Sebastian Sinclair

<div id="highlights-block_62b920be04bb9" class="highlights">
 <ul>
 <li>Zerocap, a digital asset manager and custodian, acted as a market maker for the Victor Smorgon Group in a landmark tokenized carbon credit transaction</li>
 <li>It&#8217;s the latest use case for the bank-backed Australian stablecoin following a $30 million pilot transaction in March</li>
 </ul>
 
</div>



A stablecoin issued by one of Australia&#8217;s biggest banks, ANZ, has been used to purchase tokenized carbon credits in a landmark transaction aimed at testing the asset&#8217;s feasibility in carbon abatement instruments.



Victor Smorgon Group (VSG), a private investment firm managing the <a href="https://www.afr.com/rich-list/from-blood-and-guts-to-crypto-inside-the-smorgon-family-office-20220426-p5ag5y" target="_blank" rel="noreferrer noopener">Smorgon family</a>&#8216;s billions in assets, bought Australian Carbon Credit Units in their tokenized form from carbon trading platform <a href="https://www.betacarbon.com/" target="_blank" rel="noreferrer noopener">BetaCarbon</a>, according to a statement Sunday.



BetaCarbon tokenizes Australian carbon credits into its BCAU token, with each representing 2.2 pounds (1&nbsp;kilogram) of carbon captured.



&#8220;BetaCarbon is the first provider to tokenize Australian Carbon Credit Units (ACCUs) using blockchain technology. Our long-term objective is to trigger more carbon sequestration and removal and drive up the cost to emit CO2 to incentivize economy-wide emissions reduction,&#8221; BetaCarbon CEO and Founder Guy Dickinson told Blockworks.



It&#8217;s the latest for the <a href="https://cms.blockworks.co/anz-becomes-first-bank-to-mint-australian-digital-dollar/" target="_blank" rel="noreferrer noopener">A$DC stablecoin</a>, launched in March, which became the country&#8217;s first dollar-backed stablecoin issued by a bank — redeemable on a 1:1 basis for Australian dollars. In that instance, A$DC was used to facilitate a $30 million pilot transaction using a smart contract that was compatible with the Ethereum virtual machine (EVM).



In the latest transaction, VSG first sent a request to ANZ asking to convert a set amount of Australian dollars into A$DC. ANZ minted the equivalent amount and passed it along to digital asset fund manager and custodian <a href="https://zerocap.com/" target="_blank" rel="noreferrer noopener">Zerocap</a>.



The fund manager then acted as the market maker for the carbon credit transaction whereby a quote was sought after in Circle&#8217;s USDC stablecoin, BetaCarbon&#8217;s preferred pair, before a market was created by Zerocap in A$DC/BCAU on behalf of VSG.



The transaction provided A$DC/BCAU liquidity while offering both VSG and Zerocap redemption rights for A$DC, according to the statement.



&#8220;Everybody involved, particularly ANZ and Zerocap, really want to expand the use of the stablecoin [A$DC],&#8221; Zerocap&#8217;s CEO Ryan McCall told Blockworks in an interview. &#8220;Our thesis is that we will see the tokenization of everything including bonds, equities, property, the works.&#8221;



He said his firm was demonstrating use cases for tokenized assets beyond cryptocurrency. Tokenization refers to the process of taking an asset and converting it for use on a given blockchain. Zerocap also provided custody assistance to VSG in March, where the technology was praised for its processing speeds.



When asked about the security backing the transactions, Zerocap told Blockworks it uses various custody technology platforms, including Fireblocks, for the creation and storage of private keys. The asset manager also said it has a bespoke insurance policy from Lloyd&#8217;s of London — one of the world&#8217;s largest and oldest insurance underwriters.



Following the success of the deal, McCall said Blockchain technology provides for &#8220;irrefutable settlement,&#8221; as well as &#8220;secure custody&#8221; and &#8220;frictionless transacting.&#8221;



&#8220;With Zerocap providing custody and creating a market for carbon credits with A$DC, we&#8217;re proving how efficient a digital asset ecosystem can be for trading and settlement of an asset that most people don&#8217;t even associate with crypto,&#8221; McCall said.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



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ANZ Bank’s Stablecoin Used To Purchase Tokenized Carbon Credits

Macauley Peterson

<div id="highlights-block_d53364dddebbf7b82d4e9bb9bd5f0b6c" class="highlights">
 <ul>
 <li>The S&amp;P 500 ended the day -1% lower after initially trading up 1.5%, which has only occurred 8 times since the 2009 GFC, according to Bianco Research</li>
 <li>Bitcoin is now at its lowest point since Aug. 5, when it traded as low as $37,316 intraday</li>
 </ul>
 
</div>



All major digital assets are trading lower, following a sharp decline Thursday into Friday, and <a href="https://blockworks.co/price/btc">BTC</a> is currently testing the lows at $38,150, echoing weakness in US equity markets futures. Around $750 million in long crypto derivatives positions were liquidated, according to data from <a href="https://www.coinglass.com/LiquidationData" target="_blank" rel="noreferrer noopener">Coinglass</a>.



