Morning Crypto Briefing: BTC Pushes Above $21K, ETH Eyes $1.2K As Risk Appetite Ramps Up

Key Points

  • Crypto is set to end the week on the front foot with altcoins outperforming as risk appetite ramps up.
  • Falling bond yields and commodity prices amid growing calls for a US recession has been cited as risk asset supportive.
  • Bitcoin was lasting trading just above $21,000 and Ethereum near $1,200.

State of the Market

Broad macro risk appetite looks set to finish the week in robust fashion, with US equity index futures eyeing a test of fresh two-week highs. The E-mini S&P 500 future is currently up about 0.7% in pre-market trade in the mid-3,800s, taking its gains since earlier weekly lows in the mid-3,600s to around 5.0%, with this recovery in sentiment helping to prop up cryptocurrency prices.

Bitcoin was last consolidating just to the north of the $21,000 level, towards the top of this week’s upper-$19,000 to upper $21,000 range and more than 20% above weekend lows near $17,500. Ethereum, meanwhile, was last at weekly highs just below the $1,200 level and about 35% higher versus last weekend’s sub-$900 per token lows.

The outperformance of stocks and crypto this week has been surprising in the context of an increasingly loud chorus of economists, major financial institutions and even Fed Chair Jerome Powell himself warning about the rising risk of a recession in the US. But analysts said that this resilience in risk assets like stocks and crypto could be down to a steep drop in US government bond yields and major commodity prices, which itself directly reflects rising recession risks. This drop in commodities and bond yields suggests a tamer inflation outlook and less hawkish central banks.

In terms of the major altcoins, Polygon’s MATIC token is up more than 18% in the last 24 hours according to CoinMarketCap data, with MATIC/USD trading near $0.60 and higher by nearly 50% on the week. Analysts have cited recent upside as down to a new product released by Polygon’s development team that allows for more private voting in Decentralised Autonomous Organisations (DAOs). The new product, called Polygon ID, is a system that verifies user identification whilst allowing individuals to maintain their anonymity when voting on governance proposals. The product went live on Polygon DAO earlier in the week.

The next best performer is Ripple’s XRP, which is higher by over 13% over the last 24 hours and closing in on the $0.40 per token level, while the likes of Avalanche, Shiba Inu and Solana are all higher in the region of 7-10% over the same time period. Solana doesn’t seem to have taken much impetus from the news that the blockchain’s key stakeholder Solana Labs is planning to release its own Web3 integrated mobile phone called “Saga”. Generally, the altcoins are outperforming on Friday, indicate of improving crypto risk appetite.

NFT Market Update: Football Icon Cristiano Ronaldo Signs NFT Deal with Binance, Snoop Dogg & Eminem Release BAYC Themed Music Video

Football (soccer for the North Americans) icon Cristiano Ronaldo, who is widely viewed as one of the best to ever play the game, has signed an exclusive multi-year partnership with crypto exchange Binance to drop a series of Non-Fungible Token (NFT) collections. These NFTs will be sold exclusively on Binance’s NFT marketplace, with the first collection expected to drop later this year.

Ronaldo, commenting on the collaboration, said that “my relationship with the fans is very important to me, so the idea of bringing unprecedented experiences and access through this NFT platform is something that I wanted to be a part of”. Binance CEO and founder Changpeng Zhao said that owners of the Binance/Ronaldo NFTs would secure “exclusive engagement opportunities to connect with Ronaldo”. Ronaldo has over 450 million followers on Instagram.

Elsewhere, US rap/hip-hop superstars Snoop Dogg and Eminem on Friday dropped a new Bored Ape Yacht Club (BAYC) NFT-themed music video to their song “From The D 2 The LBC”. Both rappers own an NFT of the cartoon ape, thus giving them rights to the images’ intellectual property, which allows them to feature the apes in their commercial endeavors.

The price floor to get your hands on one of Bored Ape Yacht Club’s 10,000 unique NFTs was last just above $100,000, around which it has spent the last ten or so days hovering. That puts the floor price market cap of the world’s most valuable NFT collection at just above $1 billion. Many major celebrities own BAYC NFTs. 

Meanwhile, the North American National Hockey League (NHL) has just signed a multi-year partnership with NFT platform Sweet to build a digital collectibles marketplace. The NHLs foray into the NFT space follows recent moves by other major US sports leagues. The NBA, MLB and NFL have all announced similar NFT projects in recent years.

Crypto Winter: CoinFLEX Pauses Withdrawals, Voyager Digital Limits Withdrawals, Moody’s Downgrades Coinbase

Crypto futures exchange CoinFLEX announced on Thursday that it would be pausing withdrawals given “extreme market conditions”. The company said it expects to resume withdrawals when it is “in a better position as soon as possible”. Trading for perpetual swaps and on spot markets has also been halted. CoinFLEX’s withdrawal halt comes as a withdrawal pause from major crypto exchange/lending platform Celsius Network enters its 11th day.

Elsewhere, crypto broker Voyager Digital, which was recently backed with funds from FTX CEO Sam Bankman-Fried, announced earlier this week that its daily withdrawal limit had been lowered to $10,000 from $25,000 given its exposure to beleaguered crypto hedge fund Three Arrows Capital (3AC). Earlier in the week, the company had said that it had accrued $720 million in exposure to 3AC via stablecoins and Bitcoin.

Turning to exchange news, global rating agency Moody’s has downgraded the corporate debt of US crypto exchange Coinbase from Ba3 to Ba2. The rating agency said the downgrade comes given “Coinbase’s substantially weaker revenue and cash flow generation due to the steep declines in crypto asset prices that have occurred in recent months and reduced customer trading activity”.

Coinbase this week announced that its Derivative Exchange would be launching its first crypto derivative producers later this month in the hope to attract more retail customers. The futures exchange will launch “Nano Bitcoin futures” (BIT), which are 1/100th the size of a traditional Bitcoin future.

Turning to crypto miners, Wall Street broker B. Riley has reduced its stock price targets for publicly listed crypto mining this week. The firm cut US mining giant Marathon Digital from a buy rating to neutral and cut its price target to $9 from $34 (the current share price is in the $6-7 region), citing to a combination of lower the lower Bitcoin price coupled with “repeated delays in the energization of miners outside Montana”.

Elsewhere, Binance CEO and founder Changpeng Zhao argued in a recent blog post that “bad” crypto projects should not be left to fail. Unfortunately, some of these bad projects have large user bases, often as a result of inflated incentives that created “marketing or pure Ponzi schemes”, he said.

Regulatory Landscape: Fed Chair Powell Thinks Digital Dollar Should be Issued by US Govt, Not Private Company

Fed Chair Jerome Powell said on the second day of his semi-annual testimony before the US Congress on Thursday that he doesn’t think it is preferable for a private stablecoin to wind up being the digital dollar. “If we’re going to have a digital dollar, it should be government-guaranteed money, not private money,” Powell said.

The Fed Chair told Congress that the rollout of a Central Bank Digital Currency (CBDC) “is something we really need to explore as a country” and that the Fed plans to “work on both the policy side and the technological side in coming years and come to Congress with a recommendation at some point”. Powell’s remarks will not go down well with the issuers of some of the largest currently existing USD-backed/pegged stablecoins like Tether and Circle Internet Financial.

Elsewhere, in a separate Congressional hearing on crypto regulation, the co-founder of Cardano Charles Hoskinson had some interesting remarks regarding regulation and compliance. Congress should make the regulations, but leave compliance up to software developers, akin to how the banking industry self-regulates.

“It’s not the SEC (Securities and Exchange Commission) or CFTC (Commodities Future Trading Commission) going out there doing KYC-AML (Know Your Customer and Anti-Money Laundering), it’s banks,” he remarked. According to Hoskins, this would allow the crypto industry to create self-regulating organizations (SROs) to guide compliance, just like what happens in the private banking industry.

Over in the UK, the country’s former Chancellor of the Exchequer (the UK equivalent of the Finance Minister) Philip Hammond on Thursday warned that the UK could be falling behind its rivals when it comes to crypto regulation. The former Chancellor told Bloomberg that “the UK has missed a trick… We are getting very close to the point where it will be too late… Other jurisdictions are racing ahead of us”.

“The jurisdictions that have embraced this technology that have regulated it properly and effectively will be the ones that develop these markets and they will become the new hubs,” Hammond noted. For what it’s worth, the UK government announced plans back in May to introduce new crypto regulations with the stated aim of becoming a global hub for crypto and blockchain technology. Meanwhile, the world’s largest stablecoin issuer Tether also this week announced the introduction of a new pound sterling-backed stablecoin (GBPT) and referred to the UK as a new frontier in crypto innovation.

5 Most Popular Cryptos of the Week: MATIC, UNI, SHIB, SOL, RUNE

Key Points

  • In a broadly subdued week for cryptocurrency markets, MATIC, UNI, SHIB, SOL and RUNE have stood out.
  • The bounce in these cryptocurrencies and the broader market’s resilience has defied growing chatter about a possible US recession.
  • A further pullback in US government bond yields may be behind this resilience.

It’s been a subdued week for the broader cryptocurrency market so far, with prices in consolidation mode following big moves in recent weeks. Bitcoin is currently on course to a post a just under 2.0% gain for the week and is currently trading just under $21,000, well within the upper-$19,000 to upper $21,000 ranges that have prevailed since Monday. On the month losses currently stand at around 34%, with the cryptocurrency having been battered in recent weeks as further upside in US price pressures as per the CPI pushed the US Federal Reserve into accelerating the pace of monetary tightening last week.

Interestingly, crypto prices have been resilient this week to increased chatter about the rising risk of a near-term US recession, including an admission from Fed Chair Jerome Powell in his semi-annual Congressional testimony that a recession is possible. That could be because US government bond yields, especially at the long end of the curve, have continued to pull back sharply from last week’s multi-year highs, a reflection of growing pessimism about the economy. Lower long-term US bond yields lower the “opportunity cost” of holding non-yielding assets (like crypto) and of holding highly speculative assets (which crypto is still largely viewed as).

Ethereum, the world’s second-largest cryptocurrency by market cap, was last trading around $1,150, towards the upper end of the $1,050 to $1,200 range that has been in play since Monday. ETH/USD looks set to end the week just over 2.0% higher, though on the month losses still stand at around 40%.

Outside of the big two cryptocurrencies, here is a list of this week’s five most popular coins…

Polygon (MATIC)

The native token to Polygon’s blockchain MATIC was last trading higher by north of 50% on the week, making it one of the best performing cryptocurrencies so far this week. MATIC/USD was last trading close to the $0.60 level, up from the levels under $0.40 where it began the week and an even more impressive more than 80% up from last week’s lows just above $0.30.

Analysts have cited recent upside as down to a new product released by Polygon’s development team that allows for more private voting in Decentralised Autonomous Organisations (DAOs). The new product, called Polygon ID, is a system that verifies user identification whilst allowing individuals to maintain their anonymity when voting on governance proposals. The product went live on Polygon DAO earlier in the week.

But MATIC still trades down more than 10% on the month and is down about 80 from the record highs it hit last December around $2.925. MATIC/USD is currently finding resistance at a downtrend that has been in play since mid-May and its 50-Day Moving Average. An upside break could, technically speaking, open the door to a rebound towards the next key area of resistance in the $1.0 area. But whether broader crypto conditions can improve sufficiently to allow such a move amid such elevated uncertainty surrounding the global economy and central bank policy is another thing.

MATIC/USD
MATIC/USD Chart. Source: FX Empire

Uniswap (UNI)

Decentralized Exchange (DEX) Uniswap’s utility token UNI has also performed strongly this week. UNI/USD was last trading with on-the-week gains of around 30% in the $5.50 area, up from earlier weekly lows close to $4.0 per token. That takes its gains since last weekend’s lows in the $3.30s to above 60%.

Analysts cited the platform’s recently announced acquisition of NFT marketplace aggregator Genie and its appointment of a former New York Stock Exchange President Stacey Cunningham as an advisor as helping drive recent gains. Analysts also noted that, impressively, Uniswap has been consistently generating fees similar to that of the Ethereum blockchain in recent days. According to CryptoFees data, Uniswap averaged $3.97 million in fees per day over the last seven days versus Ethereum’s $4.02 million average.

But UNI/USD is still trading slightly in the red on the month and is around 87% below the record highs it hit above $45 in May 2021. But analysts note an upside break of resistance around $6.0 could spur a run higher towards $8.0, broader crypto conditions allowing.

UNI/USD
UNI/USD Chart. Source: FX Empire

Shiba Inu (SHIB)

The crypto community’s second favorite dog-inspired memecoin Shiba Inu is currently on course to post gains of over 25% this week, amid a spike in a number of its social metrics according to crypto intelligence website LunarCrush. SHIB/USD was last changing hands just above the $0.000010 level, having rallied from early weekly levels just above $0.000008, with the cryptocurrency’s social dominance score having jumped to around 2.5% as of Friday from around 1.8% on Sunday.

Most of the rally came on Tuesday, with SHIB spiking over 30% on the day, though finding resistance at the cryptocurrency’s 50-Day Moving Average at $0.000012 (at the time, the 50DMA has since fallen to $0.0000113). In the absence of a significant lift to broader crypto market sentiment, it’s hard to argue for a more sustained recovery.

SHIB/USD
SHIB/USD Chart. Source: FX Empire

Solana (SOL)

The Solana blockchain’s native token SOL has been unable to break above the $40 level this week but is nonetheless on course to post healthy weekly gains of nearly 13% in the $38s, meaning it has now been able to sustain a move back above its 21DMA for the first time since early April. At current levels, SOL/USD is trading around 50% above earlier monthly lows, likely helped out by the fact that, according to LunarCrush, a few of its key social metrics have ticked higher in recent weeks.

For example, daily social engagements were near 400 million on Friday, LunarCrush data shows, up from around 35 million at the end of last month. With SOL/USD breaking above a key short-term downtrend this week, the prospect for some near-term gains, assuming broader cryptocurrency market stabilization continues, looks good.

SOL/USD
SOL/USD Chart. Source: FX Empire

THORChain (RUNE)

THORChain’s RUNE is up over 22.5% so far this week, having risen from under $1.80 to current levels close to $2.20, in wake of the project officially announcing the launch of its Mainnet, alongside the rollout of a new promotional campaign called the “Rune in a Million Campaign” on Binance that will dish out $1 million in RUNE rewards to exchange users.

But the cryptocurrency, which is still on course for monthly losses of more than 30%, has not yet been able to break above its 21DMA at $2.24 and also faces significant resistance in the mid-$2.30s. If it can overcome these levels, a run higher towards $3.0 per token is possible.

RUNE/USD
RUNE/USD Chart. Source: FX Empire

Could a Cryptocurrency Resurgence Take Hold When Inflation Drops?

Key Points

  • Inflation has surprised to the upside in the last few quarters, defying calls that it was “transitory” or had peaked.
  • This has resulted in a drastic hawkish policy shift from major central banks, which has battered speculative assets like crypto.
  • A sustained fall in inflation rates during H2 would likely see cryptocurrencies post an impressive recovery.

“Transitory” Inflation Narrative Crumbles

The cryptocurrency market’s fall from grace since last November coincides almost exactly with one of the largest policy shifts from major central banks in a generation. At the start of last November, Bitcoin was trading above $60,000 and Ethereum near $5,000, while central bankers were holding into the now-discredited belief that the surge in inflation witnessed during mid-2021 would be “transitory”.

