Crypto + Market update - March '22

Markets

US

The Federal Reserve increased its rate by 0.25% in March, marking the first rate increase since 2018. Post-rate-rise, the yield on the 30-year Treasuries fell below that of the five-year for the first time since 2006. This comes after the 5-10 year and 3-10 year yields inverted. An inverted yield curve may suggest a looming recession. However, analysts are suggesting this is likely occurring due to the Fed's quantitative easing strategy, which included buying long-dated Treasuries to lift the economy, which has, in turn, left the long end of the yield curve artificially low.??

Source: CNBC

Europe?

Russia has pledged to de-escalate its war in Ukraine. However, negotiations have failed to reach a cease-fire. The Kremlin said it'll reduce military operations near Kyiv and Chernihiv. No date was set for future talks. Joe Biden expressed scepticism over Moscow's assurances, "We'll see," Biden said.

"I don't read anything into it until I see what their actions are."

Confirming US scepticism, Zelensky's advisor said the talks hadn't made much progress.

Regulation?

Last year, the Australian Government agreed in principle to recommendations made by the Senate Select Committee on Australia as a Financial and Technology Centre regarding consulting on a licensing and custody regime for crypto-asset secondary service providers (commonly known as crypto exchanges). This month, the consultation paper has been released and is open for feedback from the digital asset exchanges of Australia. The industry sees this as a positive sign toward a crypto-friendly regulatory environment. The Australian 2022 budget was quiet on the crypto front but had a favourable outlook for the digital economy, with Binance Australia CEO Leigh Travers quoted in ITWire.?

Looking to the US, President Joe Biden's proposed federal budget anticipates $11 billion in new revenue over the next decade from revised crypto rules. The proposal is set to "modernise rules" related to digital assets, including extending the "mark-to-market" rules to digital assets, which could mean, in theory, that crypto held by certain entities that appreciates in price may be taxed even if it's not sold.

In Europe, the EU's proposed Markets in Crypto Assets (MiCA) regulatory package voted against the de-facto Proof-of-Work (PoW) ban: 30 against, 23 in favour. This has come with a sigh of relief from the European crypto community, as 9.1% of Bitcoin's hash rate comes from European miners. MiCA trilogue is set to begin next week.? Proof-of-Work blockchains saw broad-based gains on the news.?

Institutions

Goldman Sachs makes history with its first over-the-counter crypto option trade. The traditional investment bank traded a bitcoin-linked instrument called a non-deliverable option - a derivative pegged to the price of BTC that pays out in cash, with crypto merchant bank Galaxy Digital. This trade represents the first step that the bank has taken to offer direct exposure to the crypto market on behalf of its clients. March also saw boutique bank Cowen officially launching a dedicated crypto and digital asset division, including full-service trade? execution and custody services. GS and Cowen join other institutions that have expanded into the cryptocurrency space; last year, Bank Of America established a crypto research arm, and JPMorgan Chase allowed access to crypto funds for private clients.?

Australian banks finally joined the stablecoin party led by ANZ, which became the first major Australian bank to mint an Australian dollar stablecoin. The use case enabled corporate customers to save settlement time for the transaction and may usher in a new wave of institutional interest to the sector.?

ETH

After nearly seven years of deliberation, Ethereum's (ETH) current Proof-of-Work (PoW) to new Proof-of-Stake (PoS) mining consensus mechanism – dubbed "The Merge", appears imminent. This will be the most significant protocol change in ETH's history. The already running beacon chain will merge with the existing Ethereum mainnet chain, which will ensure the preservation of the network's history, but, crucially, will change the consensus mechanism, marking the end of PoW for Ethereum, and the full transition to PoS. Last week, core developers successfully simulated The Merge on Kiln, an Ethereum test network, and announced that they intend to transition the remaining test networks by June. Notably, the Merge will end GPU mining on the network and reduce the network energy usage by at least 99.95%.?

Source: ethereum.org?

Given Ether's $407 billion market capitalisation and the $126 billion value now locked in DeFi protocols, the stakes associated with a successful Merge are high.

DeFi

Double-digit gains have seen DeFi tokens rally. Terra is up 43.75% (73.90 to 106.23), Ethereum up 29% (2635 -3400), and BNB up 18.75% (368-437) in the last 30 days. Total Value Locked hit $222.94B.?

Source: DefiLlama

Industry News

• On March 17th ApeCoin ($APE) was officially launched, an ERC-20 governance token that will be operated by the ApeCoin DAO. In addition, BAYC recently passed CryptoPunks to become the world's most valuable NFT collection.?
• Yuga Labs raises $450m to build the metaverse.?
• Google and Instagram searches for crypto tattoos surged 222% in the last 12 months. Nice.
• TreasureDAO, an up-and-coming NFT ecosystem built on Arbitrum, was hacked. The exploit took advantage of the contract's 'buy item' function, which did not ensure that the quantity of an ERC-721 purchased was greater than 0. Because of this, NFTs could be "purchased" for free.?
• Ronin, an EVM blockchain for play-to-earn games – recently fell victim to one of the largest hacks in crypto history. A whopping 173,600 ETH was drained from Ronin bridge last week, alongside another 25.5M USDC.
• The prince of crypto was crowned by the front cover of Time magazine, and the tweets couldn't be funnier.?

And thats all folks.

All values are in USD.