Newsletter Volume 23
Article 1 — The Market This Week
In a significant move, Bitcoin surpassed the $30,000 mark for the first time since June 2022, causing a stir among traders and investors. As the largest cryptocurrency by market capitalization, Bitcoin experienced an impressive rally in 2023, increasing in value by over 80%. This surge is seen as an optimistic sign by many, who believe that the turbulence faced by banking institutions in March is a thing of the past, and that the U.S. central bank’s monetary policy is becoming more favourable.
The cryptocurrency recently traded at $30,237, marking a 6.75% increase in the last 24 hours. This rise has been attributed to the market pricing in a slowdown in growth and the Federal Reserve’s loosening of monetary policy in 2023. The U.S. CEO and chief legal officer of Banxa, Richard Mico, believes that the bond market confirms this trend. He notes that the U.S. two-year Treasury note has fallen below 4% from a peak above 5% in early March, indicating that traders have rapidly reversed their expectations of future Federal Reserve interest rate hikes.
Mico goes on to state that the market is likely to see a lot of liquidity injected as a result of this, with Bitcoin being the best-performing asset of 2023. He notes that Bitcoin has always been the asset that responds most quickly and violently to these types of monetary shifts.
Bitcoin last crossed the $30,000 mark on June 10, when it was on its way down to below $20,000, where it spent a significant part of late 2022 and early 2023. In the past three weeks, it has hovered around $28,000 as wary investors assessed the impact of a near banking meltdown, continued inflationary pressures, and other macroeconomic uncertainties. However, despite this, Bitcoin is up approximately 80% year-to-date after starting the year at about $16,600.
The cryptocurrency surged in January on signs that inflation was waning. Though it stalled in February, it regained momentum in late March following the failure of Silicon Valley and Signature banks. As a result, some investors questioned the stability of the current monetary system and regained their appetite for assets that hold their value. This resurgence in value has not gone unnoticed, and gold has also recently spiked, crossing the $2,000 mark for the first time since 2020.
Mico believes that a narrative shift is happening because of the banking crisis, which has fed into Bitcoin’s momentum. Increasingly, Bitcoin is seen as a reliable store of value, free from the issues of storing money by way of a third-party intermediary or a bank. As a result, Mico suggests that Bitcoin is now perceived adequately as a risk-off asset.
Moreover, de-dollarization is increasingly becoming part of the narrative, further accelerating Bitcoin adoption. Of course, with Bitcoin, you are your own bank, and it’s challenging to make predictions, given the volatility of late. However, Mico believes that this momentum regarding Bitcoin is likely to continue.
Bob Ras, the co-founder of Sologenic, a blockchain-powered network for tokenizing securities, notes that Bitcoin has decoupled from stocks and shown “its increasing appeal as a safe haven for investors.” He believes that the present time truly marks Bitcoin’s ascendance onto the global stage as a formidable asset. Amidst heightened geopolitical instability, faltering banking systems, and mounting concerns surrounding reserve currencies, Bitcoin has emerged as the reliable refuge many had anticipated. This crucial juncture signifies a pivotal advancement for the digital asset sector.
KEY METRICS
Total Crypto Market Cap: $1.30 T
Bitcoin Market Cap: $589.00 B
Ethereum Market Cap: $243.16 B
ETH/BTC Ratio: 0.07
Ethereum Gas Price: 43 gwei
DeFi TVL: $79.61 B
Fear and Greed Index: 61 (Greed)
Federal Reserve Balance Sheet: $8.63 T
Article 2 — Weekly Review of IC15
The global cryptocurrency market experienced a dip in the benchmark IC15 Index ahead of the US inflation data scheduled for later on April 12th, 2023. The Index was down by 493 points to 39,884, and all the constituents in the Index were in the red except Solana, which was up by 4.95%. The major losers in the market were Litecoin, Dogecoin, Cardano, and XRP, all experiencing losses in the range of 3–5%. The total market capitalization of cryptocurrencies stood at $1.2 trillion, with Bitcoin hovering around $30,000. However, the market gained after better-than-expected US inflation data was released the following day. The US CPI rose by 0.1%, which was below the expectation of 0.2%. As a result, the benchmark IC15 Index was up 412 points to 40,296 on April 13th, 2023, and all the constituents in the Index were positive. The major gainers in the market were Dogecoin, Ethereum, Uniswap, and Cardano, experiencing gains in the range of 3–8%.
The G7, a group of seven advanced economies, is collaborating to help developing nations develop their Central Bank Digital Currency (CBDC). This effort will reduce the cost of transactions and facilitate faster cross-border payments. Meanwhile, the Securities and Futures Commission of Hong Kong has stated that decentralized finance (DeFi) is subject to licensing requirements under the Securities and Futures Ordinance. In Hong Kong, virtual bank ZA Bank is poised to offer crypto accounts and crypto-to-fiat exchange services to crypto firms. Bitfinex, a crypto exchange, obtained the first-ever digital asset service provider license in El Salvador.
However, the Texas State Senate recently passed a bill in the legislative session that removes incentives for Bitcoin miners and limits their participation in demand response programs. In addition, the Zambian government is conducting a crypto regulation test with the central bank and securities regulators to assist in forming crypto regulations by June. The Central Bank of Sweden, Riksbank, also works on the third phase of its CBDC research, focusing on retail and conditional payments. Finally, the National Commission of Value of Argentina authorized the first regulated Bitcoin-based futures index in the LATAM region on the Matba Rofex exchange, which is set to start in May.
As the cryptocurrency market continues to evolve, it is essential to stay up to date with the latest developments and news.