Inflationary pressures would quickly subside as the pandemic fades and global supply chains normalize, central bankers reasoned at the time, meaning that they could continue holding interest rates at zero and buying bonds in their billion via QE. This mindset began to shift in November as inflationary pressures across major economies, far from receding, continued to accelerate into the final quarter of 2021.

The Bank of England was the first to realize it needed to do something about inflation and came close to hiking interest rates in November, while there was also a big shift in tone from the Fed, arguably the world’s most important central bank given the US dollar’s status as the global reserve currency.

By the end of December, the Fed had signaled that its QE program would be wound down by the end of Q1 2022 with rate hikes soon to follow. By this point, realizing that the era of ultra-accommodative central bank policy was soon coming to an end, Bitcoin had corrected to the mid-$40,000s, about a third below its record levels back in early November.

The Fed ended its QE buying on schedule in March and, as expected, implemented its first rate hike since 2018 of 25 bps. Fearing that it had fallen behind the curve in tackling inflation, the bank came close to raising interest rates by 50 bps but decided not to given the uncertainty surrounding the war in Ukraine which had just begun. This patient start to its hiking cycle helped keep Bitcoin supported in the mid-$30,000 to mid-$40,000 during Q1 2022.

But the inflationary impact of the Russo-Ukraine war, as well as renewed, harsh lockdowns across China amid the country’s struggle to adhere to its zero-Covid-19 strategy in the face of the highly transmissible Omicron variant, made itself clear as Q2 2022 got underway. Inflation hit 8.5% YoY in the US in March, its highest in four decades, making it abundantly clear to the Fed that it needed to accelerate the pace of rate hikes this year and get back to the so-called neutral rate (around 2.5%) as quickly as possible.

Markets began pricing a series of 50 bps rate hikes for the June, July and September meetings as the Fed delivered on a 50 bps rate hike in May. This further battered cryptocurrency sentiment, with Bitcoin falling 17.3% and 15.6% respectively in April and May respectively.

“Peak” Inflation Narrative Crumbles

Still, chatter at the Fed and amongst economists that US inflation rates had now hit their “peak” kept Bitcoin supported near the $30,000 level throughout the second half of May.

The Fed wouldn’t have to take interest rates too much beyond neutral given that inflation will soon start falling, market participants reasoned. But the “peak” inflation narrative would soon suffer the same fate as the “transitory” inflation narrative.

US CPI data for May released on 10 June revealed that inflationary pressures in the US had accelerated and broadened once again, pushing the YoY rate to a fresh four-decade high at 8.6%. The Fed, who had been guiding markets to expect a 50 bps rate hike at the 15 June meeting, scrambled to “leak” its new intentions to lift interest rates by 75 bps to the market ahead of the meeting.

Having delivered a 75 bps hike earlier this month, markets expect another 75 bps hike next month, followed by a 50 bps rate hike in September. Meanwhile, the latest rate guidance from the Fed in the form of its quarterly dot-plot that it released alongside its meeting earlier this month showed policymakers expect interest rates nearing 4.0% in 2023, well above the neutral rate.

This further hawkish shift in Fed expectations delivered a further beating to cryptocurrencies and other risk-sensitive/speculative assets (US equities are also in a bear market now, for example). Between 10 and 18 June, Bitcoin lost as much as 40% of its value, dropping from near $30,000 to print new 18-month lows in the $17,000s.

As of Thursday, Bitcoin was last consolidating just above the $20,000 level, down roughly 70% versus its record highs hit last November.

Fall in Inflation Needed For a Crypto Rebound

Just as the surge in global inflationary pressures since 2021 and subsequent hawkish central bank reaction has been the key driver of the crypto market’s tumble from 2021 peaks, an easing of global inflationary pressures and subsequent dovish central bank reaction could be a major driver of a recovery in the years ahead.

Even though it has continually surprised to the upside, most economists and market participants think that inflation in the US and elsewhere will eventually ease. Fiscal stimulus has shrunk dramatically in most advanced economies in 2022 versus 2021 and central banks are aggressively lifting rates, all while the surge in global energy and food prices takes its toll on economic growth.

These are deflationary headwinds to the global economy that seem increasingly likely to trigger a recession and, one would assume, should eventually result in inflation rates subsiding.

But the timing of this is all very uncertain and the longer that inflation remains elevated, the greater the risk that central banks like the Fed will need to take interest rates even further above the neutral rate in order to slow the economy and ease inflation.

In the absence of clarity about the inflation picture, it makes sense to adopt a defensive stance when investing in crypto. If inflation keeps surprising to the upside, a drop back under $20,000 for Bitcoin is likely.

But in the more optimistic scenario, say inflationary pressures do begin easing in the second half of this year. Maybe this is because the US economy falls into recession, which isn’t exactly optimistic. But for crypto, anything that reduces the pressure on central banks to be hawkish will be positive.

A sustained fall in MoM and YoY US inflation rates during H2 this year would likely see cryptocurrencies post an impressive recovery. Bitcoin could easily recover $30,000. However, in the near future, in the absence of all of the monetary stimulus excess of 2021, it will be hard for crypto to recover back to record levels.

For this to happen in the next few years, it would probably take either some big strides forward in terms of crypto’s mainstream adoption (major US regulation and the introduction of spot crypto ETFs), or a new (deflationary) economic crisis that sees major central banks like the Fed taking interest rates back to zero and restarting QE.

Morning Crypto Briefing: Bitcoin (BTC) Bounces at $20k After Fed’s Powell Warns US Recession Possible

Key Points

  • Fed Chair Powell on Wednesday warned a US recession is possible but otherwise didn’t say much new.
  • Cryptocurrencies have subsequently stabilized in recent ranges, with Bitcoin back in the mid-$20,000s having found support at $20,000.
  • Nexo is looking to take advantage of the crypto winter by pursuing mass consolidation of the crypto industry through M&A.

State of the Market

Aside from being a little more explicit in his acknowledgment of the risk that the US economy might fall into a recession, Fed Chair Jerome Powell’s comments at Wednesday’s Congressional testimony weren’t much different from those he made one week earlier after the Fed lifted interest rates by 75 bps for the first time in 28 years. Achieving an economic soft landing “is going to be very challenging” and a recession is “certainly a possibility” Powell conceded to lawmakers.

Powell reiterated that the Fed must press ahead with rate increases to get inflation under control, giving cryptocurrency traders and broader financial markets very little to trade off of. In pre-market trade on Thursday, US equity index futures are trading with a positive bias and eyeing a test of weekly highs, though remain within recent ranges. This is lending cryptocurrencies some support, with total crypto market capitalization hovering just under $900 billion as Thursday, about 4.5% up from Wednesday’s $850 billion lows and still around 16% higher versus weekend lows under $800 billion.

Cryptocurrencies have been resilient to growing calls for a US recession in the near term by major Wall Street banks and other analysts this week, perhaps as a recession may take the pressure off of the Fed to be so aggressive with rate hikes when tackling inflation. Data out later in the day (weekly US jobless claims and preliminary June PMI survey estimates) will give a timely insight as to the health of the US economy and, if weak, will lead to renewed recession calls that will test crypto’s resilience in the past few days. Powell will also be speaking again at the second day of his Congressional testimony, but his remarks will be a copy and paste from Wednesday.

Bitcoin, the world’s largest cryptocurrency with a market cap of around $395 billion, was last trading around $20,600, up about 3.5% on the day having found support $20,000 earlier. Ethereum, meanwhile, was last up about 5.5% on the day and trading back around the $1,100 level, having bounced from a test of $1,050 overnight. Price action across the major altcoins is similar; up from overnight lows but still within recent ranges.

Crypto Winter: Nexo Working With Citigroup on Mass Consolidation of Crypto Lenders

According to reports on Thursday, popular crypto lending firm Nexo is looking to take advantage of the crypto winter by pursuing a mass consolidation of the crypto industry through mergers and acquisitions and is working with major US investment bank Citigroup. “We have been approached by multiple Wall Street banks and decided to officially explore the opportunities for acquisition to help stabilize our nascent industry,” said Nexo’s co-founder Antoni Trenchev. Back on 13 June, Nexo revealed it was planning to buy out rival crypto lending platform Celsius Network, which has frozen customer withdrawals now for ten days.

Elsewhere, the billionaire CEO of crypto exchange FTX Sam Bankman-Fried has signed deals to bail out two major crypto firms in the last two weeks. Reports on Thursday suggest that FTX will provide crypto lending and custody service BlockFi with a $250 million revolving credit facility after the firm recently announced it was laying off 20% of employers. Last week, Bankman-Fried’s quantitative research firm Alameda Research it would provide Voyager Digital with $500 million in financing.

Exchange News: Binance.US Offers Zero-fee Bitcoin Trading, Bitget to Double Workforce

Binance.US, Binance’s US subsidiary, on Wednesday announced that it would offer zero-fee Bitcoin trading in order to attract more users. Coinbase, the largest US-based crypto exchange, saw its share price tumbled on the news. Coinbase will continue to face headwinds in the current crypto downturn, BTIG equity research analyst Mark Palmer said in a note earlier this week, with woes compounded by Celsius Network and Babel Finance’s struggles.

Elsewhere, Singapore-based crypto derivatives exchange Bitget on Thursday announced plans to double the size of its workforce in the next six months. The company aims to employ 1,000 workers by the end of 2022, up from 150 at the start of 2021. Bitget’s expansion comes at a time when other major crypto exchanges like Coinbase, Gemini and Crypto.com are shrinking the sizes of their respective workforces amid this year’s slump in crypto prices. Bitget has experienced “tremendous growth and generating strong and recurring cash flow despite uncertain market conditions,” said Bitget Managing Director Gracy Chen.

Meanwhile, Bybit and KuCoin are set to be slapped with enforcement action from Canada’s top financial regulator the Ontario Securities Commission (OSC) for failing to comply with securities law. Both stand accused of allowing residents of Canadian state of Ontario to trade unregistered securities. Bybit reached a settlement with the OSC which will include a C$2.5 million fine, while KuCoin will be banned from operating on Canadian soil for non-compliance with the agency.

Powell Supports Better Crypto Regulation

Fed Chair Jerome Powell was quizzed on crypto and regulation by US Senators at Wednesday’s testimony. Speaking about the crypto markets crash and high profile liquidations and exchange blow-ups, Powell said the Fed is “tracking those events very carefully” but that the central bank is “not really seeing significant macroeconomic implications”. Nonetheless, Powell said he sees the need for a better regulatory framework. “A lot of the digital finance products, in some ways, are quite similar to products that have existed in the banking system or the capital markets, but they’re just not regulated the same way,” Powell noted, adding that they need to be regulated in the same way.

Powell also commented on a recent decision by the SEC to advise firms holding customer digital assets to consider those assets as on their own balance sheet. That suggests that if a digital asset custodian, like an exchange, went bankrupt, a customer’s digital assets could get caught up. “Custody assets are off balance sheet, have always been,” Powell noted, adding that “the SEC made a different decision as it relates to digital assets for reasons it explained, and now we have to consider those.”

In other notable US regulatory news, US Congressman Jim Himes published a white paper on Wednesday in which he argued in favor of the creation of a Fed-issued Central Bank Digital Currency and argued it might be a safer bet than cryptocurrencies and private stablecoins. “A US CBDC would have advantages over privately issued stablecoins and crypto‐assets, most notably the ability to be backed by the full faith and credit of the US government, like traditional cash, and would provide holders with a degree of safety that may not be offered by privately issued stablecoins because of the risk associated with sponsors’ reserves,” Himes argued in the document.

Crypto has “Huge Applications and Potential within the Financial Sector”, Says BoE Policymaker

Elsewhere, survivors of the current crypto market crash could rise to dominate in the future like major tech names like Amazon and eBay did after the dot-com crash just over two decades ago, Bank of England Deputy Governor Jon Cunliffe said on Wednesday at a forum in Switzerland. Cunliffe said crypto/blockchain technology has “huge applications and potential within the financial sector” despite current uncertainty. “Whatever happens over the next few months to crypto-assets, I expect crypto technology and finance to continue,” he added, noting “it has the possibility of huge efficiencies and changes in market structure”.

His remarks contrast with commentary from other BoE policymakers. The bank’s governor Andrew Bailey recently said in a testimony before the UK Parliament that crypto has “no intrinsic value”. Meanwhile, Cunliffe had previously warned that crypto’s rapid growth poses a threat to broader financial stability.

Over in India, the government has issued clarifications to its controversial and stifling new crypto tax laws. From 1 July the country will implement a 1% tax on all crypto transactions on exchanges, who must notify the government of transactions within 30 days after the end of the month in which the transaction was made, with any sum to be paid also due then. At the start of April, India introduced a new 30% capital gains tax on crypto, though the transactions tax will be deductible from this.

Meanwhile, over in Singapore, chief fintech officer Sopnendu Mohanty of the country’s central bank told the Financial Times on Thursday that it will be “brutal and unrelentingly hard” on bad behavior in the crypto industry. Mohanty told the FT that is enforcing a “painfully slow” and “extremely draconian due diligence process” to licensing crypto businesses as it seeks to protect its broader economy.

China Argues Bitcoin Going to Zero

Finally, over in China, in an apparent attempt to dissuade citizens from purchasing cryptocurrencies after they were banned last year, various Chinese government mouthpiece news outlets have said that Bitcoin is headed to zero. According to China’s Economic Daily, Western nations have created a highly-leveraged market that is “full of manipulation and pseudo-technology concepts”. “Bitcoin is nothing more than a string of digital codes, and its returns mainly come from buying low and selling high,” the paper decried. “In the future, once investors’ confidence collapses or when sovereign countries declare Bitcoin illegal, it will return to its original value, which is utterly worthless,” it concluded.

Is Bitcoin (BTC) Better than Gold (XAU)? An Honest Analysis

Key Points

  • Gold has a long history as a safe haven/store of value and carries immense cultural significance.
  • Bitcoin and crypto have experienced significant gains in recent years, with potentially much more to come as adoption spreads.
  • But crypto remains a highly risk-sensitive asset class, meaning it serves a different purpose within portfolios.

Bitcoin is better than gold” has been a commonly espoused mantra by Bitcoin and crypto proponents/enthusiasts in recent years. Some even go as far as to predict that the world’s largest cryptocurrency will even replace the precious metal as the world’s major reserve asset. That would involve Bitcoin’s market cap (currently around $390 billion) rising above gold’s at more than $11 trillion, implying a price per Bitcoin of well above $500,000.

But those claiming that Bitcoin (or crypto for that matter) is better than gold appear to have gotten egg on their face this year. At least, that’s the immediate takeaway when comparing a gold chart to a Bitcoin chart in 2022. While gold is virtually flat on the year (with XAU/USD changing hands near $1830 per troy ounce), Bitcoin has shed about 55% of its worth, dropping to around $20,500 per token from end-2021 levels above $46,000.

But comparing the performance of the two over just the last six or so months is fair, crypto proponents argue. Indeed, since the start of 2020, Bitcoin is up nearly 200%, while gold is up a much more modest 20%. And since the start of 2012, more than one decade ago, gold is up just 17%, whilst Bitcoin is up more than 4500x.

