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Bitcoin market activity surges on back of BRC-20 token and Taproot upgrade


Bitcoin (BTC) closed last week at about $26,750, a 0.5% decrease in price compared with the previous week. The 7-day moving average of active addresses on the Bitcoin network dropped to 754.52k, the lowest since July 2021.

The impact of BRC-20, tokens that confirm transactions on the BTC blockchain, remained strong. BRC-20 tokens are responsible for 26% of BTC network transaction fees.

BTC activity recently surged however due to the growing use of ordinal inscriptions, which are used to create BRC-20 tokens that can be deployed on BTC blockchain following the Taproot upgrade and have seen a rise in activity since mid- April.

On a year-to-date basis, Bitcoin spot volume increased in emerging markets and Japan, while a decrease had been recorded in the European, United Kingdom and US markets. BTC supply stored on exchanges dropped below 12% for the second time during 2023, still showing fear among investors amid multiple bankruptcies that affected crypto businesses and banks.

International plan unveiled to regulate crypto

The International Organisation of Securities Commissions which regulate financial markets have unveiled an 18-point plan to put guardrails around crypto investing. Bitcoin has also been bought this week as the proposals propel crypto currencies further into the mainstream.

Concerns about investors’ risk in crypto markets following the FTX collapse prompted the move. It piles pressure on the UK – and other countries – to publish crypto market regulation.

Bitcoin seems to have been bolstered by the news of this concerted effort to regulate the industry, rising by more than 2%. The crypto currency has gained 64% since the start of the year, largely recovering from the sharp falls it suffered in the back half of 2022.

Despite this volatility, the IOSOC is clearly recognising that digital coins and tokens are here to stay which is why it’s pushing a global approach to governing this risky asset class.

“When FTX collapsed like a house of cards it sent shockwaves – not just through the crypto world – but also the wider financial system as the vast numbers of diverse firms owed money became apparent,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. “The ripple effect sent a shiver through regulatory bodies and prompted this turning point from the IOSOC. It wants to apply the similar stringent rules governing the way equity and bond markets operate to the crypto-sphere covering requirements governing conflicts of interest, operational risks, treatment of market manipulation and the treatment of retail customers.”

This move by the international watchdog comes hot on the heels of MPs calling for the government to treat crypto investments as gambling.

“The need for regulation could not be clearer, and now the guardrails have been drawn up and now the pressure is growing on individual jurisdictions, including the UK, to come up with a concrete plan to regulate the market,” Streeter said.

Tether reports $1.48bn profit in Q1

USDC, the stablecoin issued by Circle, witnessed a negative trend, after it was hit by the contagion of U.S. banks, as supply shrank from 47 billion to less than 30 billion in just over 60 days. Issues related to other major stablecoins worked in favour of Tether, the firm behind the USDT stablecoin. It announced a record net profit of $1.48 billion in Q1 and currently shows a 64% dominance in the stablecoins market cap.

Starting this month, Tether will regularly allocate up to 15% of its net realised operating profits towards purchasing Bitcoin (BTC). Tether also claims to have drastically reduced its liquid component in banks from $5.3 billion to $483 million in Q1 2023, to avoid exposure to possible further bank contagion.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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