In this week’s newsletter, the Diem Association is considering a sale of its assets, the organization that oversees the Diem digital currency. McDonald’s pokes fun at crypto investors in the midst of a market crash, to everyone’s delight. We have these stories and more in this week’s newsletter.
Our weekly newsletter begins with an interesting news. The ambitious plan by Mark Zuckerberg to create a cryptocurrency is falling apart due to growing pressure from regulators. The Diem Association, the entity in charge of developing Diem’s digital currency, is considering selling its assets in order to return capital to its investors. In an effort to maximize its value, Diem is reportedly in talks with investment bankers to determine next steps, such as how to sell its intellectual property. Bloomberg reports that the company is also seeking a new home for the engineers who developed the technology.
In the week that just ended, we saw many tweets and memes about McDonald’s playingfully mocking cryptocurrency investors by asking how they are doing in a viral tweet that has received over 88,000 likes in just a few hours. McDonald’s has seized on a meme about crypto bros flipping burgers when the market goes south because they are broke. MicroStrategy CEO Michael Saylor responded with a picture of himself wearing a McDonald’s hat in response to the tongue-in-cheek tweet. Despite taking a significant hit to his wealth during a recent crash, the Bitcoin mogul says he intends to acquire even more. Tyler Winklevoss, CEO of Gemini Capital, jokingly joked about buying “the Big McDip.” El Salvador President Nayib Bukele posted an image of himself in a McDonald’s uniform recently.
Last but not least, Blackrock will provide an ETF tracking blockchain and tech. At the moment, positive crypto market news seems to go unnoticed amidst the current chaos. The global financial markets remain focused on inflation and FED monetary policy, which has contributed to the drop in crypto markets. In spite of the blurring of the lines between mainstream and crypto, uncertainty presents an opportunity. Exchanges are also getting involved with cryptocurrency trading platforms on a mainstream level. Robinhood announced this week that its crypto wallet beta program is now available for download. The Robinhood wallet will make it possible for users to deposit and withdraw cryptos. Previously, Robinhood users could trade cryptos, but the launch of the wallet will allow users to deposit and withdraw them as well. Previously, investors were only able to buy, hold, and sell stocks.
Every day, ALPEX Global provides market wrap — following analyses are based on keeping an eye on the markets and what we anticipate.
Last week was the worst for the crypto market in months, and the slump continues this week. The price of bitcoin fell below $34,000 early Monday, down from an all-time high of nearly $69,000 in November. The price of Ethereum fell below $2,200 on Monday. The pair had shown some signs of recovery this week, but they were halted late Wednesday after Federal Reserve Chairman Jerome Powell announced that the Fed would likely begin raising rates in March.
Prices collapsed after the stock market had its worst week in nearly two years, and after the Federal Reserve released its long-awaited report on the possibility of issuing a government-issued digital currency. In the wake of the sell-off, the crypto market cap fell below $2 trillion.
According to some experts, the catalyst for the slowdown is the Federal Reserve’s plan to pull back on stimulus and raise interest rates. The current market environment is causing many investors to remove risk from their portfolios. According to Grant Maddox, founder and certified financial planner of Hampton Park Financial Planning based in South Carolina, the recent drop could be a sign of a new market cycle. ‘Investors should set aside money that suits their risk tolerance as their ‘safe money.’
- 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.
A rate hike by the Fed could damage bitcoin. Goldman Sachs warns bitcoin is increasingly vulnerable to Fed rate hikes as it gains popularity. As increasing bond yields have affected technology stocks in recent weeks, the Nasdaq 100 index has fallen more than 13 percent so far for the year. Goldman Sachs noted, “Bitcoin and other digital assets could be affected in the same manner, as these assets are subject to macroeconomic forces, such as central banks tightening monetary policy. Bitcoin’s correlation with macro assets has increased over the past two years as it has gained wider mainstream acceptance.”
With the EU’s Market for Crypto Assets framework, the EU is set to become the global leader in crypto regulation by stimulating and supporting the potential of digital finance to innovate and compete, as well as reducing risks. The European Commission is expected to approve the Market for Crypto Assets (MiCA) framework in 2020, which is itself part of the Commission’s digital finance package, by the end of the year. Considering the decentralized and global nature of the crypto industry, it is difficult for individual countries or regions to regulate independently, which is the major challenge the EU intends to address with this bill.
That concludes our weekly newsletter. Thank you for reading. We hope it was insightful and helpful. Stay tuned for more exciting news about crypto and blockchain next week.
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