So which is better? Let’s examine some of the key arguments in favor and against gold and Bitcoin (as well as crypto more broadly).

Gold: Arguments in Favor

Gold has been the fascination of human societies for thousands of years. For the majority of this time, gold has been used as a medium of exchange, thanks to its high value-to-weight ratio. The precious metal is undeniably beautiful for use in jewelry and gold plating and doesn’t rust or perish over time. The acquisition of gold has long been a method used by humans to demonstrate their power and wealth.

Gold is highly scarce, with only about 200,000 tonnes of the stuff having been discovered so far, so says the World Gold Council. For this reason, gold has historically also been seen as a great store of value that could be passed on through the generations. No corrupt or incompetent government can print more of the stuff to fund this or that endeavor via an inflation tax.

In more recent history and since the maturation of global financial markets, gold has become an established investment vehicle. Central banks and governments hold substantial sums in their reserves. The precious metal also has a track record of performing well as a safe haven asset/inflation hedge in periods of economic stress/high inflation. Its industrial use has also been rising, given its properties as a highly malleable superconductor metal. Small quantities of the stuff can be found in most mobile phones.

Given its physical properties, cultural significance and strong track record dating back thousands of years, those wanting to store value into the future can be pretty confident in gold.

Gold: Arguments Against

Unlike Bitcoin, the supply of which is capped at 21 million, the supply of gold has historically risen by about 2% each year amid new discoveries and continued extraction. That implies a doubling of the gold supply every 36 years. That is roughly in line with the inflation rate targeted by major central banks like the Fed, ECB and BoE.

Meanwhile, the mining of gold is a very energy-intensive/destructive business. Critics highlight that gold mining has a long track record of contaminating water sources with dangerous chemicals and destroying local, often pristine ecosystems. According to one environmentalist website, extracting the gold used in a standard wedding ring involves the production of 20 tonnes of waste.

Gold is also often the target of theft. Holders of the stuff risk losing it if not stored securely. That means that many owners of gold who are holding it for its store of value properties opt to store their gold in the vault of some counterparty, such as a bank. That introduces the problem of having to trust a custodian not to steal, lose or abuse your gold. Over the years, gold deposits at banks/trusted storage facilities have frequently been confiscated by corrupt/inept governments.

Meanwhile, gold does not produce any yield. That means that, in the past, alternative safe-haven assets such as government bonds have offered a greater appeal. When government bond yields rise, this raises the opportunity cost of holding non-yielding precious metals, burnishing their appeal.

Bitcoin (& Crypto): Arguments in Favor

The wider adoption of blockchain technology – i.e. of decentralized databases – looks inevitable. Satoshi Nakamoto, the anonymous creator of Bitcoin, bequeathed the world with the first use case of the technology back in 2009 – the bitcoin blockchain. Since then, there has been an explosion of use cases of the blockchain, with the technology going beyond just money and seeking to transform financial services, gaming, trade, social media and much, much more. Technologists refer to it as the rise of Web3.

It is widely assumed that leading cryptocurrencies like Bitcoin and Ethereum should be able to ride the wave of greater crypto/blockchain technology adoption, suggesting the prospect of continued outsized gains in the coming decade.

But the key subject of this article is comparing Bitcoin and crypto to gold. So starting with the former, how does Bitcoin compare?

As noted, its supply is capped at 21 million, meaning it is scarcer than gold. Just like gold, it is highly divisible. Each bitcoin can be broken into 100 million Satoshis.

Unlike gold, transactions between bitcoin users can occur nearly instantaneously across any geographical location. Granted, digital paper claims to gold can be transacted at the same speed, but then there is the problem of trusting a third party to hold the actual physical gold.

Whilst gold does have a solid history of protecting wealth through humanitarian crises, crypto has proven superior in recent years. For example, Ukraine has raised $130 million in crypto donations since Russia’s invasion. Ukraine certainly isn’t asking for the delivery of physical gold to fund its defense. Meanwhile, refugees from the war have found it much easier to access crypto payment solutions via a mobile app as their domestic currency collapses than they have to transact in physical gold.

Meanwhile, no third party is needed in a Bitcoin transaction between two users. That means Bitcoin holders are less exposed to the risk that someone else will steal, or abuse, or confiscate their gold. Even if a gold owner chooses to take custody of the precious metal themselves, making it secure from robbery involves significant cost. Contrast that the Bitcoin, where the only way someone could steal it is if they got hold of the private keys to your digital wallet.

In many ways then, Bitcoin achieves greater decentralization compared to gold.

Turning to the pros of crypto more broadly over gold; smart-contract enabled blockchains like Ethereum, Solana, Cardano, Avalanche and more do not just function as a form of money, but also allow for the creation of applications on top of them. The last few years have subsequently seen the emergence of Decentralised Finance (DeFi), which allows users to engage in the provision/consumption of financial services without needing to go through a bank or institution.

Such innovations never emerged from gold. Crypto and blockchain carry the promise of transforming many aspects of daily life, beyond just financial applications.

Bitcoin (& crypto): Arguments Against

Of course, the above is all well and good, but crypto also has some big drawbacks.

Firstly, its price action in recent years suggests that crypto remains a highly speculative, risky asset class to invest in. Given continued difficulties in assessing Bitcoin’s inherent value, it continues to experience wild price swings. Bitcoin is certainly not viewed as a safe-haven asset just yet, even though its track record as of late is that it is the best haven within crypto.

In recent months, Bitcoin and crypto more broadly have had a strong positive correlation to the most speculative corners of US equity markets (i.e. tech and growth stocks). Bitcoin’s realized volatility in recent years has been in the region of four times higher than gold. Other less liquid cryptos experience even larger price swings.

The poor performance of Bitcoin and crypto as of late also damages the claim that it can act as an inflation hedge. Where gold has held up well amid the onset of the first global inflation surge in decades, cryptocurrencies have collapsed amid expectations that global central banks will tighten financial conditions, damaging the most speculative corners of the market.

Meanwhile, crypto has struggled to shake its reputation for attracting criminals and scam artists, who seek to exploit its permissionless, anonymous characteristics. For many years, Bitcoin was the currency of choice for users trading illicit substances via the Darkweb.

More recently, the advent of the still unregulated DeFi ecosystem has been a boon for scam artists seeking to exploit vulnerable retail crypto investors. Investors are often drawn into investing in new crypto schemes/projects with the promise of high returns, only to find that the project was just a big Ponzi scheme designed to pay off the early holders. When the project developers abandon ship after dumping their holdings, this is what’s referred to as a rug pull.

Additionally, there is the risk that the cryptocurrencies such as Bitcoin are banned. China has already taken this step, as the authoritarian government there looks to increase control over the everyday lives of its citizens through the implementation of a centrally controlled central bank digital currency (CBDC).

While democratic nations like the US, UK and in the EU have signaled no intention to ban crypto, they are all still looking towards the creation of their own digital currencies, with the EU seeming particularly keen. The introduction of CBDCs could stymie crypto’s future growth prospects.

Whilst Bitcoin seems to have secured its status as a digital commodity, meaning it won’t face regulation from the US (or other) Security and Exchange Commissions, the same cannot be said for much of the rest of the crypto market. Proof-of-Stake blockchains like Solana and Cardano (and also soon Ethereum once the merge takes place) offer yield when users stake their cryptocurrencies to secure the network. That arguably makes them securities.

Many cryptocurrencies are also not as decentralized as they claim, with a centralized group of developers able to adjust their rules/parameters ad hoc. This further strengthens the argument that they may be securities, not commodities. If much of crypto does fall under SEC purview, costly regulatory compliance could further stymie growth and innovation.

Meanwhile, cryptocurrencies like Bitcoin are reliant upon the internet. Global internet infrastructure is more fragile than many people realize and is heavily reliant on underwater cables which are vulnerable to attack. Whilst it may seem as though the continued spread of the internet around the world is inevitable, there is always the risk of some sort of internet-ending global cataclysm. Of course, in such a scenario, it’s debatable how useful gold would be. But if civilization needs to rebuild itself from the ground up, it would be a better asset to own.

Finally, crypto critics argue that cryptocurrencies aren’t even scarce. While Bitcoin is capped at 21 million, there is no limit to the variations of Bitcoin that can be created. Indeed, there is Bitcoin Cash, Bitcoin SV and Bitcoin Gold, plus another many thousand more cryptocurrencies to choose from.

In that sense, Bitcoin seems more analogous to a social media site that relies upon network effects. At the time, MySpace and Bebo seemed like dominant players in the social media space, but eventually, something better came along and took over – Facebook. Instagram, Twitter and Facebook are now losing ground to TikTok, as history repeats. In the same manner, there is nothing stopping crypto preferences from changing and Bitcoin (or any other cryptocurrency for that matter) from being replaced by a better version of itself.

Summary

The Bitcoin (& crypto) versus gold debate will inevitably continue in the years ahead. But in many ways, it is a silly, futile debate. While it might be claimed that the two asset classes share some characteristics, they form very different parts of an investment portfolio.

For now, Bitcoin and crypto can be viewed as one of the riskiest additions to a portfolio, but likely with the most potential upside. Gold, meanwhile, will continue to serve as a steadfast safe haven and long-term store of wealth, though with limited upside prospects.

Morning Crypto Brief: BTC Slips to Mid-$20Ks, ETH Pivots $1.1K Amid Pre-Powell Caution

Key Points 

  • Cryptocurrencies prices are lower in tandem with stocks amid a cautious tone pre-remarks from Fed Chair Powell.  
  • The Bitcoin price was last in the mid-$20,000s, while Ethereum was last trading just under $1,100.  
  • Tether on Wednesday announced it will expand its stablecoin offerings with pound sterling-backed GBPT.  

State Of The Market 

In tandem with a pre-market pullback in US equities, cryptocurrency prices fell during Wednesday’s Asia Pacific session, with total crypto market capitalization last down about 1.5% near $880 billion, down nearly 6.0% from Tuesday’s leaks close to $940 billion. But that leaves crypto markets still well within recent ranges, with total market cap still up about 15% or around $115 billion from Saturday’s 18-month lows near $760 billion.  

According to FX Empire head of crypto analysis Bob Mason, markets are feeling cautious ahead of this week’s Congressional testimony by Fed Chair Jerome Powell, which begins later on Wednesday. “Movement today will hinge on how Powell threads the needle,” Mason said, arguing that if the Fed Chair was to offer “a convincing argument that the Fed can achieve a soft landing, this would ease market angst”. But any such argument “will need to be very convincing, with US inflation at 40-year highs,” Mason added.  

Recession Worries

According to other analysts, US recession concerns have been weighing on risk assets (like stocks and crypto), with the likes of Morgan Stanley and Goldman Sachs both warning that recession risks might not be fully priced in. “The bear market will not be over until recession arrives or the risk of one is extinguished,” analysts at Morgan Stanley stated. Meanwhile, analysts at Goldman said that traders were pricing in a mild recession, “leaving them exposed to a further deterioration in expectations”. Elsewhere, major US consumer bank Citibank said it saw the probability of a recession in the near-term as close to 50%, citing risks associated with central banks tightening monetary policy and a weakening of demand for goods. 

A slightly more optimistic take came from Bloomberg’s senior commodity strategist Mike McGlone. The recent and ongoing drop in risk assets “are taking away inflation at a breakneck pace, which may translate into pre-pandemic deflationary forces resurfacing in H2 2022”, he said in a thread on Twitter. McGlone said the primary beneficiaries of this scenario may be Bitcoin, gold and US government bonds.  

Bitcoin Slips Back to Mid-$20,000s, Ethereum Pivots $1,100 

Bitcoin, the world’s largest cryptocurrency with a market cap of around $390 billion as of Wednesday, was last changing hands in the mid-$20,000s, down about 4% over the last 24 hours according to CoinMarketCap data. BTC/USD is down nearly 6.0% versus its Tuesday peaks above $21,700 but continues to trade about 16% up from Saturday’s sub-$18,000 lows as it consolidates within recent ranges pre-remarks from Fed Chair Powell.  

Similarly, Ethereum, the world’s second-largest cryptocurrency with a market cap of just above $130 billion as o Wednesday, was last trading down by about 6% in the last 24 hours just below the $1,100 level according to CoinMarketCap data. That marks a more than 8.0% pullback from Tuesday peaks close to $1,200 per token but leaves ETH/USD still trading an impressive 25% above sub-$900 weekend lows.  

Major altcoins are trading in line with the two major cryptocurrencies and are lower by similar margins as of Wednesday morning. Cardano doesn’t seem to have been impacted too much by a one-month delay to its Vasil hardfork upgrade which was supposed to go ahead later this month. Shiba Inu’s SHIB token and the Bitfinex crypto exchange parent company’s LEO token are the standout performers of the top 20 cryptos, with both trading more than 5.0% higher over the past 24 hours. 

Tether Announces GBPT, It’s Latest Pound Sterling-Backed Stablecoin 

Tether, the British Virgin Island-based issuer of what is currently the largest US dollar-backed/pegged “stablecoin” USDT announced plans on Wednesday to expand its stablecoin offerings with the introduction of GBPT. A stablecoin is a cryptocurrency running on the blockchain that maintains a stable value (normally 1:1) to a fiat currency, such as the US dollar or pound sterling.   

Like USDT, Tether says GBPT will be backed 1:1 by cash or liquid cash equivalents (such as short-term government paper). GBPT will be the fifth stablecoin to be offered by Tether, with the company having already issued USDT, EURT, CNHT and MXNT.   

“We believe that the United Kingdom is the next frontier for blockchain innovation and the wider implementation of cryptocurrency for financial markets,” Tether Chief Technology Officer Paolo Ardoino said in a statement as it announced the introduction of GBPT. Tether said it would work closely with UK regulators.  

In April, the UK government announced plans to introduce legislation that would see stablecoins recognized as a valid form of payment, as part of wider plans to make the country a global hub for crypto-asset technology and investment.  

GBPT’s introduction by Tether comes against the backdrop of persistent fears that USDT might lose its 1:1 peg to the US dollar. These fears have seen outflows of over $16 billion from USDT since early May and seen USDT trade around 0.1% below the $1.0 level, despite Tether fulfilling all USDT redemptions thus far.  

Solana NFT Platform Magic Eden Raises $130M, Valued At $1.6B 

Magic Eden, the most popular Non-Fungible Token (NFT) trading platform running on the Solana blockchain recently closed a Series B funding round which saw it raise $130 million. That put the platform’s value at $1.6 billion, with the company saying its newly raised capital will be used to expand its primary and secondary NFT marketplaces, as well as explore multi-chain expansion possibilities and research and development. According to analysts, 40,000 NFTs are traded on Magic Eden’s per day, amounting to 92% of all NFT volume on the Solana blockchain.  

Magic Eden’s impressive funding round and hefty valuation comes despite the broader bear market in the NFT and crypto/digital asset space. According to NFT data analytics website NFT Price Floor, the minimum cost to get hold of a Bored Ape Yacht Club (BAYC) NFT was around $95,000 on Wednesday, down four-fold from the record high hit just over two months ago above $400,000. The BAYC collection of 10,000 original NFTs is currently the most valuable NFT collection, with a price floor cap of nearly $1 billion.  

