Dear Teroxx Community,
This week we saw a digital asset market which experienced a turbulent and volatile week in both directions.
As usual, we are also providing detailed videos for those who want to delve deeper into the subject.
Digital Asset News
Bitcoin’s correlation with the US stock market could be a reason for its current decline. But the financial destabilization of Eastern Europe could make Bitcoin a crisis hedge. Bitcoin (BTC) is considered an inflation hedge, and many have expected the price to hold up in times of crisis. However, Sam Bankman-Fried, the CEO of global derivatives and spot crypto exchange FTX, believes that BTC’s decline was not a surprise.
On Twitter, he talked about the scenario, stating that the war led to a shortage of money on the market, which resulted in the sell-off on the traditional and crypto markets. The BTC price decline is also attributed to the increasing correlation with the Nasdaq and the S&P 500, which recently reached a two-year high. Bankman-Fried pointed to the destabilization of currencies in Eastern Europe and suggested that investors in Eastern Europe may be looking for alternatives due to the invasion of Ukraine. Here, Bitcoin could become an obvious choice.
Bankman-Fried distinguished between two types of investors here: fundamental investors and algorithmic. He explained that fundamental investors look at market conditions and sentiment, while algorithmic investors prefer data.
Market fundamentals suggest a buying opportunity as BTC is a crisis hedge. On the other hand, if you look at the data and the correlation of BTC with the stock market, you would rather sell as an algorithmic investor.
Although sentiment in the crypto market is rather subdued at the moment, the stablecoin offering has reached a milestone of $180 billion. Stablecoin growth continues to outpace the rest of the market, up 6 percent in the last 30 days. During volatile times in the market, stablecoins can provide price stability that is possible through certain assets or algorithms. In February, three stablecoins rose into the top 10 coins by market cap. Binance USD (BUSD) only managed to do so temporarily. According to Arcane Research, the three largest stablecoins, Tether (USDT), USD Coin (USDC), and BUSD now account for a total of “9 percent of the total market capitalization of all cryptocurrencies.” Arcane Research noted that USDT stagnated as the largest stablecoin with 44 percent market share last year, and USDC is “shifting up a gear” with “20 percent growth in 2022.
“If USDC and USDT continue to grow at similar rates so far in 2022, USDC will be the largest stablecoin by market cap by the end of June.”
The European Commission has moved to exclude several key Russian banks from the influential SWIFT international payments information system in an effort to largely cut off Russia’s foreign trade from the rest of the world.
The EU Commission, together with the heads of government of France, Germany, Italy, the United Kingdom and the United States, imposed the relevant sanctions in order to end the war against Ukraine that Russia is waging.
The EU Commission strongly condemns Vladimir Putin’s war of aggression in the statement and is now taking a series of measures to isolate Russia from the international financial system.
The exclusion of SWIFT in particular could condition Russia’s elite to inevitably turn to cryptocurrencies and crypto payment networks. Crypto expert Mati Greenspan opines:
“If a wealthy person is afraid that their funds will be frozen by the sanctions, then they can simply put their money in Bitcoin to be safe from such measures.”
Berlin-based smartphone bank N26 is reportedly using the white-label solution from Austrian crypto exchange Bitpanda for its crypto and ETF trading offering, according to media reports. This was reported by FinanceFWD, among others, citing confidential sources.
Back in 2017, Valentin Stalf, the founder of N26, told Die Welt in an interview that Neobank was considering “integrating a bitcoin exchange into the app.” Since June 2021, Bitpanda has also offered its technical infrastructure to other companies as a so-called white-label solution. This means that traditional financial companies as well as neobanks and banking apps will be able to use the Austrian unicorn’s infrastructures in the future.
It is precisely this service that should be of interest to N26. The service could be integrated directly into N26’s banking app via API interface. How long it will take for this to be implemented is still unclear.
Whether both companies will really collaborate on this crypto offering – neither N26 nor Bitpanda have confirmed that yet. In addition, Bitpanda is still waiting for the license it has applied for from the German financial supervisory authority BaFin and is currently subject to a special growth restriction that only allows the company 50,000 new customers per month.
Technical term of the week
Crisis-proof assets: Describes assets that perform independently of political decisions and tensions. They behave “neutrally” and serve as an alternative for asset protection when national currencies or shares, which are not independent, drop sharply. These include gold and bitcoin, as well as other digital assets.
Bullish outlook: $40,000 establishing support would be a bullish sign for the market in these particular times and would provide positive sentiment.
Bearish Outlook: Setbacks will play out in correlation to global indices and equity markets if they occur. Support zones from the last few weeks should catch the market from reaching lower levels.