Monday, August 15, 2022

What Is Going On With The Crypto Market

Current & Future Uses Of Blockchain Technology & Cryptocurrency

What’s going on in the crypto market right now?

Since its inception, Bitcoin has been rather volatile. But based on its recent boom â and a forecast by Snapchat’s first investor, Jeremy Liew, that it would hit $500,000 by 2030 â and the prospect of grabbing a slice of the Bitcoin pie becomes far more attractive.

Bitcoin users expect 94% of all bitcoins to be released by 2024. As the number moves toward the ceiling of 21 million, many expect the profits miners once made from the creation of new blocks to become so low that they will become negligible. But as more bitcoins enter circulation, transaction fees could rise and offset this.

As for blockchain technology itself, it has numerous applications, from banking to the Internet of Things. It is expected that companies will flesh out their blockchain IoT solutions. Blockchain is a promising tool that will transform parts of the IoT and enable solutions that provide greater insight into assets, operations, and supply chains. It will also transform how health records and connected medical devices store and transmit data.

Blockchain wonât be usable everywhere, but in many cases, it will be a part of the solution that makes the best use of the tools in the IoT arsenal. Blockchain can help to address particular problems, improve workflows, and reduce costs, which are the ultimate goals of any IoT project.

Crypto Is Now Strongly Correlated With Equities

Many cryptocurrency investors have argued that Bitcoin is a new version of gold for the digital era, a potential flight-to-safety investment and hedge against inflation. But price action in cryptocurrencies suggests the market doesnt seem to see these highly volatile assets as reliable stores of value during periods of economic uncertainty.

Gold has historically had an inverse correlation to stock prices, a relationship that has played out expectedly so far in 2022. While stock prices have fallen, the price of gold is up nearly 3% in 2022, whereas the S& P 500 is down around 16% year to date.

The selling pressure in the stock market has been driven primarily by fears over persistently high U.S. inflation and the potential for extremely aggressive Fed measures to counter it. The consumer price index rose 8.3% in April from a year ago, the highest U.S. inflation reading since 1981.

Earlier this month, the Fed raised interest rates by 50 bps to a new target range between 75% and 1%. In his post-announcement press conference, Fed Chair Jerome Powell said additional 50 bps increases were on the table at the next two FOMC meetings.

The Fed will also begin allowing $30 billion in U.S. Treasurys and $17.5 billion in mortgage-backed securities to roll off its balance sheet starting in June.

Brian Price, senior vice president of investment management and research at Commonwealth, says the path of least resistance in risk assets remains to the downside for now.

About The Currency Calculator

Once you select the base and target currencies from the list and enter the desired amount into the provided field, the currency calculator immediately gives you the result. Additionally, you can also choose whether to calculate the result based on the current exchange rate or the exchange rate on a certain date. This way, the Markets Insider currency calculator allows you to search for historical exchange rates. The result provided by the currency calculator is displayed in a clearly arranged table. Here, the currency calculator shows the opening and closing rate as well as the lowest and highest rates for the respective date.

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What Does This Price Drop Mean For Crypto Investors

For those who invest in crypto for the long-term using a buy-and-hold strategy, swings like this are to be expected. Big dips are nothing to be overly worried about, according to Humphrey Yang, the personal finance expert behind Humphrey Talks, who says he avoids checking his own investments during volatile market dips.

Ive been through the 2017 cycle, too, Yang says, referencing the crypto crash of 2017 that saw many major cryptocurrencies, including Bitcoin, lose major value. I know that these things are super volatile, like some days they can go down 80%.

Experts recommend keeping your cryptocurrency investments to under 5% of your portfolio. If youve done that, then dont stress about the swings, because theyre going to keep happening, according to Bill Noble, chief technical analyst at Token Metrics, a cryptocurrency analytics platform.

Volatility is as old as the hills, and its not going anywhere, Noble says. Its something you have to deal with.

As long as your crypto investments dont stand in the way of your other financial goals and youve only put in what youre ultimately OK with losing, Yang recommends using the same strategy that works for all long-term investments: set it and forget it.

Dont check on it. Thats the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision, says Yang.

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Outstanding Issues Around The Cryptocurrency Market

With cryptocurrencies still in the early innings, there are many issues surrounding its development. Its interesting to contemplate the philosophical and political implications of cryptocurrencies. Cryptocurrencies are inherently political because they challenge the traditional social contract that societies operate under. According to this theory, members of society implicitly agree to cede some of their freedoms to the government in exchange for order, stability, and the protection of their other rights. By creating a decentralized form of wealth, cryptocurrencies are governed by code alone.