Regulatory Landscape: SEC’s Pierce Opposes Crypto Bailouts

US Securities and Exchange Commission (SEC) commissioner Hester Pierce, often referred to by members of the crypto community as the SEC’s “crypto mom” given her pro-crypto stance, spoke out against bailouts for struggling crypto companies like Celsius Network earlier this week. “When things are a bit harder in the market, you discover who’s actually building something that might last for the long, longer-term and what is going to pass away,” Pierce said. It’s better to “let these things play out,” she added.  

Separately, the launch of the first inverse Bitcoin Exchange Traded Fund (ETF) on Tuesday in the US is a positive sign for the crypto industry, argued grayscale CEO Michael Sonnenshein, given it shows the US SEC is becoming more comfortable with Bitcoin. The ProShares Short Bitcoin Strategy (BITI) began trading on the New York Stock Exchange (NYSE) on Tuesday. Crypto investors are pining for the SEC to approve a spot Bitcoin ETF, as this is expected to bring significant sums of institutional money in from the sidelines. Grayscale has applied for its Bitcoin Trust to be converted into a spot Bitcoin ETF, with an SEC decision on the matter due in July. 

Elsewhere, European Central Bank President Christine Lagarde on Tuesday said that cryptocurrencies and Decentralised Finance (DeFi) pose a real risk to financial stability, especially if crypto starts playing a bigger role in the economy. Right now, the links between crypto and the legacy financial services industry remain small, but the ECB nonetheless supports the EU’s proposed Markets in Crypto-Asset (MiCA) regulatory framework. MiCA is in the final stage of approval within the EU’s legislative process and is expected to come into force in 2024.

BIS Criticises Crypto Again

90% of global central banks are looking into the feasibility of introducing their own digital currencies, a new report from the Bank of International Settlements (BIS) said on Tuesday. The report criticized what it referred to as crypto’s “inability to perform “basic fundamental functions of money”, as well as its “opacity”. The report also highlighted recent adverse developments in the DeFi space, with the likes of Celsius Network having recently halted investor withdrawals and risks related to stablecoins in wake of Terra UST’s collapse. The BIS also highlighted the limited scalability of popular blockchains like Ethereum, which have in the past seen significant congestion and a sharp rise in transaction fees (I.e. gas fees).  

Tether Announces GBPT, Its Latest Pound Sterling-Backed Stablecoin

Key Points 

  • Tether announced that it will expand its stablecoin offerings with the introduction of pound sterling-backed GBPT, its fifth stablecoin.  
  • Tether said the UK is “the next frontier for blockchain innovation and the wider implementation of cryptocurrency for financial markets”.  
  • GBPT’s introduction comes against the backdrop of concerns about USDT losing its 1:1 peg to the US dollar.  

Tether, the British Virgin Island-based issuer of what is currently the largest US dollar-backed/pegged “stablecoin” USDT announced plans on Wednesday to expand its stablecoin offerings with the introduction of GBPT. A stablecoin is a cryptocurrency running on the blockchain that maintains a stable value (normally 1:1) to a fiat currency, such as the US dollar or pound sterling.  

Like USDT, Tether says GBPT will be backed 1:1 by cash or liquid cash equivalents (such as short-term government paper). GBPT will be the fifth stablecoin to be offered by Tether, with the company having already issued USDT, EURT, CNHT and MXNT.  

UK the Next “Frontier” of Blockchain Innovation, Tether Says 

“We believe that the United Kingdom is the next frontier for blockchain innovation and the wider implementation of cryptocurrency for financial markets,” Tether Chief Technology Officer Paolo Ardoino said in a statement as it announced the introduction of GBPT. Tether said it would work closely with UK regulators. 

In April, the UK government announced plans to introduce legislation that would see stablecoins recognized as a valid form of payment, as part of wider plans to make the country a global hub for crypto-asset technology and investment. 

Tether Troubles 

GBPT’s introduction by Tether comes against the backdrop of unusually high levels of uncertainty for broader cryptocurrency markets, which have been crashing in recent weeks, as well as increased scrutiny towards stablecoins following the crash of in value of the Terra blockchain’s algorithmic stablecoin UST back in May.  

Unlike USDT, which Tether claims to be backed 1:1 by US dollars or liquid equivalents, UST was backed by the native token of Terra’s old blockchain LUNA. UST maintained its peg given that, at any time, if UST deviated from $1.0, traders would be able to swap $1.0 worth of UST for $1.0 of LUNA. The big problems for UST came when the market cap of LUNA fell below that of UST, sparking fears of under collateralization.  

Tether has in the past faced accusations that its USDT token is not fully collateralized. Only a few weeks ago, a claim was doing the rounds that USDT was 85% backed by Chinese and Asia commercial paper, claims which were vigorously refuted by Tether in a blog post on their website.  

But fears about the company’s transparency regarding its reserves have taken their toll. USDT’s market cap fell under $67 billion on Wednesday, down from above $83 billion as recently as early May. US-based Circle Internet Financial’s USDC token has attracted much of these flows, with USDC’s market cap close to $56 billion as of Wednesday, up from early May levels under $50 billion. Circle is currently viewed by many in the crypto space as more transparent about the reserves it holds backing USDC compared to Tether.  

While Tether has thus far been able to fulfill all USDT redemptions, the stablecoin has nonetheless been trading about 0.1% below its peg to the US dollar in the last few weeks. USDT/USD was changing hands at 0.999 as of Wednesday morning.  

Morning Crypto Briefing: BTC Consolidates Above $21,000, ETH in Mid-$1,100s Pre-Powell Testimony

Key Points 

  • Cryptocurrency markets are on course for a third successive session in the green and about 20% up from weekend lows.  
  • But Fed Chair Powell “could put the cat amongst the pigeons tomorrow” at his Congressional testimony, warns FX Empire’s Mason.  
  • The Bitcoin price was last consolidating just above $21,000, while the Ethereum price was in the mid-$1,100s.  

State Of The Market 

Cryptocurrency markets are currently on course to print a third successive session in the green, with total cryptocurrency market capitalization recovering and holding back above $900 billion at the time of writing on Tuesday, nearly 20% above the 18-month lows reached on Saturday just above $760 billion. Macro sentiment is upbeat ahead of the reopening of US markets following a long weekend (US markets were shut on Monday for Juneteenth). Major US equity index futures are tracking between 1-2% higher ahead of the open.  

Analysts at JP Morgan said in a note on Tuesday that they think the current crypto market share of stablecoins, which as of Tuesday was around 17%, looks “excessively high”, pointing to an oversold market and a potentially significant bounce from here. Back in April, analysts at JP Morgan successfully forecasted a short-term drop in non-stablecoin cryptocurrency prices given that they deemed the market share of stablecoins at the time to have dropped excessively low 7%.  

But many analysts remain unconvinced that a sustained recovery for crypto prices in the near term is likely, given the uncertain and worrisome outlook for the US and global economies. “There has been no catalyst to change the crypto winter narrative,” said FX Empire’s lead crypto analyst Bob Mason. “Inflation is unlikely to reverse to central bank targets any time soon, leaving the threat of a global recession on the table,” he said, noting that “technical indicators and the Fear & Greed Index are also sending bearish signals despite the prospects of a third consecutive day in the green”.  

In terms of near-term risk events, Mason highlights Fed Chair Jerome Powell’s two-day testimony before Congress this week as one for crypto traders to watch. “Powell could put the cat amongst the pigeons tomorrow when he delivers testimony on Capitol Hill,” Mason warns, adding that “between now and then, there are no major economic indicators due out for investors to fret over”.   

Bitcoin Consolidates Above $21K, Ethereum in Mid-$1,100s  

The world’s largest cryptocurrency by market cap Bitcoin was last trading around 3% higher on the day just to the north of the $21,000 level, roughly 20% above sub-$18,000 weekend lows. That gives the cryptocurrency a market cap of just over $400 billion at current prices, giving the cryptocurrency a market dominance of around 44.5% according to TradingView, well below earlier monthly highs near 48.5%. Despite being 20% up versus earlier monthly lows, BTC/USD remains on course to post a monthly loss of around 33%, which would mark its worst month since May 2021.  

Turning to the world’s second-largest cryptocurrency by market cap, Ethereum was last changing hands in the mid-$1,100 area, also higher by about 3.0% on the day and up more than 30% versus the 18-month lows it hit over the weekend under $900 per token. That’s an impressive recovery in the past three days, but like Bitcoin, Ethereum is on course to post hefty monthly losses that currently stand at above 40%. This would mark the cryptocurrency’s worst month since March 2018. At current prices, its market cap is around $140 billion.  

In terms of relevant Ethereum news; the Sepolia testnet’s Beacon Chain has gone live, setting the stage for a “practice” merge of Ethereum’s current Sepolia testnet (which achieves consensus using Proof-of-Work) to the Sepolia Beacon Chain. After the trial merge, the Sepolia testnet will achieve consensus using Proof-of-Stake (PoS) and provide key insights and data to Ethereum developers ahead of the planned merge of the mainnet to PoS later this year.  

Elsewhere in other notable news relating to major cryptocurrencies, Cardano’s Vasil hardfork, a network upgrade that will significantly boost the blockchain’s scalability scheduled for later this month, may be delayed. “After some consideration, we have agreed NOT to send the hard fork update proposal to the testnet today to allow more time for testing,” Cardano’s developers at Input Output Hong Kong (IOHK) said on Tuesday.  

“This puts us behind schedule on our previously communicated target date of June 29 for a mainnet hard fork,” the developers said. Nonetheless, the development team is “is extremely close to finalizing the core work, with just seven bugs still outstanding to complete the hard fork work, with none currently ranked as ‘severe’,” IOHK said.  

Cardano’s ADA token certainly doesn’t seem fazed and was last trading slightly to the north of the $0.50 mark, well within its range over recent weeks and around 20% above weekend lows around $0.42. In terms of other major altcoins, Binance’s BNB was last trading about 3% higher on the day just above $220 per token, also around 20% higher versus weekend lows. Solana’s SOL was last up closer to 8% on Tuesday and at 10-day highs in the $37s per token. Ripple’s XRP, meanwhile, was last trading with a slight positive bias around $0.33 per token.  

Crypto Winter Update: Sports Team Marketing Deals Shelved As Crypto Firms Tighten Purses 

Major crypto exchange FTX is rethinking its marketing plan that would see its name and logo appear on Los Angeles Angels jerseys, the NY Post reported on Monday. According to the report, FTX’s cold feet come after another undisclosed crypto firm shelved plans for a deal with the Washington Wizards just a few weeks ago. The NY Post quoted Columbia University sports management professor Joe Favorito as saying “what money hasn’t been spent already you’re going to see curtailed — just like we saw during the dot-com bubble”. Crypto firms shelled out an unprecedented amount of cash on sports sponsorship deals in 2021 whilst crypto markets were booming.  

Elsewhere, troubled crypto lending firm Babel Finance has reportedly eased some of its most immediate liquidity concerns after coming to an agreement regarding debt repayments to some of its major counterparties. The firm suspended the withdrawals and redemption of crypto assets deposited on its platform last Friday, amid a spate of similar moves made by other crypto lending/yield offering platforms including Celsius Network and Finblox. As recently as May, Babel had raised $80 million in a funding round that had valued the firm at roughly $2 billion.  

Exchange Update: Huobi Secures NZ, UAE Licenses, Bitpanda Expands Into Spain 

Huobi, one of the largest cryptocurrency exchanges in the world, has secured licenses to operate in New Zealand and the United Arab Emirates. However, its license in the UAE doesn’t permit it to trade but rather permits it to incentivize local tech startups. Meanwhile, Austrian crypto exchange Bitpanda has secured a license to operate as a virtual currency exchange and digital asset service provider in Spain, having successfully secured licenses in Italy and Sweden earlier in the year and France back in 2020.  

Other News: Ukraine Raises Further $100K With CryptoPunk NFT Sale, UK Ditches Controversial Private Wallet Rules 

The Ukrainian government has sold a CryptoPunk Non-Fungible Token (NFT) that it was donated back in March in the immediate aftermath of Russia’s invasion. The NFT was sold to an anonymous buyer for 90 ETH, worth around $100,000 at the time. That’s well below the NFT’s estimated value of around $260,000 at the time of donation, with the downside mostly due to the drop in ETH’s price since March. According to analysts, Ukraine has raised more than $135 million in crypto donations since Russia’s invasion.  

Elsewhere, the UK government has shelved plans to implement a controversial ruling that would require all senders of funds to private crypto wallets to collect identification details about the recipient. The UK Treasury said in a new report that it no longer thinks this data collection rule appropriate in all cases. “Instead of requiring the collection of beneficiary and originator information for all unhosted wallet transfers, crypto-asset businesses will only be expected to collect this information for transactions identified as posing an elevated risk of illicit finance,” the Treasury said. The ability to send and receive funds anonymously is one of the key values that underpin the crypto community’s view of a better world, something the UK Treasury seems to have clocked onto.  

Cardano (ADA) Price Prediction 2022 to 2025

Key Points 

  • At $0.50 per token, ADA is over 85% lower versus its September 2021 ATHs near $3.0.  
  • Despite its strong fundamentals, Cardano has been brought down alongside the broader crypto bear market.  
  • When global economic conditions improve, Cardano is likely to come back strong and could 10x by 2025.  

Since the launch of the Cardano blockchain back in May 2017, it has gone on to become the fourth largest layer one blockchain cryptocurrency by market capitalization, with the total value of all circulating ADA tokens currently clocking in just below $17 billion. Whilst Cardano’s rise to prominence in the crypto space has been impressive and lucrative for its developers and early investors (ADA’s market cap has increased 30x at current prices since its launch), it’s been a bumpy road.  

ADA was trading at just under $3.0 per token as recently as early September 2021 but has since shed about 85% of its value and now trades around $0.50. The driver of this pullback has been a deterioration in broader cryptocurrency markets that has seen other comparable cryptos drop a similar amount. Investors have been selling down speculative assets, which cryptocurrencies are viewed as, as central banks globally move to raise interest rates in order to dampen the recent surge in inflation, and as the global growth outlook darkens.  

ADA/USD
ADA/USD’s near 85% pullback from 2021 peaks. Source: FX Empire

Strong Fundamentals 

Cardano’s drop comes despite the fundamentals surrounding the blockchain’s future growth prospects looking very healthy. In early June, the number of projects being built on top of the Cardano blockchain surpassed 1000, Input Output Hong Kong (Cardano’s developer) said. More than 40% of these projects are Non-Fungible Token (NFT) related, indicative of a broader trend of Cardano’s growing popularity as the go-to platform for NFTs.  

In June, the number of NFTs minted on the Cardano blockchain surpassed 5 million. Cardano’s proponents call it an “Ethereum killer”, owing to its much faster transaction speed (of 250 transactions per second versus Ethereum’s 15-45) and much lower energy consumption owing to its proof-of-stake (PoS) consensus mechanism.  

Cardano’s development team also works closely with academics and upgrades its blockchain-based on peer-reviewed research, ensuring a level of rigour that its competitors struggle to match. At the end of this month, Cardano will deliver a major upgrade called the Vasil hardfork that with further boost speed and scalability. 

All the above suggests that Cardano is very likely to remain a major player in the crypto space for the long-term, meaning it should be able to ride the expected wave of crypto adoption in the coming decade. 

