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WEEKLY MARKET UPDATE
AUG 11, 2023
Weekly Market Update - Friday, August 11, 2023 - PayPal Launches PYUSD Stablecoin, Coinbase Opens Base Layer-2, and Aptos Partners With Microsoft
Welcome to our Weekly Market Update.* Explore weekly crypto price movements, read a quick digest of notable market news, and dive into a crypto topic — this week we explore the basics of crypto custody.
Crypto Movers
Crypto News
BitcoinBuzz Indicator
Topic of the Week
*Percentages reflect trends over the past seven days.
**Crypto prices as of Friday, August 11, 2023, at 11:55am ET. Check out the latest crypto prices here. All prices in USD.
Takeaways
- PayPal launches a USD-backed stablecoin: PayPal became the first major US financial institution to create its own US dollar-backed stablecoin with the launch of PayPal USD (PYUSD).
- July inflation cooler than expected: With inflation numbers from July coming in below expectations, the market is now projecting interest rates to remain steady through to the end of the year. Headline and core consumer price data for July both increased by 0.2%, reflecting a respective 3.2% and 4.7% yearly increase.
- Coinbase layer-2 network Base goes live to the general public: The Base mainnet had already been open to a select group of users for the past few weeks. As of Friday, data shows $175 million USD locked on the blockchain. The announcement followed Coinbase’s second quarter earnings beat.
- Aptos (APT) Surges on Microsoft partnership announcement: Aptos (APT), a layer-1 proof-of-stake blockchain, saw a ~15% surge in price on Wednesday after it announced a partnership with Microsoft to work on AI and web3 products and services.
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Bitcoin and Ether Continue Range Bound
Bitcoin (BTC) traded in the $29k to $30k USD range for the second week running. On Tuesday, BTC rallied from the bottom of its recent range to test the psychological $30k USD resistance level, perhaps boosted by Paypal’s launch of its new stablecoin PayPal USD (PYUSD) in the US.
Ether (ETH) has been fighting to move back above its 100-day moving average of $1,850 USD, having broken below that level last week. ETH has continued to track alongside BTC, with the ETHBTC pair hovering around the 0.063 level.
PayPal Launches US Dollar-Backed Stablecoin
The payments giant PayPal announced the launch of a US dollar-denominated stablecoin called PayPal USD (PYUSD). The move expands their crypto services, which currently offers bitcoin (BTC), Bitcoin Cash (BCH), ether (ETH), and Litecoin (LTC) trading.
PayPal is the first major US financial institution to create its own US dollar-backed stablecoin as it moves to gain market share in the crypto payments sector. Jose Fernandez da Ponte, Senior Vice President and General Manager of blockchain, crypto, and digital currencies at PayPal, spoke of the excitement surrounding the move, saying: “stablecoins are the killer application for blockchain right now,” adding that they are “something we cannot just sit out.”
July Inflation Cooler Than Expected
After sliding lower last week, stocks were down just over 1% this week as earnings season continues and investors waited for Thursday’s inflation update. On Thursday, inflation numbers came in below expectations, easing fears of further interest rate increases from the US Federal Reserve and pushing stocks mildly higher.
Headline and core consumer price data for July both increased by 0.2%, reflecting a respective 3.2% and 4.7% yearly increase. In response to the better than expected results, the market is setting a ~90% chance that the Fed will keep interest rates steady at its next meeting in September.
Coinbase Launches General Access to Base Layer-2 Network
Coinbase launched their Ethereum layer-2 network Base to the general public on Wednesday, after a beta launch in February. The Base mainnet has been open to a select group of users for the past few weeks, with data showing $175 million USD locked on the blockchain as of Friday morning.
The announcement followed Coinbase’s second quarter earnings beat, as it reported $708 million USD in revenues and an adjusted earnings per share loss of $0.42 USD, compared analyst expectations of $628 USD in revenues and losses of $0.76 USD earning per share. Following its better-than-expected second quarter performance, Coinbase also announced on Monday that it will offer to repurchase up to $150 million USD of $1 billion USD in bonds maturing in 2031.
Microsoft Partnership Boosts Aptos (APT) Token Price
Aptos (APT), a layer-1 proof-of-stake blockchain, saw a ~15% surge in price on Wednesday after it announced a partnership with Microsoft to work on AI and web3 products and services.
The partnership will see Aptos leveraging Microsoft's Azure OpenAI services to build its offerings, including a new chatbot called Aptos Assistant. The news comes just ahead of a large token unlock on the network that will see over 2% of APT supply unlocked on August 12.
-From the Gemini Trading Desk
BitcoinBuzz data as of 5:00pm ET on August 10, 2023.
To learn more about the BitcoinBuzz Indicator and its components, read our introduction here. Check back every Friday for an updated score!
Intro to Crypto Custody
When investing in crypto, one of the most important factors to consider is custody. Custody is a broad term that refers to the ability to hold, move, and protect crypto securely.
Different types of investors require different types of crypto custody solutions. A retail investor, for example, might want a simple, relatively hands-off option, whereas an institutional investor could require more customization. Fortunately, there are a variety of options available, from self-custody options like a hardware or software wallet to third-party offline storage in a cold wallet.
Crypto Self-Custody: Hot and Cold Wallets
For those seeking complete control over their crypto, a self-custody solution might be the best option. Self-custody affords you complete control of your crypto via a personal private key. Within the self-custody arena, there are a couple options, including software wallets, which come in the form of desktop wallets, mobile wallets, and online wallets, and hardware wallets, which store your private key in a secure hardware device.
While controlling your own crypto storage might sound appealing, there are inherent risks to this option, as there are few recovery options as no third party can intervene if you lose your private key.
Crypto Partial Custody
Partial custody refers to a self-managed wallet that offers a degree of third-party assistance in securing assets. This infrastructure can be as simple as two-factor authentication or basic multi-signature protections, where the third party possesses a key for co-signing a customer’s transactions.
Third-Party Digital Asset Custody
Third-party custody provides some of the highest levels of security for your crypto. This solution could work well for individual investors, as well as institutions, such as asset managers, hedge funds, and high-net-worth individuals (HNWIs). Within third-party custody, there are different types of security options to consider.
Read more about hot vs. cold wallets here.
Online or hot wallets are connected to the internet and therefore generally more easily accessible. Cold storage, by contrast, is offline, which means signing keys are kept in physically isolated hardware devices with no connection to the internet, and thus, cannot be controlled remotely. For this reason, cold storage boasts heightened security but can cause longer transaction times than its online counterpart in some cases. In other cases, an exchange may allow you to instantly access an equivalent value of the funds you have in cold storage at that exchange.
You can learn more about Gemini Custody here.
See you next week. Onward and Upward!
Team Gemini
*This material is for informational purposes only and is not (i) an offer, or solicitation of an offer, to invest in, or to buy or sell, any interests or shares, or to participate in any investment or trading strategy, (ii) intended to provide accounting, legal, or tax advice, or investment recommendations, or (iii) an official statement of Gemini. Gemini, its affiliates and its employees do not make any representation or warranty, expressed or implied, as to accuracy or completeness of the information or any other information transmitted or made available. Buying, selling, and trading cryptocurrency involves risks, including the risk of losing all of the invested amount. Recipients should consult their advisors before making any investment decision. Any use, review, retransmission, distribution, or reproduction of these materials, in whole or in part, is strictly prohibited in any form without the express written approval of Gemini.
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