opportunity. The growing acceptance of Bitcoin by the general public and the financial industry is boosting investor confidence. However, it is important to note that the cryptocurrency market remains risky and investors should consider their investments carefully. The development of the crypto market in 2023 remains an interesting area with forward-looking investment opportunities. Bitcoin's annual returns have never shown two consecutive negative results before.

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Videos for the visual learners, news summarized succinctly, Twitter news for discussion material and exchange and last but not least blogs for a somewhat longer reading also conveniently available in audio form. 

A significant proportion of our customers have a voluntary uncommitted investment plan, which enables them to pursue a long-term average cost strategy. In case of lower market prices, the cost prices can thus be reduced. To check your individual suitability for an investment plan, please contact us if you are interested.

(*Information: bitcoin and Bitcoin: bitcoin lowercase is used in the crypto domain to denote the monetary unit. Bitcoin capitalized refers to the network as a whole. For simplicity, we use upper case in this newsletter).

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This communication/blog article/market update is for informational purposes only and does not constitute a recommendation, offer or solicitation to buy or sell any securities, cryptocurrencies, fund shares, structured products, financial instruments or other investment products, nor shall it be deemed to constitute a solicitation of an offer to enter into a contract for any financial service, or otherwise constitute a personal recommendation. This communication/information cannot replace personal advice from a financial, legal and/or tax advisor. 

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