Outlook For ADA 

If the above is true, that suggests ADA’s long-term upside prospects look very good. But would-be crypto investors should exercise caution about aping in. In late 2017/early 2018 during an explosion in the price of various smart-contract enabled cryptocurrency tokens, ADA rose about 47x in a matter of weeks from under 3 cents per token to record highs at the time above $1.30.  

However, by the end of 2018, it had shed about 97% of its value. It then took until February 2021 before ADA was able to post fresh record highs. Based on prior history then, investors should mentally prepare for a drawdown this time around that could near 98% from last September’s highs, which implies a potential drop to as low as about $0.06 per token.  

ADA/USD
ADA/USD’s 97% pullback from 2018 highs to the end of 2019, Source: FX Empire

Whilst support around $0.40 has been holding up very well in recent weeks, macro investor sentiment remains in the dumps and could further worsen if global inflationary pressures continue to build, which would demand an even more aggressive response from global central banks. A break below $0.40 would open the door to a run towards the next area of support under $0.20.  

For cryptocurrency markets to come roaring back, there needs to be more certainty about inflation and investors need to know that central banks are on the path back towards easing rather than tightening. But the global economy might not reach this point until 2023/2024.  

That suggests that over the course of the rest of this year and likely a large portion of next, ADA is going to continue to struggle. But when it does come back, Cardano has a track record of coming back with fury.  

As already noted, ADA increased by 47x in a matter of weeks in late 2017/early 2018. Between early 2021 and September 2021, it increased by 16x. It is perfectly feasible that by 2025, ADA could 10x from current levels.  

Shiba Inu (SHIB) Price Prediction 2022 to 2025

Key Points 

  • Shiba Inu has seen significant volatility in its short history, routinely increasing by more than ten-fold in a few days. 
  • SHIB/USD currently trades near $0.000008, over 90% lower versus October 2021 highs at $0.00008. 
  • If cryptocurrencies recover and SHIB developers deliver utility to the ecosystem, a challenge of 2021 highs before 2025 is likely.  

SHIB’s Short History 

Shiba Inu, the second-largest dog-inspired memecoin by market capitalization after Dogecoin and self-proclaimed as the “Dogecoin killer”, has a short history. The ERC-20 token was launched on the Ethereum blockchain by pseudonymous creator “Ryoshi” back in August 2020 and spent the first few months of its life in relative obscurity.  

Shiba Inu’s ascent to fame began during the meme-stock craze of early 2021, which also coincided with explosive upside in Dogecoin. In the space of a few days in April 2021, SHIB/USD increased nearly twenty-fold in value from under $0.0000002 per token to around $0.0000037, before then pulling back to around $0.0000015.  

History was to repeat itself less than one month later, with SHIB/USD increasing more than twenty-fold in value from around $0.0000015 to as much as $0.000035 in a matter of days in early May. SHIB/USD then consolidated in the $0.000006-0.000008 area until another explosive move to the upside in October 2021.  

SHIB/USD increased ten-fold in value between 1 October, when it was changing hands under $0.000008 and 27 October, when it hit $0.00008. This move really put Shiba Inu on the map, given that at its monthly peak, its market cap briefly surpassed that of rival Dogecoin and surpassed $41 billion.  

A significant deterioration in cryptocurrency market sentiment since last November as a result of a worsening global economy (inflation rising and growth weakening) and central banks turning more hawkish has seen SHIB/USD drop over 90% from its October 2021 peaks. The cryptocurrency was last trading around $0.000008 per token and within the $0.000005-0.000010 range that prevailed throughout much of 2021.  

What Next for SHIB? 

Despite its short history, there is no doubt that Shiba Inu is here to stay given the strength of its community and fan base. Shiba Inu’s official Twitter account has over 3.4 million followers, in joint third place alongside Dogecoin and behind only Binance and Bitcoin. Meanwhile, on crypto social intelligence data website LunarCrush, Shiba Inu consistently ranks in the top ten cryptocurrencies in terms of the website’s social dominance, social engagements and social mentions measures.  

Shiba Inu investors will have to be patient, but eventually global macroeconomic and financial conditions should improve (most economists think). Perhaps global central banks will be in a position to start reducing interest rates with inflation coming back under control in 2023/24.  

When the macro-outlook for broader cryptocurrency markets starts to improve, Shiba Inu is likely to be a prime candidate for outperformance, given its aforementioned strong brand and notoriety to rival Dogecoin.  

The token’s short and volatile history makes identifying long-term technical trends difficult. But if recent history is any lesson, SHIB/USD maintains the potential to increase swiftly by more than ten-fold in a matter of days if conditions are right.  

Many long-term HODLers will be patiently waiting for such a move to occur, perhaps as soon as the end of 2022 or in 2023 if the inflation outlook/outlook for central bank policy drastically improves, and for the October 2021 highs to be taken out.  

However, a return to October 2021 highs suggests a rebound in SHIB’s market cap to above $40 billion. In the absence of the Shiba Inu token offering its investors real utility, its hard to justify why the token’s market cap should increase much beyond there between now and 2025.  

That means that innovation by developers working to expand the Shiba Inu ecosystem in the coming years will be crucially important. Since its launch in July 2021, Shiba Inu’s Decentralised Exchange (DEX)/Decentralised Finance (DeFi) platform ShibaSwap has mostly failed to gain traction.  

As of Monday, the Trade Value Locked (TVL) on the platform is under $30 million, well below highs above $650 million last November. Developers will need to up their game in order to attract flows back to the platform when the broader DeFi market recovers in the years ahead. One potentially big near-term positive catalyst for SHIB could be the release of the Shibarium metaverse later this year.  

Crypto Rebound: What’s Driving Bitcoin (BTC)’s Latest Bounce from Lows?

Key Points

  • After Bitcoin and Ethereum hit fresh annual lows under $18,000 and $900 on Saturday, cryptocurrency market sentiment has stabilized.  
  • Bitcoin has bounced over 18% to the upper $20,000s and Ethereum over 30% to the mid-$1,100s. 
  • FOMO on the dip, retail buying and profit-taking on short positions have all been cited as supporting crypto prices.  

If panic was the mood of the day on Saturday, relief is the dominant feeling in cryptocurrency markets on Monday. After falling to its lowest level since January 2021 around $760 billion, total cryptocurrency market capitalization has recovered more than 16% to around $890 billion.  

Bitcoin and Ethereum, the world’s largest two cryptocurrencies by market cap that account for more than 60% of the crypto market, drove the drop and subsequent rebound. BTC/USD slumped as low as $17,593 on Saturday but has since recovered over 17% to the $20,700s. Meanwhile, after falling as low as $880 per token, ETH/USD has bounced more than 30% to around $1,150.  

Bitcoin futures long positions worth over $170 million were liquidated on Saturday, CoinGlass data showed, the fourth highest in the last three months. Meanwhile, over the course of the same day, $120 million worth of Ethereum long positions were liquidated, though daily liquidations of around this level haven’t been uncommon to see in Ethereum markets this month amid recent turmoil.  

If so many traders have been stung by the recent drop, how is it that crypto prices have been able to mount such as impressive recovery on Sunday and Monday? 

What’s Driving the Rebound? 

Crypto market commentators have proposed a variety of explanations as driving the most recent rebound from lows. Analysts said that Fear Of Missing Out (FOMO) on buying into the dip was likely at play. Selini Capital CIO Jordi Alexander told CoinDesk over the weekend that “willing buyers have been in cash waiting to buy cheap coins,” and that “they have to determine if they will get to buy another 20% lower, or if this is their chance”. “If they wait too long, they will have to chase higher,” he noted, highlighting the FOMO.  

According to comments made by National Alliance Securities head of fixed income Andrew Brenner on Monday, dip-buying by retail investors was a major driver of the weekend rebound, given professional investors are less active at this time. Many retail investors trade/buy crypto via mobile apps, through which they would have been able to track the weekend’s price action.  

Others cited profit-taking by those holding crypto short-positions as technical indicators point to an increasingly over-sold market as driving the rebound. For example, Bitcoin’s 14-Day Relative Strength Index fell below 20 for the first time since March 2020 on Saturday. The last time that Bitcoin’s RSI fell to comparable levels back in January of this year, prices recovered by as much as 35% over the next two months.  

Is the Latest Rebound a Bull Trap? 

Some analysts have warned that the latest rally could be a so-called “bull-trap” – a rebound that encourages investors to re-enter ultimately unprofitable long positions.  

FX Empire’s head of crypto analysis Bob Mason stated on Sunday that “investor sentiment towards Fed monetary policy and investor fears of a global recession remain headwinds (in the) near-term” for cryptocurrency markets. “Barring a marked decline in inflationary pressure, volatility will likely persist as investors digest economic data and central bank forward guidance,” he continued. 

Mason pointed out that Bitcoin Fear & Greed Index remains in the “Extreme Fear” zone at just 9/100 on Monday, though this is admittedly above Saturday’s levels of 6/100. The last time the index was as weak as it was on Saturday was in March 2020 when Bitcoin was changing hands for under $10,000. 

Morning Crypto Briefing: Bitcoin (BTC) Recovers $20K Handle Following Weekend Turmoil

Key Points 

  • Bitcoin is back in the mid-$20,000s and Ethereum around $1,100, with both have recovered well from the weekend’s downside.  
  • But many analysts suspect the worst may be yet to come for crypto against a still unfavorable macro backdrop.  
  • Solana has shrugged off a Solend governance debacle and is eyeing a test of key technical resistance.

Bitcoin Price Recovers Back Into Mid-$20,000s, Ethereum To $1,100

It’s been a tumultuous few days in cryptocurrency markets. On Saturday, Bitcoin led a market-wide sell-off as it cratered from highs in the upper $20,000s to lows under $18,000, its worst levels since December 2020. However, the world’s largest cryptocurrency by market capitalization swiftly recovered on Sunday amid apparent dip-buying and is on Monday changing hands in the mid-$20,000s once again, in line with its pre-weekend sell-off levels once again. At current levels, BTC/USD is up an impressive 15% versus weekend lows.  

Volatility in Bitcoin that was seemingly a function of thin weekend liquidity, a stop-run and technical selling/buying dragged the world’s second-largest cryptocurrency by market cap Ethereum along for the ride. ETH/USD on Saturday briefly fell below the $900 per token level for the first time since January, but as of Monday is back to trading just above $1,100, a stunning 25% up from weekend lows.  

The rapid recovery after key levels of support was broken over the weekend in major cryptocurrencies will come as a relief to investors, but analysts continue to argue that risks remain tilted towards further losses given the unfavorable macro backdrop. Fed Chair Jerome Powell will be testifying before Congress this week and will elaborate on last week’s hyper-hawkish Fed policy shift, which saw the bank accelerate the pace of rate hikes to 75bps from 50bps and signal an intent to take interest rates well into so-called “restrictive” territory in the coming years to deal with inflation. 

Powell was keen last week to emphasize that the Fed will do whatever it takes to bring inflation in the US back under control, even if that means tolerating a higher unemployment rate (which would typically come about as a result of a recession). While the Fed signaled in its latest dot-plot last week that it doesn’t see rates moving above 4.0% in 2023, crypto investors should brace for the risk that inflation remains elevated and the Fed eventually has to raise interest rates to the 5-6% region. 

This would be catastrophic for risk assets like US stocks and crypto, which perform best when monetary conditions are accommodative as opposed to restrictive. US Purchasing Manager Index survey data on Thursday will give a timely update as to the health of the US economy as concerns about a US recession rise and could also impact stock/crypto risk appetite. Trade will be quiet this Monday with US markets shut for the Juneteenth public holiday. 

SOL Bounces To Test 21DMA, Key Downtrend Despite Solend Governance Debacle 

Turning now to some of the major stablecoins. Solana’s SOL has recovered back towards last week’s highs near $36 per token in tandem with the broader market bounce. SOL/USD doesn’t seem to have been much impacted by a governance debacle at Solend, the largest Decentralised Lending (DeFi) platform running on the Solana blockchain.  

On Sunday, a Solend governance proposal proposing to create “emergency powers” that would give Solend Labs the power to access a major whale’s wallet to mitigate the risk of a large liquidation. However, after a massive social media backlash, with Solend accused of going against the values that underpin crypto in creating powers to hack into a wallet, a new governance proposal that would rescind these “emergency powers” passed.  

SOL/USD is eyeing a test of its 21-Day Moving Average just above $36.00 and a test of a key downtrend that has been capping the price action since mid-May. A break above these levels could open the door to an extension of recent upside towards the next key areas of resistance around $45 and $48.  

Elsewhere, Cardano’s ADA was last trading near $0.50, up about 18% versus weekend lows. Binance’s BNB was last changing hands near $215, up 17% versus weekend lows. Dogecoin, meanwhile, was doing a little better and up over 20% versus sub-$0.05 weekend lows near $0.06 after Tesla CEO and precocious billionaire Elon Musk doubled down on his support for the coin via Twitter. Ripple’s XRP was last trading around $0.32 with focus as ever on the ongoing Ripple vs SEC lawsuit.  

Algorithmic Stablecoin Trouble Continues 

The Tron blockchain’s algorithmic stablecoin Decentralised USD (USDD), which many in the crypto space see as a copy and paste of Terra’s ill-fated UST stablecoin, continues its slow decline. USDD was last trading below $0.95, having fallen to as low as $0.92 on Sunday, despite claims by Tron founder Justin Sun that the stablecoin is substantially over-collateralized.  

Elsewhere, Magic Internet Money (MIM), another USD-pegged algorithmic stablecoin, has also lost its 1:1 peg to the buck in recent days. According to CoinGecko, MIM/USD fell as low as $0.975 on Sunday before rebounding to current levels around $0.99, with the token’s platform Abracadabra facing accusations on social media of having accrued $12 million in “bad debt”.  

Cryptocurrency markets will be watching a hearing in the US Congress this week on the topic of stablecoins, with the Fed having recently made a few criticisms about them in a recent monetary policy report.  

FTX Expands Canadian Presence, Binance Suspends Withdrawals/Deposits Through Brazil’s Pix App 

FTX, one of the fastest-growing cryptocurrency exchanges in the world, this weekend entered into an agreement to purchase Canadian platform Bitvo. The acquisition comes as FTX looks to expand its presence in Canada, with the purchase expected to complete sometime in Q3 2022, subject to regulatory approval. “We are delighted to enter the Canadian marketplace and continue to expand FTX’s global reach,” FTX CEO Sam Bankman-Fried said in a statement. “Our expansion into Canada is another step in proactively working with cryptocurrency regulators in different geographies across the globe,” he added.  

Elsewhere, the world’s largest cryptocurrency exchange Binance suspended deposits and withdrawals through the Brazilian government’s online payment platform Pix last Friday. The split with Pix comes after the end of a deadline set by the Brazilian Central Bank (BCB) for all Pix providers to implement new Know Your Customer (KYC) requirements. But Binance deposits and withdrawals via Pix could soon return, with the exchange in the process of buying Brazilian securities brokerage firm Sim;paul Investimentos, which has already secured approval from the BCB and Brazil’s Securities and Exchange Commission.  

Number of NFT Platforms in China Increases 5x Since February 

According to a report published this weekend by local Chinese press, the number of Non-fungible Token (NFT) platforms operating in the country has increased five-fold since February 2022 to over 500. The report noted that the rise in the number of platforms operating in the country comes as the popularity of digital collectibles rises, with Chinese tech giants Tencent and Alibaba also showing interest in the space and filing multiple trademarks. According to the Chinese press, the government continues to view the NFT market unfavorably, believing it to be filled with speculation that poses risks to investors.  

