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Circle Integrates USDC with Brazil and Mexico's National Payment Systems
Circle has integrated its USD-pegged stablecoin, USDC, into Brazil's PIX and Mexico's SPEI real-time payment systems, allowing businesses in both countries to directly access USDC through local financial institutions. This integration eliminates the need for international wire transfers, significantly reducing transaction times from days to minutes. Companies can now use USDC for corporate purposes and offer it to retail customers, with transactions available in local currencies like the Brazilian Real (BRL) and Mexican Peso (MXN). Circle's move aims to enhance cross-border transactions, particularly benefiting remittances and trade between the U.S., Mexico, and Brazil.
Google Cloud Launches Ethereum-Compatible RPC Service
Google Cloud has launched a blockchain remote procedure call (RPC) service, allowing developers to access blockchain data via API calls. Initially supporting the Ethereum mainnet and test networks, the service is compatible with the Ethereum JSON-RPC standard for seamless integration into existing applications. Google Cloud plans to expand support to more blockchains next year. The service is aimed at a wide range of users, from startups to large enterprises, and offers a free tier with up to 100 requests per second. It joins other RPC providers like Infura, Alchemy, and QuickNode in supporting Web3 development.
Australia's Central Bank Launches 3-Year Program for Wholesale CBDC
The Reserve Bank of Australia (RBA) announced it will prioritize the development of a wholesale central bank digital currency (CBDC) over a retail version. In a speech at the Intersekt Fintech Conference, RBA Assistant Governor Brad Jones outlined the bank's three-year roadmap, highlighting the benefits of a wholesale CBDC for commercial and central banks, such as reducing risks, enhancing liquidity, and lowering compliance costs. He stated that a retail CBDC offers limited innovation and potential challenges, like increased borrowing costs and bank run risks. The RBA will focus on Project Acacia, which explores wholesale CBDC and tokenized bank deposits, while continuing research on asset tokenization and blockchain technology.
Trading Desk Insights
Price Action:
As anticipated, BTC continues to display high intraday volatility and indecisive price action ahead of today's FOMC meeting. Yesterday's attempt to break above $61,000 failed, with prices pulling back after the New York close. The daily chart shows a clear bearish rejection off the 100-day moving average, along with a persistent pattern of lower highs over the past month. ETH continues to underperform Bitcoin, taking heavier hits on the downside, as evidenced by the plummeting ETH/BTC ratio.
Caution is highly advised for anyone intraday trading today, as FOMC meetings cause notoriously high volatility and whiplash like candles. Options market pricing seems to reflect this high variance as well, as super-short dated options (less than 1 week expiry) show massively elevated implied volatilities. This means that short-dated exposure of any kind is very expensive, as market makers are pricing in a hefty risk premium for both calls and puts.
FOMC Meeting: Market Update
Arthur Hayes, co-founder of BitMEX and CIO of Maelstrom, has stated in a recent interview at Token2049 that the Federal Reserve's first rate, expected today, could trigger a significant decline in risk assets, especially cryptocurrency. Although liquidity easing cycles have been historically favorable for BTC, Hayes cautioned that this move could exacerbate inflationary pressures and strengthen the Japanese yen (JPY), leading to broad-based risk aversion. He stated, "Cutting rates now is a mistake because inflation remains a persistent issue in the U.S., largely driven by government spending. Cheaper borrowing will only add fuel to the inflation fire."
He also pointed out that the narrowing interest rate differential between the U.S. and Japan could cause Japan to raise rates, triggering a sharp appreciation in the yen. He further argues that this could lead to the unwinding of yen carry trades, and force investors to unwind long positions in risk assets that were financed by JPY-denominated loans. He highlighted how this scenario played out in early August when the Bank of Japan raised its benchmark rate, causing Bitcoin to plummet from $64,000 to $50,000 within a week. Hayes also predicts that U.S. interest rates could fall back to near-zero levels, far from their current range of 5.25% to 5.5%.
Ethereum: Developer Update
Ethereum is facing discussions about its next major upgrade, Pectra, just six months after its last. Pectra was set to be Ethereum's largest hard fork to date, incorporating several new features. However, some developers have voiced concerns about the scale of the upgrade. Developers are now considering splitting the highly anticipated upgrade into two parts due to its complexity and the risk of introducing too many changes at once.
According to a report by Christine Kim, VP of Research at Galaxy Digital, the first part of Pectra would focus on Ethereum Improvement Proposals (EIPs) such as EIP-7702, which aims to enhance wallet functionality. The second part would tackle upgrades to Ethereum's Virtual Machine, specifically through EOF (Ethereum Object Format). The decision on whether to split Pectra into two parts will be made during the All Core Developers Consensus Layer call this Thursday.
Crypto Charts
Disclaimer
This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.
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Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.
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