Good morning. Here’s what’s happening:
Prices: As bitcoins nudges higher above $17,400, altcoins are surging and the so-called “Grayscale discount” is narrowing thanks to growing speculation over Digital Currency Group’s finances.
Insights: Indonesia’s government is launching a crypto exchange. But it’s not completely correct to think that it’s launching a competitor to Binance.
Prices
Bitcoin crosses above $17.4K, but Check Out GALA
By Bradley Keoun
The digital-asset analysis firm Arcane Research noted that bitcoin’s gains are getting eclipsed as “market participants rotate into altcoins amidst a frantic short squeeze.”
Markets analyst Glenn Williams Jr. wrote Tuesday that he’s suddenly seeing an uptick in activity in a technical screen he uses to identify cryptocurrencies with rising volatility. It’s especially surprising given how missing volatility was for the previous few weeks, as chronicled in a weekly report Tuesday by Glassnode.
The drama surrounding Digital Currency Group (owner of CoinDesk) continues, and the speculation can be seen in the recent narrowing of the so-called “GBTC discount” to an eight-week low.
Insights
Indonesia’s Government-Run Crypto Exchange Isn’t What You Think it Is
By CoinDesk Indonesia’s Shenna Peter and CoinDesks’s Sam Reynolds
Indonesia’s government is launching a crypto exchange. But it’s not completely correct to think that it’s launching a competitor to Binance.
Within Indonesia, crypto exchanges like Binance are referred to as “Physical Traders of Crypto Assets” by the country’s Commodity Futures Trading Regulatory Agency, also known by its Indonesian acronym BAPPEBTI.
Behind the scenes there are a number of other entities that are specific to the country that are similar to the infrastructure found in traditional finance.
When authorities in Indonesia refer to “crypto exchange,” it means something closer to a pricing reference index such as the NASDAQ composite.
This is one pillar in the trading infrastructure ecosystem, along side nationally regulated custodians — remember: post-Mt. Gox national custodian rules are why FTX Japan customers are whole — and a futures clearing house.
On one hand, this is how crypto trading goes mainstream in Indonesia and becomes an institutional grade asset. Its only with regulations and infrastructure akin to TradFi that institutions can truly invest in the asset class.
But on the other hand, crypto does lose some of its appeal if it’s as regulated and controlled as equities. There are possibilities that the government might implement things like trading hours (which would be tough to do for crypto) and restrictions on price movements.
BAPPEBTI has yet to release a timeline as to when they expect this to be completed. The regulator says they are still working on building out this infrastructure, and is targeting a launch date sometime this year.
This entire system and infrastructure will be the first of its kind in the world. And Indonesia, given its scale, is a great place to put this to the test.
Important events.
9:30 a.m. HKT/SGT(1:30 UTC) Germany’s 10-y Bond Auction
11:30 p.m. HKT/SGT(15:30 UTC) Australia’s Trade Balance (Mom/Nov)
6:00 a.m. HKT/SGT(22:00 UTC) China’s Foreign Direct Investment (YoY/Dec)
CoinDesk TV
In case you missed it, here is the most recent episode of “First Mover” on CoinDesk TV:
Crypto exchange Coinbase has said it is planning to reduce its headcount by around 950 employees as part of a restructuring which it expects to be complete by the end of Q2 2023. Pacific Street Managing Director Gareth Rhodes weighed in on the lingering crypto winter jitters. Meanwhile, bitcoin (BTC) is holding steady above $17,000. IDX Digital Assets CIO Ben McMillan shared his crypto markets analysis. And, Blockchain Foundation Executive Director Cleve Mesidor discussed the future of crypto regulation.