Regulatory Landscape 

In a semi-annual monetary policy report released last Friday, the Fed noted that “recent strains experienced in markets for stablecoins… and other digital assets have highlighted the structural fragilities in that rapidly growing sector”. “Generally, stablecoins that are not backed by safe and sufficiently liquid assets and are not subject to appropriate regulatory standards create risks to investors and potentially to the financial system, including susceptibility to potentially destabilizing runs,” the Fed’s report continued.  

The report criticized the “concentrated nature” of the current stablecoin market, pointing out that total stablecoin market cap is currently concentrated in the USDT, USDC and BUSD coins. Stablecoin “vulnerabilities may be exacerbated by a lack of transparency regarding the riskiness and liquidity of assets backing stablecoins,” the report added. Fed Chair Jerome Powell will deliver a two-day testimony this week before the US Senate and House of Representatives where he will discuss the monetary policy report. He may comment on stablecoins.  

Separately, a group of 14 US Senators signed a letter addressed to the US Environmental Protection Agency arguing the benefits of crypto mining, which can have a “substantial stabilizing effect on energy grids”. The letter argued that mining can utilize flared gas and renewable energy sources and that “digital assets, and their related mining activities, are essential to the economic future of the United States.” 

Meanwhile, over in Russia, state-owned Gazprom Neft has entered into a partnership with BitRiver, Russia’s largest crypto mining hosting service provider. Under the new agreement, Gazprom Neft will provide BitRiver mining centers with electricity generated from petroleum gas. BitRiver will also develop the necessary digital infrastructure to utilize energy from Gazprom flare gas.

What does the Future Hold for SafeMoon (SFM)?

Key Points 

  • SafeMoon has held up better than much of the rest of the crypto market in recent months.  
  • But SFM is nonetheless trading lower by around 85% versus earlier year highs.  
  • SafeMoon faces accusations of being a pump and dump scheme and its executives of siphoning funds, undermining investor trust.  

SafeMoon has held up better than much of the rest of the cryptocurrency market in the past few months. While the total cryptocurrency market has lost around 50% of its market capitalization since the start of May, SafeMoon’s SFM token that runs on the Binance Smart Chain (BSC) is about 10% higher.  

SFM currently trades just above $0.0005, around 30% higher versus earlier monthly lows in the $0.0004 area, though down around 35% from earlier monthly highs around $0.0008.  

But recent outperformance masks a massive drawdown from earlier annual highs. After the SafeMoon developers released a new version of their token last December (SafeMoon V2), the new tokens shot to as high as $0.0032 in January, meaning the token has lost over 85% of its value since these highs.  

At the January peak, SafeMoon V2’s market capitalization was nearly $2 billion, impressive stuff, but still nowhere near SafeMoon V1’s market cap from last May, shortly after the project’s initial launch. 

What is SafeMoon? 

SafeMoon is a self-proclaimed “DeFi” (which stands for Decentralised Finance) token that critics say offers no true utility to the crypto space, but employs incentives to encourage investors to hold onto their tokens. Each SafeMoon transaction is subject to a 10% “tax”. 

SafeMoon says on its website that 4% of this tax goes towards redistributions back to all existing SafeMoon token holders. 3% is supposedly added to a liquidity pool. 2% of tokens are allegedly burned and 1% is added to SafeMoon’s Ecosystem Growth Fund.  

The punitive tax on transactions, as well as the prospect of earning redistribution fees when others transact, encourages SafeMoon investors to HOLD.  

What Next for SafeMoon? 

Cryptocurrency market conditions are currently dire and this is weighing on SafeMoon just like the rest of the space. But when the macroeconomic backdrop improves over the next few quarters/years (I.e. inflation comes down, allowing central banks to revert to easy policy), most expect a powerful cryptocurrency market rebound.  

Will SFM surge back towards record highs and onwards safely towards the moon? 

Many think not. 

SafeMoon faces widespread accusations of being an elaborate fraud/pump and dump scheme. SafeMoon’s price action since its launch in March 2021 (of both V1 and V2 of its token), with swift upwards swings followed by massive bearish corrections certainly has all the markings of a pump and dump scheme.  

SafeMoon has also in the past employed a tactic popular amongst rug pull/pump and dump crypto scam artists – Paying big bucks to gullible social media influencers to shill the token. Various big-name celebrities including YouTubers Jake Paul and Ben Phillips, as well as rapper Lil Yachty, all pushed the project.  

Last month, popular cryptocurrency scam hunter Coffeezilla released a series of videos on YouTube accusing the SafeMoon project of being an elaborate fraud. Not only was SafeMoon originally conceived of as a pump and dump scheme, Coffeezilla concluded, but the forced migration from the V1 token to the V2 token was linked to over $100 million in investor losses. Meanwhile, Coffeezilla accused SafeMoon executives of embezzling transaction tax funds that were supposed to have gone to the Liquidity Pool.  

Separately, SafeMoon and a number of prominent social media stars who promoted are also facing a lawsuit. “The defendants’ intention behind the celebrity-driven marketing of the SafeMoon token was to eventually sell their holdings for a profit when numbers were high,” the lawsuit says.  

Despite all of these accusations, SafeMoon does still have a robust community of supporters and believers. But sooner or later, SafeMoon’s developers are going to have to live up to their promise of being a “human-focused technology and innovation business expanding blockchain technologies for a brighter tomorrow”, or investors will continue heading for the exit.  

LEO Holds Near $5.0, Remains Resilient As Cryptocurrency Markets Fall

Key Points

  • Cryptocurrencies markets have stabilized on Sunday after tumbling on Saturday, with the Bitcoin price in the mid-$18,000s.  
  • LEO has outperformed the rest of the crypto market this weekend, recovering 15% from Saturday’s lows.  
  • The token fell as low as $4.30 on Saturday but has since recovered back to near-$5.0.  

Cryptocurrency markets appeared to broadly stabilize on Sunday after experiencing sharp downside on Saturday in a continuation of recent bearish moves as a result of the increasingly hawkish US Federal Reserve and growing US recession fears. Having slipped as low as the $760 billion on Saturday, total cryptocurrency market capitalization was last just above $800 billion, down more than $400 billion or over 30% in the last two weeks alone.  

The world’s largest cryptocurrency by market capitalization Bitcoin was last changing hands near $18,500 and down about 2.0% on the day, having slumped more than 7% alone on Saturday to break below the important psychological $20,000, $19,000 and $18,000 levels before printing fresh annual lows in the mid-$17,000s. Ethereum, the world’s second-largest cryptocurrency by market cap, was last trading in the mid-$900s per token, having dipped to fresh 2022 lows in the $800s on Saturday.  

BTC/USD
BTC/USD continues recent slump into the weekend, falls under key $20K level.

UNUS SED LEO – Coin of the Day 

According to CoinMarketCap data, crypto exchange Bitfinex’s utility token UNUS SED LEO is the best performing cryptocurrency in the top 20 by market cap over the last 24 hours. LEO, which offers holders discounted trading fees on the Bitfinex exchange, dipped from around $5.0 per token to as low as $4.30 on Saturday in tandem with the meltdown in Bitcoin and other cryptocurrencies.  

But LEO has since seen a sharp recovery back to close to the $5.0 per token level, a 15% bounce from Saturday lows. The bounce comes at a time when most other cryptocurrencies have failed to mount a recovery from this weekend’s losses and is in fitting with the cryptocurrency’s recent outperformance versus most of its major rivals.  

LEO/USD
LEO/USD bounces from Saturday lows. Source: FX Empire

Indeed, in 2022, while most of the rest of the cryptocurrency market has suffered from high global inflation, a weakening global economy, hawkish central banks and a bear market in global equities, UNUS SED LEO has been a very strong performer. Though it has pulled back aggressively from February’s all-time highs in the $8.50 area, it still trades over 30% higher on the year.  

While the cryptocurrency market has shed over $1.2 trillion in value (or over 60%) since the start of April, LEO has only dropped about 13%. Some have argued that LEO’s unique tokenomics mean the cryptocurrency can be viewed as a comparative safe haven compared to other tokens.  

iFinex, Bitfinex’s parent company, has committed to purchasing and then burning LEO tokens equal to 27% of the company’s revenues. The burn mechanism to “continue to 100% of tokens have been redeemed”, iFinex said when it released the token back in 2019. This means the token is deflationary, a property that some in crypto think helps preserve a token’s value.  

Bitcoin Bears in Control as Price Swiftly Breaks Below $20K Then $19K Levels

Key Points 

  • The Bitcoin price fell under $20,000 for the first time since December 2020 then briefly took out $19,000.  
  • The cryptocurrency is now back to trading in the low $19,000s with weekly losses of nearly 30%.  
  • Fed hawkishness and rising downside risks to the US economy continue to weigh heavily on crypto.  

Bitcoin – The Coin of the Day as It Takes Out $20,000 and $19,000 Levels 

The biggest news in crypto this week looks set to be Bitcoin’s latest slide that has taken it back below the psychologically important $20,000 level for the first time since December 2020. Prior to Saturday, BTC/USD had been tentatively fending off a push below the key support level, even in wake of the US Federal Reserve’s largest rate hike in 28 years of 75 bps on Wednesday.  

However, Saturday’s sudden bearish break that saw Bitcoin tumble from around $20,300 to the low-$19,000s in a matter of minutes, an unusually large move in such a short time frame for Bitcoin, makes the cryptocurrency fitting of the title of Coin of the Day. Amid thin weekend liquidity conditions, BTC/USD soon extended its to below the $19,000 level as well.  

The cryptocurrency has since recovered back above te $19,000 level and at current levels near $19,100, Bitcoin is trading with losses on the day of just over 6.0%, taking its weekly losses to closer to 30%. The world’s largest cryptocurrency by market capitalization now trades more than 70% below its record highs printed last November just above $69,000.  

BTC/USD
BTC/USD takes out $20K and $19K levels, before recovering a tad. Source: FX Empire

The Fed’s hawkish shift this week continues to hang heavily over crypto market sentiment. The central bank has not only shifted towards faster rate hikes but is also signaling higher interest rates by the end of this year and throughout 2023, as it seeks to battle US inflationary pressures that continue to build (as per last Friday’s US CPI data).  

Cryptocurrencies, including Bitcoin, are seen as highly speculative investments. These sorts of investments tend to perform poorly when central banks (the most important being the Fed) move to tighten financial conditions, which dampens risk-taking activity. Tighter financial conditions also push up government bond yields, raising the “opportunity cost” of not being invested in this safe asset class, and increase downside risks to economic growth, given lower borrowing across the economy.  

What Next for Bitcoin? 

Bitcoin can only muster a sustainable rebound if economic conditions in the US and global economy improve and the Fed can ease back from its current hawkishness. That means a sustained easing of US inflationary pressures that would allow the Fed to take its foot off of the monetary breaks. 

The fact that global commodity (energy) prices remain elevated for mainly geopolitical reasons (Russia’s invasion of Ukraine, OPEC+ supply reduction) and look set to remain so for some time makes this much-needed decline in inflation more difficult. But most suspect that with many major economies like the UK, Eurozone and US seemingly in/headed towards recession, consumer weakness could take the sting out of global prices by the end of this year/in 2023.  

But that means we may have to wait sometime for a more certain picture on inflation. As long as this uncertainty lingers, traders will continue to have to price in a tail risk that the Fed has to pivot in an ever more hawkish direction. In other words, if an inflationary spiral is starting, it might take rates in the 5-6% region to snap, way higher than the peak interest rates the Fed is currently signaling of under 4.0%.  

Amid all this uncertainty that doesn’t look likely to ease anytime soon, Bitcoin’s near-term outlook remains ugly. The $20,000 level will now be looked at as one of short-term resistance. If BTC/USD was to break above, the May low at $25,400 would be the next key area of resistance. Against the current macro backdrop, a fall to test 2019 lows in the $13,800 area seems more likely than a rally back towards $30,000.  

BTC/USD
BTC/USD eyes push lower to 2019 highs. Source: FX Empire

Ethereum Price Dips Briefly Below $1K for First Time Since January 2021

Key Points 

  • Cryptocurrencies have shed $380 billion in value in the past nine days, rocked by hot US inflation and Fed hawkishness.  
  • The Bitcoin price fell under $20,000 for the first time since December 2020 and Ethereum broke below $1,000.  
  • SOL, DOT and ADA have all held up comparatively better this week, but remain at risk of losses.  

It’s been another ugly week for cryptocurrencies. Total crypto market capitalisation hit fresh annual lows near $820 billion on Saturday, extending a slump that really got kicking last Friday in wake of hotter-than-expected US inflation data. As of last Thursday, the total crypto market cap was closer to $1.23 trillion, meaning it has shed around $380 billion of over 30% in just nine days.  

Last Friday’s hot US inflation figures had a chilling impact on markets as a result of forcing the US Federal Reserve to accelerate the pace at which it is raising interest rates, with the central bank raising interest rates by 75 bps on Wednesday and signaling that another 75 bps hike could be coming at its next meeting in July.  

The bank also signaled its intention to take interest rates well into so-called “restrictive” territory (levels that will weigh heavily on lending, the housing market, and economic growth) by the end of the year and in 2023. All said, in the last nine days, the outlook has shifted to much tighter US financial conditions (which is typically a negative for risk assets like US stocks and crypto) over the next few quarters.  

A more hawkish Fed also raises US recession risk, at a time when data is increasingly pointing to a loss of US economic momentum as consumers feel the bite of inflation and the tightening of financial conditions that has already occurred. This of course compounds downside risks to speculative asset classes like crypto, as investors consolidate their holdings into safer asset classes in order to ride through tough times.  

Bitcoin was leading the latest leg of cryptocurrency market downside on Saturday and was last down over 6.0% on the day after breaking below the psychologically important $20,000 level for the first time since December 2020. This is the key break that many technicians have been waiting for, with some now likely to target a retest of 2019 highs in the upper $13,000s. At current levels in the low $19,000s, the world’s largest cryptocurrency has a market cap of around $370 billion.  

BTC/USD
BTC/USD slides under $20,000 for the first time since December 2020. Source: FX Empire

Ethereum (ETH) 

In tandem with Bitcoin’s latest big drop below the important $20,000 level, Ethereum is also experiencing downside and breaking below key support levels of its own. ETH/USD briefly fell under the $1,000 level for the first time since January 2021, down over 7.0% on Saturday alone and extending its weekly losses to around 30%.  

The next significant area of support is the May 2018 highs in the $830 per token area. Ethereum’s slide this week has seen it erase over $50 billion in market cap.  

ETH/USD
ETH/USD briefly dips under $1,000 to hit its lowest since January 2021. Source: FX Empire

Solana (SOL) 

Solana’s losses this week have been comparatively modest versus the likes of Bitcoin and Ethereum, with SOL/USD last trading lower by about 7.5% and still within reach (though slightly below) the $30 per token level which it has consolidated around in recent days. That could just be a reflection of the fact that the cryptocurrency has performed so spectacularly badly in recent months and the bears have been getting weary.  

SOL/USD, while still holding above weekly lows in the $25s for now, still looks vulnerable as bearish momentum returns to crypto markets for the weekend. The cryptocurrency looks at risk of testing a 2021 triple bottom in the $20 area.  

