- The latest CPI report in the U.S. came in hotter-than-expected for the third straight month, dashing hopes for an interest rate cut anytime soon.
- Predictions of volatility leading into the Bitcoin halving have proven true as the top crypto oscillated between a high of $72,800 and a low of $67,480 over the start of the week. The weekend however brought greater volatility with the price dropping to a weekly low of $61,794.
- The top DEX Uniswap has become the latest target of the SEC as the regulator issued a Wells notice to the exchange, suggesting a lawsuit is imminent.
Market Overview
Crypto investors and analysts who anticipated volatility leading into the Bitcoin (BTC) halving have been proven right as this week saw the top crypto oscillate between a high of $72,800 and a low of $67,480, only to return to support near $70,000. The weekend however brought greater volatility with the price dropping to a weekly low of $61,794.
Bitcoin’s fourth halving is anticipated to occur sometime between April 19 and 20 and will reduce the block reward from 6.25 BTC to 3.125 BTC. History shows that in the six to eighteen months after a halving, Bitcoin’s price undergoes a parabolic run, with conservative analysts saying it could top out at $150,000, while the high end of projections have some seeing a $1 million BTC.
Aside from the halving, macroeconomic factors will undoubtedly play a role in how asset prices perform moving forward. The latest CPI report in the U.S. came in hotter-than-expected for the third straight month, dashing hopes for an interest rate cut anytime soon as the Fed continues to struggle to rein in now-rising inflation. Both the DXY and 10-yr Treasury spiked after the CPI was revealed, causing declines in cryptos, stocks, and gold, which was fresh off a new all-time high.
Bitcoin initially dumped to $67,840 in response to the CPI, but rebounded several hours later and climbed back above $70,000 by Wednesday afternoon. On Thursday, it largely traded above support at $70,000 and closed the daily candle at $70,695.
At the time of writing, the total cryptocurrency market cap stands at $2.64 trillion, an increase of 3.5% over the past week. The DeFi market cap currently stands at $128.8 billion with a 24-hour trading volume of $7.64 billion, which is 9.7% of the total crypto market volume.
Crypto News
The Killer App – Stablecoins continue to be the “killer app” that ushers in wider adoption as Sony Bank, the banking and financial unit of the Sony Group Corporation, has initiated a proof-of-concept (PoC) pilot to issue a fiat-pegged stablecoin on the Polygon blockchain. Belgium-based blockchain company SettleMint has partnered with Sony Bank on the trial, which aims to assess the potential benefits of stablecoins, such as reduced payment and remittance fees, and explore ways to adopt them in Sony’s gaming and sports intellectual properties. The trial will also explore potential legal issues that arise when transferring Japanese yen-backed stablecoins and other fiat-backed digital currencies within Japan's regulatory framework. The PoC is expected to last for several months.
Approval Unlikely – Jan van Eck, the chief executive of investment firm VanEck, said it’s unlikely that the U.S. SEC will approve a spot Ether ETF in May, including the application submitted by his firm, which will “probably be rejected.” VanEck was the first to file for a spot Ether ETF in the U.S. alongside Cathie Wood’s ARK Invest, and the final decision dates for these applications are on May 23 and May 24, respectively. “The way the legal process goes is that regulators will give you comments on your application and that happened for weeks and weeks before the Bitcoin ETFs, but now pins are dropping as far as Ethereum is concerned,” he said, reiterating comments from many analysts that the SEC hasn’t engaged with the filers to the same degree they did with the BTC ETF applications. CoinShares CEO Jean-Marie Mognetti agreed with van Eck, saying, “I don’t see anything being approved this side of the year.”
No More DAO – The controversial SushiSwap DAO governance proposal involving the transfer of more than $40 million in DAO-controlled treasury assets to a new Labs model has passed an initial community signal vote despite objections to the plan on social media. After voting concluded on Wednesday, 62.5% of respondents voted in favor of the proposal, and it will now move on to the implementation vote, which will conclude on April 16 and currently has support from 98% of voters. According to SushiSwap developer Jiro, the proposal aims to evolve Sushi by adopting a labs model, “thereby restructuring the current organization to enhance operational efficiency and accelerate protocol development.” The controversy stems from SushiSwap Compensation Committee member Naïm Boubziz, who alleged the core development team created fresh wallets ahead of the vote to increase the team’s voting power.
And in the World of Regulators…
Policing Crypto – The U.S. Treasury has called for the creation of “an enforcement regime” that is capable of helping protect the American public from the downsides of decentralized currencies and finance, including their use by terrorists, transnational criminals, and rogue states. U.S. Treasury Deputy Secretary Adewale Adeyemo said the main problem with cryptos and DeFi is that they allow bad actors to “hide their identities and move resources using virtual currency.” Reforms put forward by Adeyemo and the Treasury include the introduction of a secondary sanctions tool targeted at foreign digital asset providers that facilitate illicit finance, modernizing and closing gaps in existing authorities by expanding their reach to explicitly cover the key players and core activities of the digital assets ecosystem, and addressing jurisdictional risk from offshore cryptocurrency platforms.
Lawsuit Incoming – The SEC issued a Wells notice to Uniswap, which the platform’s chief legal officer Marvin Ammori said was “disappointing” but “not unexpected from this SEC.” A Wells notice is a formal notification issued by the SEC to inform a company or individual that the regulator’s staff intends to recommend enforcement action against them. “If the SEC had authority over our self-custodial, non-intermediated products, it could tell us how to register them,” Ammori said. “It can't and so it doesn't. It has provided no clarity and no guidance – as several SEC commissioners have stated in multiple dissents.” The SEC has been investigating Uniswap Labs, Uniswap’s main developer, since 2021, and the DEX previously delisted several tokens from its platform, citing growing regulatory pressure. Wells notices were issued to Binance and Coinbase prior to the lawsuits that the regulator filed against them.
ETFs Inbound – The Securities Regulatory Commission of Hong Kong (SFC) has reportedly expedited the approval process for four spot Bitcoin ETFs, with the first approvals expected to be handed down by April 15. Among the applicants are several investment firms with a home base in China, suggesting that some companies look to use Bitcoin ETFs in Hong Kong as a workaround to the ban on all things crypto that China announced in 2021. The firms behind the spot BTC ETFs include Harvest International, China Asset Management, Boshi Fund, and Value Partners Financial. After the SFC greenlights the initial set of spot Bitcoin ETFs, the Hong Kong Stock Exchange will require approximately two weeks to finalize listing procedures and related arrangements. The addition of ETFs in Hong Kong is expected to put additional buying pressure on Bitcoin, which has already seen heavy demand from the ETFs listed in the U.S.
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