Furthermore, governments and financial institutions worldwide are looking to regulate cryptocurrencies to provide investors with a safe and secure environment while mitigating the risks associated with this type of asset. In this regard, it is crucial to understand the nuances of the market and the implications of government actions for crypto investors. This includes monitoring the actions of regulatory bodies worldwide and their impact on the market.
Article 3 — Battle of Bull and Bear
The crypto market has exhibited exceptional performance, with Bitcoin and Ethereum leading the charge. Bitcoin, the largest cryptocurrency, reversed its modest losses from the previous day and regained traction above the $30,000 level once more, while Ethereum broke through the $1,900 barrier and outperformed Bitcoin. Additionally, other cryptocurrencies such as Dogecoin, Litecoin, and Solana also exhibited strong performance.
The sustained growth of the crypto market can be attributed to positive inflation data and the Ethereum Shanghai upgrade. At the time of writing, the global crypto market capitalization stood at $1.23 trillion, marking a 1.20% increase over the past 24 hours. In addition, Ethereum has outpaced Bitcoin, owing to a new update that enhances staking flexibility, boosting market liquidity and bolstering the security of the blockchain, ultimately contributing to an increase in Ethereum’s value in the future.
The global crypto market has been flashing green and rose moderately on Thursday, thanks to the release of lower-than-expected US inflation statistics, which fueled speculation that the Federal Reserve will likely finish its rate-tightening cycle sooner than expected, affecting the value of cryptocurrencies like Bitcoin. According to statistics released on Wednesday, U.S. consumer prices increased by 0.1% in March. This resulted in an annual increase of 5.0%, the weakest 12-month growth since May 2021.
The probability of an early end to the rate-tightening cycle might soon result in a rise in Bitcoin prices. In addition, the prospect of a small recession later this year, as predicted by the minutes from the March Fed meeting, may lead to the central bank lowering interest rates before the year ends. This will likely have a long-term influence on the cryptocurrency market, including Bitcoin, because lower interest rates may lead to rising inflation, increasing the attraction of alternative assets like cryptocurrencies.
Despite the ongoing market volatility, the global cryptocurrency market has demonstrated exceptional performance. The crypto market has been tumultuous recently, but the past few weeks have seen a resurgence in investor sentiment towards cryptocurrencies.
The rise of cryptocurrencies such as Bitcoin and Ethereum has been nothing short of meteoric. As a result, their market capitalization has increased significantly, and they have emerged as mainstream investment options, even attracting institutional investors. This is evident in the recent purchases of cryptocurrencies by companies such as Tesla and MicroStrategy.
However, there are still concerns about the regulation of cryptocurrencies. For example, China recently reiterated its stance on cryptocurrencies, reiterating its crackdown on Bitcoin mining and trading activities. Furthermore, some countries are also exploring the possibility of launching their own central bank digital currencies (CBDCs), which could threaten the dominance of cryptocurrencies like Bitcoin and Ethereum.
Despite these concerns, the crypto market has been on the rise. Moreover, the recent positive inflation data and the Ethereum Shanghai upgrade have further contributed to the market’s sustained growth. Of course, it remains to be seen how the market will react to the prospect of a small recession and lower interest rates, but the long-term outlook for cryptocurrencies remains positive.
Article 4 — Weekly Spotlight
In this week’s spotlight, Solana Labs has announced the public sale of its cryptocurrency-ready smartphone, Saga, on May 8th. The Saga aims to make cryptocurrencies more accessible to people increasingly using mobile devices to access digital services. The smartphone is a product of Solana Mobile, a company behind the Solana blockchain. Solana first teased the possibility of a mobile device that doubled as a dedicated crypto hardware wallet nearly 10 months ago, intending to integrate cryptocurrency usefulness into the phone’s hardware and software.
The Saga smartphone has a price tag of $1,000 and comes with 512GB of storage, a 6.67-inch OLED display, two versatile back camera lenses, and a fingerprint scanner. The smartphone runs on the latest Android operating system. What sets it apart from other smartphones in the market is the “Solana Mobile Stack” (SMS), which comprises custom add-ons that integrate crypto functionality into the phone’s hardware and software. In addition, SMS has built-in security features that allow the device to send, receive, trade, and store cryptocurrencies.
The Saga’s secure element is customized with a “seed vault” that stores a user’s private keys, keeping them separate from the rest of the phone’s data for increased security. Additionally, the smartphone has a custom “dapp” store that only lists cryptocurrency applications, with over a dozen applications available for download currently. Solana says it won’t impose “extractive fees” on dapp store apps, a dig at the 30% tax charged by Apple and Google on their respective storefronts. The dapp store is separate from Android’s “Google Play” and is designed to cater to the specific needs of crypto enthusiasts.
The Saga smartphone is built on hardware from Bay Area smartphone company OSOM and is marketed to the Solana ecosystem. The product is a bet that mobile will be essential to the future of cryptocurrencies as more people are embracing digital currencies and seeking innovative ways to integrate them into their daily lives. Despite the potential benefits, Saga is not the first cryptocurrency smartphone in the market. Previous attempts by phone makers like HTC and Sirin Labs to create a crypto-forward smartphone have failed to gain traction. However, Solana is optimistic that the Saga will be successful, given its customized features and focus on the specific needs of crypto users.
The Saga’s success will depend on its ability to integrate with the broader ecosystem of Solana blockchain users and cater to cryptocurrency enthusiasts’ specific needs. As more people embrace digital currencies, there is a growing need for innovative solutions that make it easier to use cryptocurrencies in everyday life. The Saga is an ambitious attempt to address this need, and only time will tell if it succeeds in its mission to put crypto in people’s pockets where the rest of the digital world has already gone.