SOL/USD
SOL/USD holds above weekly lows for now. Source: FX Empire

Polkadot (DOT) 

It’s been a similar story for Polkadot this week, with the cryptocurrency for now holding up better than the broader market. For example, where Ethereum’s weekly losses currently stand at around 30%, Polkadot’s is closer to 8.0%, with DOT/USD holding above its earlier weekly lows just under $6.50 for now.  

As with Solana, the cryptocurrency looks very much to be at risk of a bearish break as selling pressure returns to crypto markets for the weekend amid Bitcoin’s break below $20,000. A break below weekly support could see Polkadot fall back to trading within its late 2020 range in the $4.0-$6.0 area per token.  

DOT/USD
DOT/USD eyes a break lower. Source: FX Empire

Cardano (ADA) 

Cardano has been one of the better performing cryptocurrencies in recent weeks with analysts citing Fear Of Missing Out ahead of its network upgrade scheduled for the end of the month (called the Vasil hardfork). Whilst ADA/USD is still trading lower by about 7.0% on the week and has slipped upwards of 30% versus its earlier monthly peaks in the upper $0.60s per token, at current levels close to $0.45, it is still trading comfortably above annual lows from early May in the $0.39 area.  

ADA/USD looks to very much be at risk of further downside if broader crypto conditions continue to worsen, however, with a test of these annual lows on the cards in the days ahead. The annual lows is a key support area going all the way back to 2018 and a break below it could really get the bears kicking.  

ADA/USD
ADA/USD eyes annual lows. Source: FX Empire

Morning Crypto Briefing: Bitcoin Price Consolidates Near $21,000 Amid Further Signs of DeFi Stress

Key Points 

  • Cryptocurrencies have stabilized on Friday, after tumbling in tandem with stocks a day earlier.  
  • Bitcoin is trading near $21,000 and eyeing a move below $20,000 as traders digest this week’s hawkish Fed.  
  • Signs of stress in DeFi continue, with Finblox and Babel the latest lending/borrowing platforms to halt/limit withdrawals.  

Bitcoin Price Consolidates Near $21,000 As Cryptos Track Stocks 

Cryptocurrency markets continue to track the price action in US equities closely as the weekend approaches. After Thursday’s tumble to fresh annual lows as investors digested Wednesday’s hawkish Fed meeting, S&P 500 index futures are trading with gains of slightly under 1.0% in pre-US open trade on Friday. That is helping to give some modest intra-day support to cryptocurrency prices, which also tumbled on Thursday, with total crypto market capitalization up about 3.0% on the day near $890 billion, having probed weekly lows around $850 billion on Thursday.  

After the big moves seen last weekend following last Friday’s “game-changing” US inflation data (which pushed the Fed into hiking 75 bps this week rather than 50 and being even more hawkish), cryptocurrency markets are likely to enter a period of comparative consolidation. Fed Chair Jerome Powell will be speaking from 1345BST on Friday but is unlikely to add anything to the lengthy remarks he gave in wake of the Fed meeting on Wednesday.  

Traders should prepare for rangebound trading conditions, with total crypto market cap likely to remain within the $840-960ish billion ranges established in recent days. The Fed is set to be in focus once again next week as various policymakers come out of the woodworks to give their views in wake of the latest meeting. Meanwhile, traders will get a timely update on the health of the US economy so far this month with the release of the preliminary version of IHS Markit’s Purchasing Manager Index survey data on Thursday.  

Looking at some of the major coins, Bitcoin continues to stabilize in the $21,000 level, leaving it well within recent $20,000-$23,000 ranges. Investors continue to fret about the potential for a break under the key $20,000 level, which could open the door to a cascade of further selling/capitulation that could send BTC/USD to its 2019 highs under $14,000.  

Ethereum, meanwhile, is consolidating in the $1,100 area, with bears also eyeing a potential drop under $1,000 that could open the door to a drop towards support in the $800s. Binance’s BNB continues to hold above the $200 level and, like other major coins, is on course for steep weekly losses. Ripple’s XRP continues to range within this week’s $0.30-$0.34 ranges as eyes remain on the lawsuit with the SEC.

Cardano’s ADA, meanwhile, is trading close to $0.50, with the 21-Day Moving Average acting now as resistance. Solana’s SOL has recovered from earlier weekly lows in the $26 per token area to around $31.50, but resistance around $35.50 and 21DMA near $38 is notable.  

DeFi Trouble: Finblox & Babel Limit Withdrawals, 3AC Reportedly Misses Margin Calls 

A staked ether (stETH) liquidity pool on the Decentralised Exchange (DEX) Curve has nearly been emptied as struggling crypto hedge funds including Alameda and Three Arrows Capital dump their holdings of the ETH derivative, various crypto media reported on Friday. One market commentator said this might force future stETH sellers into entering less transparent over-the-counter (OTC) trades where the stETH discount to ETH might be even higher. This discount reached record highs above 8.0% as of Monday this week, a sign of the stress in the Decentralised Finance (DeFi) space.  

Meanwhile, news broke on Friday that the issuer of USD-pegged stablecoin DAI MakerDAO has cut off staking/lending DeFi platform Aave’s ability to generate DAI for its platform without collateral. Analysts said MakerDAO took this decision in order to reduce exposure to the wider DeFi space, amid the risk that beleaguered lending/borrowing platform Celsius Network implodes and causes further contagion across the space.  

Crypto staking and yield generating platform Finblox, a rival in many ways to Celsius Network, announced on Friday that it would be limiting investor withdrawals to $1,500 per month. The platform cited uncertainty supporting the now rumored to be insolvent crypto hedge fund Three Arrows Capital, which had invested $3.6 million in Finblox back in December.  

Meanwhile, news also broke on Friday that Hong Kong-based crypto lending platform Babel Finance had suspended withdrawals given “unusual liquidity pressures”. The withdrawal suspension comes just a month after Babel raised $80 million in a funding round that valued the company at $2.0 billion.  

Back to Three Arrows Capital, reports have been doing the rounds on Friday that the hedge fund has failed to meet margin calls this week, raising the insolvency risk. A report in the Financial Times said that crypto lender BlockFi liquidated some of the hedgefund’s Bitcoin positions this week.  

Crypto Adoption: Metaverse Could Reach $5T by 2030, Digital Payments On Twitter “Make Sense” Says Musk 

According to a new report published by multi-national consulting firm McKinsey & Co on Thursday, spending within the metaverse could hit $5 trillion by 2030. The 77-page report, which drew its findings from two global surveys, found that e-commerce and advertising will dominate payments in the metaverse.  

Elsewhere, Tesla and SpaceX CEO and billionaire Elon Musk, who is currently attempting to buy Twitter, said in a meeting with Twitter employees earlier in the week that it “makes sense” to integrate digital payments into the social media platform so as to make it “easy to send money back and forth”. Dogecoin HOLDers will be hoping that DOGE can play some sort of role in this. Tesla and SpaceX already accept the dog-inspired memecoin that Musk is a big fan of as payment methods for merchandise. Speaking of Dogecoin and Musk, the Tesla CEO has been hit with a widely derided lawsuit, where he is being sued for $258 billion for essentially misleading investors into investing in DOGE.  

Back to crypto adoption; Latin American crypto exchange Bitso announced on Thursday that it had handled more than $1 billion in remittance payments from the US to Mexico so far in 2022, more than fourfold the amount handled over the same period in 2021. The company said it hopes to handle $2 billion in global remittances to Mexico in the full year of 2022. 4% of the remittances sent to Mexico in Q1 2022 went through Bitso, the company added, before stating that it hopes for this percentage to reach 10% in 2023.  

Regulatory Landscape: SEC’s Crypto Mom Peirce Criticises Agency’s “Refusal To Engage”, US States Investigate Celsius 

US Securities and Exchange (SEC) Commissioner Hester Peirce, who is referred to as many within the crypt industry as “crypto mom” given her pro-crypto stance, criticized the SEC’s approach to crypto in a speech given earlier in the week. Peirce accused the SEC of refusing to engage with the industry, citing the agency’s failure to approve a spot Bitcoin ETF as evidence it is determined to hold crypto to a higher standard than other products that it regulates.  

Elsewhere, US Treasury Secretary Janet Yellen reportedly met with numerous Wall Street bank CEOs on Thursday to discuss the economy, while she also allegedly raised the issue of “responsible innovation in digital assets”, said a US Treasury Department official. The official added that the Treasury Department is closely watching cryptocurrency markets and recent turmoil underlines the need to establish regulations in the industry.  

Elsewhere, a number of US states have reportedly opened investigations into the recent decision of the Celsius Network to halt customer withdrawals. Director of enforcement at the Texas State Securities Board Joe Rotunda said in an interview with Reuters that “I am very concerned that clients – including many retail investors – may need to immediately access their assets yet are unable to withdraw from their accounts”. “The inability to access their investment may result in significant financial consequences,” he continued.  

Over in Europe, the EU is being urged by a lobbying group to consider whether introducing a digital euro is actually a good idea, rather than implicitly assuming that this is the case. The Institute of International Finance (IIF) urged the EU to consider its assumptions in a response to a European Commission consultation on the matter that closed on Thursday.  

As USD-pegged stablecoins gain global traction, their proponents have played down the need for a Fed-issued digital USD in the US. The issuer of the second-largest US dollar-pegged stablecoin Circle Internet Financial, whose USDC has a market cap of just shy of $55 billion, has in the past called the idea of a Fed-issued dollar “preposterous”. Circle Internet Financial announced on Thursday that they would be launching a full-backed euro equivalent of USDC, which would be called EUROC.  

EUROC will join a few other pre-existing euro-backed stablecoins, including Tether’s EURt and Stasis’ EURS. If these stablecoins can gain traction in the coming years, they may preclude the need for an ECB-issued euro.  

5 Most Popular Cryptos of the Week: DOGE, SOL, ADA, SFM, CEL

Key Points 

  • Cryptocurrency markets were battered this week as traders priced in faster Fed tightening and a US recession.  
  • Markets have mostly been going sideways in recent days, despite the Fed delivering a 75 bps rate hike on Wednesday.  
  • Five of the most popular cryptocurrencies were DOGE, SOL, ADA, SFM and CEL.  

Cryptocurrency markets were battered this week, with most of the week’s losses coming on Monday as investors reacted to last Friday’s hot US CPI data and record weak US Consumer Sentiment data by pricing in a more aggressive US Federal Reserve tightening cycle at the same time as rising US recession risk. The Fed delivered on these expectations for an accelerated tightening cycle on Wednesday by lifting interest rates by 75 bps (as recently as last week a 50 bps move had been expected).  

Cryptocurrency markets, which had already shed about $300 billion in market cap between last Friday and this Monday, took the Fed policy announcement in their stride. As of Friday, total cryptocurrency market cap is around $890 billion, roughly in line with its pre-Fed announcement levels.  

But the crypto bears remain hopeful that more downside might be in store in the weeks ahead. The Fed signalled that it could hike rates by another 75 bps at its next meeting and that it expects rates to end this year in the mid-3.0% range, before moving close to 4.0% during 2023.  

Powell’s tone on the need to address inflation, even if that means a (slightly) weaker labour market and slower growth sends a message that the Fed will not stop tightening even if the US economy does slide into recession (as many now expect). The only thing stopping the hawkish Fed will be inflation coming back under control.  

That is all very hawkish stuff and the knowledge that the Fed isn’t going to be there to save the day when growth weakens could weigh heavily on risk assets such as US equities and crypto in the weeks ahead. For now, total crypto market cap is likely to remain within the $840-$960ish billion range it established this week, as trade consolidates after recent big bearish moves.  

In terms of the largest cryptocurrencies by market cap, Bitcoin is currently trading just above $21,000, well within the $20,000-$23,000 range established over the past few days, but way down from its levels above $30,000 as recently as the start of last week.  

The psychologically important $20,000 level hold for now, but any break below could see BTC/USD quickly test its 2017 highs just below $20,000 and open the door to a run lower towards the 2019 highs under $14,000.  

BTC/USD
BTC/USD Weekly Chart. Source: FX Empire

Ethereum, meanwhile, is consolidating close to $1,100, having at one point dipped to just above the critical $1,000 level. ETH/USD is looking to establish a footing within the $1,000-$1,270ish ranges it has established over the past few days, after its swift tumble from the $1,800 area between last Friday and this Monday.  

ETH/USD
ETH/USD Weekly Chart. Source: FX Empire

Outside of the top two coins, here are five of this week’s most popular cryptocurrencies.  

Dogecoin (DOGE) 

Interest in the internet’s favourite dog-inspired memecoin has spiked in the past two days, after the news broke on Thursday that Tesla and SpaceX CEO Elon Musk is being sued for using his “pedestal as the world’s richest man operate and manipulate the Dogecoin pyramid scheme for profit, exposure and amusement”. Keith Johnson, the man suing Musk, alleges he was “defrauded out of money”. He is reportedly attempting to sue for $258 billion and wants to represent all of those who have lost money investing in Dogecoin since 2019.  

According to crypto social intelligence website LunarCrush, social engagements regarding Dogecoin have spiked in the last two days from around 100-150 million prior to the news breaking to nearly 900 million alone on Friday. But the spike in buzz around Dogecoin hasn’t helped its price. DOGE/USD was last trading in the $0.0575 area, around the middle of this week’s $0.050-0.063ish range. Dogecoin currently trades around 92% below its record peaks printed in May 2021 at just above $0.76.  

DOGE/USD
DOGE/USD Daily Chart. Source: FX Empire

Solana (SOL) 

According to LunarCrush, Solana has consistently clocked about 200 million social engagements per day this week. The cryptocurrency is one of the few to be trading in the green on the week. With SOL/USD currently changing hands around $31.50, it stands to gain just over 3.0% on the week and is near the middle of this week’s approximate $26-36ish range.  

However, its failure on Thursday to break above resistance around $36.00 in the form of May and early June lows is a bearish sign in the short-term, technicians think, as well as its continued failure to test its 21-Day Moving Average (near $38.00). Indeed, selling as SOL/USD approaches its 21DMA has proven to be a highly profitable strategy going all the way back to the middle of April.  

SOL/USD
SOL/USD Daily Chart. Source: FX Empire

Cardano (ADA) 

Cardano was the next most popular cryptocurrency this week, having clocked around 100 million social engagements per day this week, as per LunarCrush data. Like Solana, ADA/USD looks on course to end the week about 1.5% higher close to the $0.50 level, around the middle of this week’s $0.43-0.55ish range.  

Cardano’s failure to get back above its 21DMA (at $0.55) this week suggests that the positive momentum associated with Fear Of Missing Out ahead of the blockchain’s highly anticipated upgrade later this month (called the Vasil hardfork) has run its course. However, for now, support in the form of the recent this week’s and late May lows around $0.43 should shield ADA/USD from a near-term test of its sub-$0.40 annual lows printed at the start of May.  

ADA/USD
ADA/USD Daily Chart. Source: FX Empire

SafeMoon (SFM) 

Social engagement relating to SafeMoon has jumped on Friday to over 30 million, LunarCrush data shows, up from earlier weekly levels in the 15 million range. The jump in interest has coincided with a more than 35% intra-day spike in SFM/USD to above $0.006 from earlier weekly levels under $0.0005. That still leaves it about 80% below earlier annual highs at $0.0032, as the SafeMoon continues to face accusations of being an elaborate rug-pull scheme.  

