Crypto Market Forecast: Week of June 12th 2023

The price of Bitcoin (BTC) fell by 4.5% in the last week, to ~US$26K. Ether (ETH) dropped by 8.0% to ~US$1.8K. Binance-coin (BNB) took a major hit after the SEC sued the coin’s issuer and is down by 22% to ~US$239.

With the SEC’s crackdown against exchanges Binance and Coinbase, suing both for operating as unregistered securities exchanges, digital asset prices have taken a downward turn. Bitcoin dipped as low as $25.4K on Tuesday, June 6^th; Ether (ETH) as low as $1.72K on Saturday.

Binance.US announced over Twitter on Thursday of last week that as of Tuesday, June 13^th, it will “pause fiat (USD) withdrawal channels” and will transition (for the time being) to a crypto-only exchange (no fiat). The exchange assured customers that their assets are still held 1:1 (full reserves).

The SEC has been seen to be fighting a challenging case in court against Ripple in recent weeks, continuing its long held legal assertion that XRP is a security. As such, the SEC suing Binance last Monday and Coinbase last Tuesday makes for interesting times across the sector.

Responses to the SEC came from many directions – not only from recently targeted exchanges. For example, IOG (a Cardano development company) issued a statement arguing that the SEC’s filing (considering ADA a security) “contains numerous factual inaccuracies” and “[u]nder no circumstances is ADA a security under U.S. securities laws. It never has been”.

In an interview with CNBC on Tuesday, June 6^th, SEC head Gary Gensler stated that his agency is “meant to be merit neutral” when it comes to digital assets but then asserted that “We don’t need more digital currency. We already have digital currency. It’s called the US dollar; it’s called the euro; it’s called the yen”.

Meanwhile, in the aftermath of the SEC’s crackdown, DeFi trading volumes surged.

A Pew Research survey was released in April that reveals some novel findings on the public’s confidence “in the safety and reliability of cryptocurrency” (particularly interesting in light of the present crackdown on cryptocurrency exchanges). Although the Pew survey only covers the United States (admittedly limited in scope), this is a fairly useful country to investigate given that the United States scores highly in Chainalysis’ 2022 Crypto Adoption Index: 5^th in the world. Thus, we would expect lower confidence and even lower overall familiarization with cryptocurrencies in countries with lower adoption rates.

One major finding of note is that, among the Americans who have heard of cryptocurrencies, only about 25% say that they are at least somewhat confident in cryptocurrency safety and reliability. Among Americans who have ever invested in, traded or used any cryptocurrency, the majority of them still own it (69%). Roughly 45% of the Americans who have engaged in cryptocurrencies did “worse than expected”, but roughly 60% of them responded saying that their investments “neither helped nor hurt their personal finances” overall.

Crypto news for the weeks ahead

June 30

The US Bureau of Economic Analysis’ (BEA’s) of March’s Personal Consumption Expenditures (PCE) numbers will be released. This is one of the primary indicators used by the FOMC when considering interest rate levels.

June 13

The Consumer Price Index data for May 2023 will be released – Another one of the indicators the Federal Open Market Committee (FOMC) watches when considering interest rate hikes.

June 14

The FOMC will be meeting. Futures markets are strongly leaning towards a prediction of another 25 bps hike.

Top 10 Crypto Summary

It was a mostly downward market this week in BNC’s top 10 digital assets by market cap, with Cardano’s ADA and Binance’s BNB being the biggest losers. Both assets (and most others more generally) presently suffer in the wake of the SEC’s crackdown against Binance and Coinbase.

Bitcoin Price Chart

GLASSNODE’s Twitter account has shown over the past 24 hours (as of this writing) some up-to-date charts that show us what is happening in light of the SEC’s present crackdown on “crypto”. Firstly, long-term holders (LTH) have sent relatively small amounts of Bitcoin to exchanges, suggesting they have little interest in cashing out in light of regulatory uncertainty. This could be also be interpreted as LTHs afraid of counterparty risk if exchanges were to be shut down by regulators.

Miners also seem to not be phased, with ASICs still coming online during a present period when hash rates are hiting all-time highs. However, miners have been cashing out, with the 3rd largest inflow of bitcoins sent to exchanges on record, being observed in the last week driven by miner deposits.