ALPEX Global Weekly Newsletter — February Week 4
This week, the United States and its allies are kicking certain Russian banks out of the SWIFT system. Since the Russian invasion of Ukraine last week, Bitcoin’s price has seen a new level of volatility that has affected both the crypto and stock markets. This and much more in this week’s newsletter.
Starting off with — ALPEX Global stands in support of peace. War is not the solution. As a response to Russia’s invasion of Ukraine, the White House last week announced the United States and its allies would expel certain Russian banks from a major international banking system. This is a significant step in crippling Russian economic activity.
In a sudden shift from just days ago, when it appeared such a move was unlikely to take place, the Biden administration and European allies have decided to block Russia’s access to SWIFT. As part of the agreement, the United States and European nations committed to taking measures to prevent the Russian Central Bank from using its reserves to undermine sanctions and strengthen the ruble.
In other news, El Salvador’s President Nayib Bukele is offering citizenship to foreign investors. The crypto community was informed on Sunday by President Bukele that he would send a list of 52 legal reforms to Congress. Bukele’s proposals included the removal of red tape, reducing bureaucracy, creating tax incentives, and, most importantly, granting citizenship to foreigners investing in the nation. The president has promised to make El Salvador one of the most free countries in the world at a time of global tyranny. Bukele is not only an outspoken advocate for Bitcoin adoption (BTC) but also a controversial figure in international politics for the same reasons. In the United States, a group of bipartisan senators recently introduced new legislation to mitigate the risks associated with El Salvador’s adoption of Bitcoin as legal tender.
Meanwhile, the Chinese Supreme Court has ruled that virtual asset transactions are “illegal fundraising,” opening the door to judicial prosecution of the crypto industry. In September 2021, the People’s Bank of China and a host of other top-level agencies designated crypto transactions as illegal fundraising; however, the court ruling formally designates them as a crime and determines appropriate penalties.
It was stated in Thursday’s ruling that the suspects will be prosecuted under Article 176 of the Chinese criminal law, which stipulates prison sentences between three and 10 years and fines ranging from RMB 50,000 (US$7,900) to RMB 500,000 ($79,000) for crimes involving large sums of money. The criminal law provides for less serious crimes to be punished with less than three years in prison and fines between RMB 20,000 ($3,160) and RMB 200,000 ($31,600). This amendment will be effective on March 1.
Finally, Bitcoin had been trading above $40,000 for much of February, after a slow start to the year. Bitcoin’s price dropped below $34,000 in January, the lowest level since July 2021. In recent weeks, Bitcoin’s price has lagged due to a continued surge in inflation, the stock market’s worst month since March 2020, and indications that the Federal Reserve will begin raising rates in March to combat inflation. However, government representatives continue to show interest in stronger regulation and involvement with digital currencies — including the possibility of establishing a government-issued currency. In recent weeks, Ethereum’s price has followed a similar trend to that of Bitcoin.
Every day, ALPEX Global provides market wrap — following analyses are based on keeping an eye on the markets and what we anticipate.
As geopolitical tensions have escalated in the past weeks, Bitcoin’s recent volatility has undermined the argument that cryptocurrencies offer a hedge. The value of the digital token has declined by about 6% so far in 2022, while it has still remained more than 30% below the record high of nearly $69,000 it had hit in November 2021.
Crypto prices have been volatile recently due to a broader market selloff triggered by investors recalibrating their portfolios in response to a more aggressive Federal Reserve, which is now expected to raise interest rates seven times this year as it fights surging inflation.
Bitcoin climbed above $43,000 after trading below $39,000 in yesterday’s session, according to a recent market report. Bitcoin’s price soared over 13% to $43,190, making it the world’s most popular crypto. Ether, the cryptocurrency linked to the Ethereum blockchain that has the second-highest market capitalization, rose over 10% to $2,912. 10% to $2,912. On the other hand, the Dogecoin price increased by 7% to $0.13 whereas the Shiba Inu price increased by more than 8% to $0.000026. Other digital tokens were also performing well, with Terra rising over 20% over the last 24 hours, while Solana, XRP, Avalanche, Stellar, Polygon, Litecoin, Cardano, Polkadot, and Terra showed gains in the range of 6–18%.
*Disclaimer* Investment in cryptos carries various risks and is not suitable for all investors. Be sure to do your research thoroughly before making any decisions to invest.
The Luna Foundation Guard has raised $1 billion to create a UST reserve denominated in bitcoin. Luna Foundation Guard, the nonprofit organization behind Terra USD’s open-source stablecoin network, has closed on the raising of $1 billion through the sale of LUNA tokens.
According to Terra, Jump Crypto and Three Arrows Capital led the $1 billion round, with participation from DeFiance Capital, Republic Capital, GSR, Tribe Capital, and others. In Terra’s ecosystem, UST; a stablecoin backed by Bitcoin — will be established as part of the proceeds of the $1 billion sales. Following a vote by the LFG, Do Kwon, founder of Terraform Labs, announced the injection of 450 million UST — roughly $450 million — into the Anchor protocol’s reserves on Friday.
The United States Securities and Exchange Commission has a good chance of losing its $1.3 billion lawsuit against Ripple based on the merits of the case, according to a former executive. Joseph Hall has expressed concern over what the SEC’s endgame might be regarding the high-stakes case against Ripple that will have implications for the entire industry.
The lawsuit contends that the company and its co-founders Brad Garlinghouse and Christian Larsen failed to notify the SEC about the sale of XRP beginning in 2013 as well as that the tokens are unregistered securities. The SEC has been attempting to prove that securities fraud occurred as a result. Ripple’s case may set the tone for investigations and litigation related to cryptocurrency in the foreseeable future, once a decision has been made. It is possible that the SEC may launch a deluge of new investigations and court cases against crypto projects if it prevails. By winning, Ripple may force the SEC to curtail its efforts to pursue the crypto industry.
This concludes our weekly newsletter. We thank you for reading. We hope it was informative and helpful for you. We look forward to bringing you more news about crypto and blockchain next week.
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