Celsius (CEL)  

In wake of crypto lending/borrowing service provider the Celsius Network’s decision to halt investor withdrawals on Sunday amid what it has called “difficult market conditions”, the platform’s CEL token has seen spectacular volatility. Amid speculation of the Celsius Network’s insolvency, CEl/USD swung as low as $0.09 this week and then back as high as $2.57 within the space of 48 hours.  

At present, the cryptocurrency is trading around $0.60, with its 21DMA (at $0.63) offering resistance over the last two sessions. In the absence of clarity surrounding Celsius’ solvency, the outlook for a rebound is slim.  

Top 5 Gold Price Linked Cryptocurrencies to Watch in 2022

Key Points 

  • The popularity of gold price-linked cryptocurrencies has grown exponentially in the last two years.  
  • Amid the ongoing crypto bear market, gold-backed cryptocurrencies offer a potential safe-haven superior to stablecoins.  
  • PAXG and XAUT are the largest gold-backed cryptocurrencies by market cap, while PMGT, GLC and DGX have potential.  

Over the last two years, gold-backed cryptocurrencies have exploded into popularity. As of Thursday, cryptocurrencies that are backed by gold deposits have a market capitalization of a little more than $1 billion, up from virtually nothing this time two years ago. However, given that the market cap of all the gold in the world is currently around $11.6 trillion, gold-backed digital currencies have a long way to go before they can be considered mainstream.  

But with the broader cryptocurrency market having experienced a ferocious bear market so far in 2022, the outlook for continued growth in the market cap of gold-backed tokens looks promising. One way that crypto investors traditionally like to hedge their risk but without taking money entirely out of the space is to buy stablecoins like Tether’s USDT and Circle Internet Financials’ USDC.  

But with inflation in the US running at four-decade highs and prices rising 1.0% in the month of May alone, according to US CPI data released last Friday, some investors might be drawn to gold-backed cryptocurrencies. Gold is often viewed as a hedge against inflation and, while many crypto enthusiasts also see Bitcoin in that lens, gold is undeniably less sensitive to risk appetite.  

Here is a list of the top five gold-backed cryptocurrencies to watch in 2022… 

Pax Gold (PAXG) 

Pax Gold is an ERC-20 token that runs on the Ethereum blockchain, with one token corresponding to exactly one troy ounce of gold. PAXG was launched back in September 2019 by Paxos Standard, with tokens backed by London Good Delivery gold bars that are stored in vaults operated by Brink’s, a London Bullion Market Association (LBMA) approved storage company. PAXG is currently the only gold-backed cryptocurrency that can be directly redeemed for LBMA-accredited gold bullion bars.  

The current circulating supply of PAXG tokens is just under 335,000, according to CoinMarketCap data, meaning PAXG’s total market cap is around $615 billion, according to gold’s spot market price on Thursday of close to $1830 per troy ounce. A benefit of owning PAXG over physical gold is that owners can generate yield on their holdings by utilizing one of the many Decentralised Finance (DeFi) applications running on the Ethereum network. A downside of running on the Ethereum network is that, in order to conduct transactions, users need to hold ETH in order to pay gas fees.  

Tether Gold (XAUT)

With Tether having established itself as the leading stablecoin issuer over the last few years, with the market cap of its fully collateralized USD-pegged USDT currently around $70 billion, it makes sense that Tether decided to move into the gold-backed cryptocurrency space in 2020. Like Pax Gold, one XAUT token represents one troy ounce of physical gold on a London Good Delivery bar, but unlike PAXG, the gold that backs XAUT is stored in Switzerland.  

One drawback of owning XAUT is that investors are required to pay a transaction fee of 0.25% a pop, reducing its viability as a form of currency. As of Thursday, the circulating supply of XAUT is around 246,500, according to CoinMarketCap data, which gives the gold-backed cryptocurrency a market cap of around $450 million.  

Perth Mint Gold Token (PMGT) 

Like Pax Gold and Tether Gold, each Perth Mint Gold Token represents one troy ounce of gold. The gold backing PMGT is stored at The Perth mint and, like PAXG, tokens can be redeemed directly for gold bullion. The bullion that backs PGMT is Australian government guaranteed. One benefit of holding PMGT over other gold-backed cryptocurrencies is that there are no transaction fees and, like other tokens, there are no fees associated with the storage/management of the gold that backs the token.  

At present, there are only about 1,150 PGMT tokens in circulation, according to CoinMarketCap data, corresponding to a market cap of around $2.14 million. One of the factors holding PMGT back from greater adoption is likely the fact that it is only available to buy on small Australian crypto exchange Independent Reserve, although talks are allegedly in the works for PMGT to be listed on other crypto exchanges. When this does happen, token issuance should rise.  

Gold Coin (GLC) 

Like Pax Gold, Gold Coin is an ERC-20 token that runs on the Ethereum network. Unlike Pax Gold and the other above-mentioned gold-backed cryptocurrencies, one GLC token does not correspond to one troy ounce of gold. In fact, one GLC corresponds to one-thousandth of a troy ounce of gold. GLC currently has a small market cap of around $880,000, which corresponds to about 43.7 million tokens in supply.  

The largest crypto exchange where the coin can be purchased is Crypto.com. As with PAXG, one of the drawbacks with GLC running on the Ethereum network is that users must hold ETH to pay for network gas fees.  

Digix Gold (DGX)  

Singapore-based DigixGlobal’s Digix Gold token is fully collateralized by physical gold bullion bars and, like with most other gold-backed cryptocurrencies, one DGX token corresponds to one troy ounce of gold. DigixGlobal stores its gold in Singapore and Canada. One drawback of the token is that investors must pay a 1% fee per transaction.  

DGX tokens had a market cap of around $800,000 as of Thursday. But DigixGlobal’s future is uncertain. The company suspended operations back in January in order to focus on reviewing the license requirements under the Singapore Payment Services Act and announced that it would not be taking any more transactions.

Morning Crypto Briefing: Bitcoin Price Back In $21K Area As Cryptos Fade Post-Fed Gains

Key Points 

  • Cryptocurrencies rallied initially on Wednesday despite a hawkish 75bps Fed rate hike, though this upside has since faded.  
  • The market continues to struggle “with a marked shift in central bank monetary policy”, said FX Empire’s Bob Mason.  
  • Bitcoin was back near $21K and Ethereum back in the low $1,100s, down over 6.0% and 10% on Thursday.  

State Of The Market 

Cryptocurrency prices spiked in tandem with upside in US stocks and downside in US bond yields in the immediate reaction to Wednesday’s Fed policy announcement, despite the bank living up to the hype and delivering a widely expected 75 bps rate hike, the largest hike in 28 years. Having lifted the target interest rate range to 1.50-1.75%, the Fed’s new dot-plot signaled it expected rates to hit 3.4% by the end of the year and go as high as 3.8% in 2023 before rates could be reduced back to 3.4% again in 2024.  

In other words, the Fed is signaling its intent to take interest rates well into so-called “restrictive” territory by the end of the year, meaning Fed policy should weigh heavily on US growth by the end of the year and in 2023. Very hawkish stuff, most agreed, leaving analysts perplexed as to why crypto and risk assets saw an initial rally on the announcement. For reference, total cryptocurrency market cap recovered as much as $100 billion from its pre-Fed announcement levels to as high as $960 billion on Wednesday. 

Perhaps the Fed’s espoused view in its latest economic forecasts that robust economic growth in the US is set to continue this year and next (which some called wishful thinking) pushed back against recently growing US recession fears, offering some support to risk assets. But the bounce in sentiment didn’t last long, with total cryptocurrency market cap now having fallen back below $900 billion once again and down about 6.0% already on Thursday.  

“Hopes of an extended breakout from Wednesday’s rebound have subsided,” said FX Empire’s head of crypto market analysis Bob Mason, adding that “risk aversion has spread from the European and US equity markets to cryptos”. As to why risk appetite has once again soured on Thursday, Mason explained that “reality has bitten as free money gets taken off the table”, with the market “struggling with a marked shift in central bank monetary policy”.  

Indeed, it’s not just the Fed to have hiked interest rates this week. Within the last 24 hours, the Brazilian central bank has lifted rates by 50 bps and the Swiss National Bank, for a long-time seen as a stalwart of dovish central bank policy, on Thursday surprised markets with a 50 bps rate hike (taking rates to -0.25% from –0.75%). Meanwhile, the Bank of England also just lifted interest rates by 25 bps to 1.25%, with a few rate-setters having favored a bigger 50 bps move.  

Looking ahead to the rest of Thursday’s session, a dump of US Housing, US jobless claims and regional US manufacturing survey data will provide some insight into the health of various sectors of the US economy (i.e. the housing and labor market plus industrial sector). Investors will be keen to assess whether the data supports the Fed’s still fairly optimistic view on the economy.  

BTC Back To $21K, ETH Back In Low $1,100s as Post-Fed Rally Fades 

Any build-up of recession fears risks sending crypto to fresh weekly lows, which for total crypto market cap could mean a push lower towards $800 billion. FX Empire’s Bob Mason warns that “cryptos may stand ahead of equities in terms of being dropped first to preserve capital” and that “a bitcoin fall to sub-$20,000 would really test investor resilience through the afternoon session”. 

For reference, BTC/USD was last trading back close to the $21,000 level on Thursday, down over 6.0% on the day and down about 8.0% versus its post-Fed peaks. That gives the world’s largest cryptocurrency a market cap of around $400 billion. Elsewhere, Ethereum was last back to trading in the low $1,100s, down over 10% from its post-Fed highs in the mid-$1,200s, giving it a market cap of around $135 billion.  

The world’s second-largest cryptocurrency is currently eyeing a test of weekly (and annual) lows just above $1,000, a break below which could open the door to a run towards the next area of support (the May 2018 highs) in the mid-$800s. In terms of the major altcoins, BNB was last down about 7.0%, SOL about 9.0% and ADA and XRP about 8.0% on Thursday, with each having significantly pared post-Fed gains in tandem with the major cryptocurrencies. 

Has Bitcoin Bottomed? 

According to the widely followed Director of Global Macro Strategy at Fidelity Investments Jurrien Timmer, one metric to assess the valuation of Bitcoin suggests the cryptocurrency may currently be “cheaper” than it looks. Bitcoin’s price/network ratio has fallen back to its 2017 and 2013 levels, Timmer stated, even though its price has only fallen back to late 2020 levels.  

However, according to analysis from Philip Swift, the creator of on-chain analytics firm LookIntoBitcoin, more Bitcoin capitulation may be coming. According to Swift, the ratio between short and long-term holders of Bitcoin has been more in favor of the long-term holders when the cryptocurrency has bottomed in the past.  

Swift cites LookIntoBitcoin’s RHODL Ratio, which assesses and takes a ratio between the wallet activity of one week and one-two year Bitcoin holders. The RHODL Ratio is yet to hit a so-called “green zone” that LookIntoBitcoin says suggests capitulation has peaked and that price bottoming is imminent.  

In further bitcoin-related commentary, crypto billionaire and Galaxy Digital founder and CEO Mike Novogratz said on Wednesday that he expects Bitcoin to lead a market recovery once the Fed pauses/reverses rate hikes. “Bitcoin will lead the markets back out of this Fed hike,” Novogratz stated, adding that “the moment the Fed flinches, the moment (Fed Chair Jerome) Powell pauses because the economy’s really starting to roll over, you’re going to see Bitcoin explode north”.  

Novogratz cited anecdotal evidence as supporting this conviction. “Lots of guys I talk to are seeing the next time they’re going to get engaged is when they start sensing Fed’s going to pause,” he noted. Meanwhile, the Galaxy Digital CEO argued that Bitcoin could start its recovery even if equities continue to decline. “If you look at the 1970s, gold led the market back not stocks”, he pointed out, alluding to how the same could happen for Bitcoin in the 2020s.

Crypto Exchanges: Kraken Continues To Hire For 500 Positions Despite Crypto Winter 

Following an announcement earlier in the week that it would be laying off nearly 20% of its staff, amounting to around 1,000 employees, Coinbase has announced that it will be letting go of 8% of its Indian workforce, various crypto media outlets reported on Thursday. Amid the ongoing downturn in crypto prices (referred to as the “crypto winter” within the industry), other crypto exchanges are also suffering.  

Crypto exchange and payments service provider Crypto.com announced on Tuesday that it will be letting go of 260 employees or around 5% of company staff, while crypto lending/borrowing service provider BlockFi also announced this week that it will let go of around 20% of its employees due to current difficult market conditions.  

But it’s not all bad for crypto exchanges. Kraken announced on Wednesday that it would continue to hire for over 500 positions, despite the crypto winter. “We have not adjusted our hiring plan, and we do not intend to make any layoffs,” the crypto exchange said in a statement on Wednesday. “We have over 500 roles to fill during the remainder of the year and believe bear markets are fantastic at weeding out the applicants chasing hype from the true believers in our mission”.  

Ultra-rich Have Already Embraced Crypto, Capgemini Survey Finds 

Global technology consulting giant Capgemini on Tuesday released its annual World Wealth Report, which revealed that, according to a survey of 2,973 high-net-worth individuals, some 71% have already invested in digital assets. Of these individuals, 54% had a net worth of between $1 million and $30 million, while 46% had a net worth of above $30 million. More than nine in ten of the high-net-worth individuals aged below 40 years old held digital asset investments.  

Capgemini’s survey, which suggests the rich have already embraced crypto to a large extent, comes after a Bank of America survey released on Monday showed that in a survey of 1,000 existing and potential crypto users, 91% plan to invest in crypto within the next six months. The BoA survey revealed that the average transaction size was about $25 with PayPal and Coinbase the most frequent platforms used, indicating it’s not just the super-rich getting into crypto.  

Bitcoin’s adoption by the global population could hit 10% as soon as 2030, a new report by Blockware last week claimed. 

Regulatory Landscape: Former CFTC Chair Calls For Stronger Oversight Following Celsius Debacle 

There should be stronger regulatory oversight of crypto lending platforms operating in the US in light of the recent freezing of withdrawals from crypto trading/lending platform Celsius, former US Commodity Futures Trading Commission (CFTC) Chair Timothy Massad said in an interview with CoinDesk earlier this week. Meanwhile, Chair of the US House of Representatives Ways and Means Committee Richard Neal asked the Government Accountability Office (GAO) to weigh in on the move by some major US pension plan providers (like Fidelity Investments) to allow savers to add cryptocurrencies into their retirement portfolios. The GAO is a legislative watchdog that is tasked with publishing policy analysis and recommendations. 

Turning now to Europe, European Central Bank executive board member Fabio Panetta said on Wednesday that if the central bank issues its own digital currency, it should cap the number of tokens to between one and one and a half trillion. “Our preliminary analyses indicate that… (this) would avoid negative effects for the financial system and monetary policy,” said Panetta. “This amount would be comparable with the current holdings of banknotes in circulation,” he added. The idea of the proposed limit is to disincentivize HODLing, as some investors do with crypto assets.  

Meanwhile, over in Russia, a bill that would ban the use of crypto as a form of payment in the country has passed its first reading in the State Duma, Russia’s lower house of parliament.