Newsletter 72
3rd May 2024
THE MARKET THIS WEEK
The majority of cryptocurrency aficionados are against CBDCs, while prominent members of the market like Consensys, Ripple, and Stellar are supporting them. An experimental digital currency called CBDCs was developed by the central bank of a nation. They are often programmable and centralized, and they are managed via a private network. This implies that transactions can be tracked, observed, and edited by central banks. These kinds of capabilities provide authorities a great deal of control over the movement of money. They give them the ability to restrict consumer spending, put “expiration” dates on savings accounts, and even remotely freeze or seize funds.
Advisors’ Guide to Crypto: The Future of Digital Asset Custody
There is a noticeable trend for Web3 asset holders to move their digital asset holdings to self-custody once they reach a certain level of competence. The management of digital assets is changing due to several factors such as advancements in technology, the abundance of new tokenized investment products, and perceived or actual hazards associated with leaving assets with service providers like centralized exchanges.
The price of ether has increased due to investor expectations of a looser monetary policy in the United States and interest in the spot ETH ETF in Hong Kong. The decline in macroeconomic conditions is a major cause of the bitcoin market slump. These include the US economy continuing to experience inflation and the first quarter’s 1.6% growth rate being less than anticipated. The Bank of Japan intervened multiple times in Asia to stop the yen’s devaluation, yet the GDP of the Eurozone grew by a meager 0.4% annually.
Iranian cryptocurrency miners are endangering national security, US legislators warn.
Senators Angus King and Elizabeth Warren claim that money from cryptocurrency mining has been utilized by the Iranian government to support terrorist groups. The letter stated that Iran’s use of cryptocurrency to get around sanctions “poses a direct threat to our national security.” The entity thought to be partially at fault, Hezbollah, is one of the known terrorist organizations that the Iranian military has funded with cryptocurrency.
According to the survey, ordinary investors have been more active in the cryptocurrency markets in recent weeks, contributing significantly to profit taking over that of institutions. The bank reports that in April, retail investors sold both equities and cryptocurrency assets, and that there have been withdrawals from bitcoin exchange-traded funds (ETFs). There are still the three obstacles the bank has previously noted: increased positioning, high bitcoin prices relative to gold and the expected cost of production, and muted venture capital (VC) funding for cryptocurrencies.
KEY METRICS
Total Crypto Market Cap : $2.65T
Bitcoin Market Cap : $ 1.32T
Ethereum Market Cap : $ 421.48B
ETH/BTC Ratio : 0.05
Ethereum Gas Price : 6 gwei
DeFi TVL : $163.36b
Fear and Greed Index : 48 (Extreme Greed)
Federal Reserve Balance Sheet : $7.36 T
BATTLE OF THE BULL AND BEAR
Bitcoin has dropped more than 20% from its peak. Will Bitcoin reach $50K in price? After dropping below the average ETF inflow threshold of $59,000, Bitcoin may momentarily reach the $50,000 mark, even though the current correction is still consistent with previous price drops.
A string of encouraging network announcements and the Fed’s plan to forgo rate hikes in 2024 have driven up the price of Solana. The gains that SOL has made today are a part of a bounce that started from its current resistance-turned-support area. Since March, the Bitcoin has regularly recovered when it got close to the zone, indicating that investors were still feeling confident about building up their holdings. Additionally, the 200-day exponential moving average’s support.
First-day outflows from BlackRock’s Bitcoin ETF lead to a record $563 million withdrawal from U.S. spot products. The leading outflows on Wednesday were from Fidelity’s FBTC, not GBTC, which could be concerning for bulls.
Analysts predict a rebound in the price of bitcoin following the Fed’s rate hike.
Although the price of bitcoin is beginning to rise again, experts are unsure if the worst of the downturn is past. After the US Federal Reserve chose to keep interest rates steady and dashed investors’ hopes for rate reduction in 2024, the price of bitcoin, which was at $59,344, began to rise again on May 2. According to the Federal Reserve’s (Fed) May 1 FOMC minutes, interest rates will remain between 5.25% to 5.50%. The Fed further stated that before reducing rates, it would require “greater confidence that inflation is moving sustainably toward 2%.”
WEEKLY REVIEW OF IC15
The global cryptocurrency market recovered from the slide over the last few days. The IC15 Index was up 724 points to 73,288 at 4 p.m. All the coins in the Index were high, led by Solana, up by 10.27%, followed by Polkadot, Polygon, and Chainlink in the 5–8% range
BlackRock’s recently launched BUIDL fund became the world’s largest tokenized treasury fund with a market capitalization of $375 million. VanEck’s new report finds nations, companies, and ETFs hold around $175 billion worth of Bitcoin — roughly 15% of the total Bitcoin supply.
Two US lawmakers introduced a bill to clarify crypto taxation rules for miners and stakers. The new bill aims to prevent double taxation, resolve current tax compliance issues, and promote innovation and business in the country. A recent survey from Germany’s central bank, the Deutsche Bundesbank, reveals that nearly 90% of German households appear open to the idea of its CBDC, the digital euro, despite their usual preference for cash.
If Morgan Creek Capital is to be believed, the baby boomers will invest heavily in digital assets with $300 billion. The inflow reflects the growing interest from investment advisers following the introduction of Bitcoin ETFs. VC giant Pantera Capital plans to raise over $1 billion for a new crypto fund to offer investors exposure across the spectrum of blockchain-based assets.
Weekly Spotlight
The decline over the previous few days was reversed by the worldwide cryptocurrency market. At 4 p.m., the IC15 Index was up 724 points to 73,288. Every currency in the Index was up, with Solana rising by 10.27%, with Polkadot, Polygon, and Chainlink following in the 5–8% range.
With a $375 million market capitalization, BlackRock’s newly established BUIDL fund has emerged as the largest tokenized treasury fund globally. According to a new estimate from VanEck, countries, businesses, and exchange-traded funds (ETFs) own over $175 billion worth of Bitcoin, or 15% of the whole supply.
A bill to clarify cryptocurrency taxation regulations for miners and stakers was presented by two US congressmen. The new bill intends to stop double taxation, address existing tax compliance problems, and encourage national business and innovation. Despite their typical predilection for cash, almost 90% of German households seem receptive to the idea of Germany’s CBDC, the digital euro, according to a recent survey conducted by the country’s central bank, the Deutsche Bundesbank.
If Morgan Creek Capital is to be believed, the baby boomer generation will allocate $300 billion, or more, to digital assets. The influx is indicative of investment advisers’ increasing interest in Bitcoin ETFs since their launch. Over $1 billion will be raised by VC behemoth Pantera Capital for a new cryptocurrency fund that will give investors exposure to.