The Nasdaq 100 ended Thursday down about -2.2%, and has fallen nearly 11% over the past 15 trading days, now approaching its early-October lows of around 14400.



The S&amp;P 500 also closed down roughly -1%, after initially rising 1.5%. <a href="https://twitter.com/biancoresearch/status/1484283297010262017">According to Jim Bianco</a> of Bianco Research, that has occurred “only 8 times since the Global Financial Crisis in 2009.”&nbsp;



Bitcoin&#8217;s correlation with the tech-sector has been on an uptrend since the middle of 2019 and is near its all-time peak, on a monthly timescale, of about 0.8, as measured by the correlation coefficient (a 1.0 reading would be perfectly correlated, while -1.0 would be inversely correlated).



Positive correlation with the Nasdaq 100 has been the predominant condition for bitcoin throughout its history, particularly since 2017, a counterpoint to the narrative of BTC as a risk-off asset more akin to gold. Gold, meanwhile, has been significantly less correlated with the Nasdaq, although most assets moved in tandem throughout the stimulus-fueled uptrend in equities after the March 2020 crash.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="388" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png" alt="" class="wp-image-15826" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=1708 1708w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Above: BTC correlation with the Nasdaq from 2013-present; Source: TradingView Below: Gold correlation with the Nasdaq 2013-present<meta charset="utf-8">; Source: TradingView</figcaption></figure>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="434" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png" alt="" class="wp-image-15827" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=1712 1712w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



“[The] market is catching a risk-off momentum due to [a] spike in supply side inflation fear as well as geopolitical concern over Russia/Ukraine situation,” William Fong, Treasurer at Australian trading firm Zerocap told Blockworks.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Safe haven portfolio flow has shifted from stocks, credit and cryptocurrency markets into treasury bonds today in search of risk protection.”&nbsp;
</blockquote>



Fong also pointed to the unwinding of bullish leveraged positions in the market for crypto derivatives. The global open interest for bitcoin — a measurement of derivatives activity — has indeed fallen to about $11.4 billion in the wake of the sell-off, down from a peak of around $13.6 billion in late December.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1019" height="482" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg" alt="" class="wp-image-15828" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=1019 1019w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=50 50w" sizes="(max-width: 1019px) 100vw, 1019px" /><figcaption class="wp-element-caption">Global Open Interest, the total number of outstanding contracts across all exchanges; Source: KrownTrading.net</figcaption></figure>



However, there is hope for bitcoin bulls. By some metrics, such as the daily <a href="https://www.investopedia.com/terms/s/stochrsi.asp">stochastic RSI</a>, both equities and bitcoin are in oversold territory. And both remain in a primary uptrend on the monthly timeframe, with higher lowers and higher highs. For bitcoin, that remains the case so long as BTC ends the month above about $35,000.



Some bitcoin-specific indicators such as the Net Unrealized Profit/Loss (NUPL) — comparing BTC sales at a profit with those at a loss — show similarities with the summer 2021 sell-off, which found a bottom around $32,000, after intra-week moves as low as the $29,000 area.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> Net Unrealized Profit/Loss (NUPL) presents the magnitude of <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BTC</a> holder unrealized profit and loss, as a proportion of the Market Cap. NUPL is currently trading at 0.43, the lowest level of network profitability since July 2021. Live chart: <a href="https://t.co/QlJUY5K6eW">https://t.co/QlJUY5K6eW</a> <a href="https://t.co/Zzge8fTUwZ">pic.twitter.com/Zzge8fTUwZ</a>&mdash; glassnode (@glassnode) <a href="https://twitter.com/glassnode/status/1484307499704807427?ref_src=twsrc%5Etfw">January 20, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



European equity markets are trading lower, with the EURO STOX 600 index down -0.68%. The S&amp;P futures market points to a similar down open for US equities, and the Nasdaq 100 futures are down about -1%.




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Sebastian Sinclair contributed reporting.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



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