Bullish Insights – Weekly Market Recap

The Bullish Insights Weekly Market Recap includes curated industry news and analysis from the Bullish team for the week of February 13, 2023.  

Bullish Exchange

This week’s peak trade volume (24h): February 17, 2023, $1,172,212,572 (49,438 BTC)

Crypto market highlights

• While Bitcoin's correlation with US equity markets was exhibiting a decreasing trend, its correlation with gold has returned to positive since the beginning of the year. Both assets rose in the month of January but saw a slight correction in price action towards February. The 30-day correlation between Bitcoin and gold is at ~0.3
• Post Paxos is  receiving a Wells Notice from the SEC regarding the issuance of $BUSD, the stablecoin market has seen a shift out of stables like $USDC and $BUSD into $USDT. In the past 7-days, $BUSD and $USDC have seen a -5.3% and -1.6% change respectively. In comparison, $USDT has seen a 1.95% increase in the same period.
• The latest distribution of validators on Ethereum: Lido still ranks as the largest known validator with a market share of 24.8%. Coinbase holds 11.4% dominance followed by Kraken with 6.9%.
• Earlier in the week we looked at the impact on stablecoins after Paxos was issued a Wells Notice by the SEC. Tether still gained traction in light of the debacle with $USDT increasing its dominance from 50% on Feb 13, to 51% on Feb 17. While the 1% increase may seem negligible, in dollar terms it equates to ~$1.4bn in a short period of four days. Notably $BUSD and $USDP saw the biggest dip in dominance over the same period, down to 10.1% and 0.6% respectively.

Macro market highlights

• Monday's session closed on a high note as households' expectation for income growth saw the biggest one-month drop in almost a decade. US consumer expectation for income growth fell from 4.6% to 3.3%.
• US equity markets closed on a mixed note in Tuesday's session after inflation came in slightly higher than expectations at 6.4% YoY for the month of January.
• US retail data noted that US retail sales jumped +3% in January, the highest level seen since March 2021. Despite this, US equity markets reacted positively to data signaling robust consumer demand with the S&P 500 up by 0.3%, the Dow rose by 0.1%, and the Nasdaq Composite advanced by 0.9%.
• Stronger than expected producer inflation data saw US equity markets close on a lower note in Thursday's session. The Producer Price Index (PPI) rose by 6% YoY in January and 0.7% MoM, signaling persistent inflationary pressures in the economy. The S&P 500 fell by 1.4%, the Dow dipped by 1.3%, and the Nasdaq Composite retreated by 1.8%.

Other updates

• The US SEC issued a Wells notice to Paxos for an alleged violation of investor protection laws. The notice outlines that Paxos had issued and listed Binance USD but failed to register it as a security. (Source: WSJ)
• PayPal Holdings has halted their stablecoin project after the SEC issued a probe into Paxos. PayPal spokesperson, Amanda Miller stated “We are exploring a stablecoin…if and when we seek to move forward, we will, of course, work closely with relevant regulators.” (Source: Bloomberg)
• Binance CEO, CZ tweeted that Paxos will “cease minting new BUSD” as a result of being regulated by the New York Department of Financial Services. He reiterated that the stablecoin is issued and redeemed by Paxos with the intention for Binance to continue supporting BUSD but may “…move away from using BUSD as the main pair for trading”
• CZ stated that Binance is going to look at other potential issuers as well as stablecoins that aren’t US based.
• Singaporean bank, DBS is looking to apply for a Hong Kong license to be able to offer crypto services to its customers based in the region. (Source: COINTELEGRAPH)
• Abu Dhabi is cementing itself in the web3 space after launching a $2bn project to fund web3 and blockchain related startups. Dubbed Hub71 Digital Assets, the initiative is set to provide and support startups the ability to develop in the ecosystem. (Source: CoinDesk)
• Chair of the SEC, Gary Gensler issued a full statement in regards to a proposal in the enhancement and expansion of the role of custodians to reflect changes in technology. He specifically highlighted that the proposal will cover all asset classes including crypto assets. (Source: SEC)
• German multinational conglomerate Siemens launched their own digital bond on an underlying public blockchain. Digital bonds will increase accessibility for investors eliminating the need for bank intermediaries. (Source: Siemens)
• Polygon announced they are going to go to mainnet beta launch for their zkEVM project on March 27. (Source: Polygon)
• Mt. Gox’s two largest creditors have allegedly opted to be paid out mostly in Bitcoin. The pay-out is anticipated to take place in September later this year. (Source: CoinDesk)
• The SEC issued a press release to charge Do Kwon for alleged securities fraud. SEC Chair Gary Gensler detailed in the statement that both UST and Luna were unregistered securities. "We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD," Gensler stated. (Source: SEC)

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