Its no wonder, then, that the accounting treatment, regulation, and privacy issues surrounding cryptocurrencies and blockchain have yet to be fully determined. The following section will discuss these tangible aspects of cryptocurrency development.

Broader Institutional Cryptocurrency Adoption

Mainstream companies across industries have taken interest and in some cases themselves invested in cryptocurrency and blockchain in 2021. AMC, for example, recently announced it will be able to accept Bitcoin payments by the end of this year. Fintech companies like PayPal and Square are also betting on crypto by allowing users to buy on their platforms. Tesla continues to go back and forth on its acceptance of Bitcoin payments, though the company holds billions in crypto assets. Experts predict more and more of this buy-in.

Weve seen a tremendous amount of inflow of attention, and thats going to continue to drive the growth of the industry for a while now, says Abner.

Some experts predict bigger, global corporations could jumpstart this adoption even more in the latter half of this year. What were looking at is institutions getting involved in crypto, whether its Amazon or the big banks, says Weiss. A huge retailer like Amazon could create a chain reaction of others accepting it, and would add a lot of credibility.

Indeed, Amazon has recently sparked rumors that its making moves to that end by sharing a job posting for a digital currency and blockchain product lead. Walmart is also recruiting a crypto expert to oversee its blockchain strategy.

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Highlights Of The Week

Here are some of the top developments of the week:

  • Bitcoin continues its bearish trend and lost 2% of its value during the day currently standing at $43,248. Ethereum follows suit with the king of the market and declined by 2%, now at a price level of $3,061
  • United States senators have introduced a bill that mandates the State Department to study El Salvadors legalization of Bitcoin and its potential impacts on the US economy so timely steps can be taken
  • A new report by Chainalysis reveals that 4,068 criminal whales hold a cumulative total of $25 billion Bitcoin. Moreover, criminal crypto balances have increased from $3 billion in 2020 to $11 billion in 2021
  • Switzerlands Financial Stability Board believes that cryptocurrencies pose high risks to the global financial ecosystem
  • Crypto exchange ByBit has been reported to have signed a deal worth $150 million with Red Bull Racing
  • MasterCard has decided to offer crypto and NFT consulting services and can also potentially help governments develop their central bank digital currencies
  • Russias Ministry of Economic Development is pushing towards the legalization of Bitcoin mining in some areas of the country

Bitcoins Volatility Limits Gains In 2021

What’s going on with the Crypto Market right now?

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What If Youre Interested In Crypto But Havent Yet Invested

Yangs set it and forget it approach to crypto reflects his philosophy for investing in the traditional stock market, but some experts feel cryptocurrency is too different from traditional investments to draw any historical comparisons. Thats why AShira Nelson of Savvy Girl Money is staying well away.

Nelson primarily invests in low-cost index funds because I can see history on that, she says. The newness of cryptocurrency and lack of trackable data make her wary of these crazy swings.

Potential investors looking to buy the dip should understand that fluctuations are par for the course, and be prepared for this kind of volatility going forward. Even if you invest now, with prices relatively low, be prepared for them to fall even more. Again, only put in what youre comfortable with losing after youve covered other financial priorities, like emergency savings and more traditional retirement funds.

Going For Gold In A Volatile Market

Gold is a good bet for even more reasons, especially now. Sales of gold tend to boom with downturns in the market and when anxiety about stability skyrockets. Its price tends to rise when cost of living increases, and when confidence in governments is low, so its an excellent strategic inflation hedge, Reuters says.

And as world tensions rise, gold tends to outperform other investments. As emerging market economies gain wealth, the demand for gold gains momentum. Investors say commodities like gold are an essential investment class to allocate funds. For instance, in 2019 Standard & Poors depository receipt Gold Trust became one of the largest exchange-traded funds in the U.S. and the largest holder of gold bullion in the world.

So unsurprisingly, the recent downturn in global markets in general, kicked off by rising inflation, the COVID-19 crisis, and the Russian-Ukraine war have all made gold investment more attractive than ever. To reduce your investment portfolios overall volatility and risk, gold is an essential investment. It has stood the test in the long term against the erosion of currencies and inflation and holds the line when paper investments drop. Gold-backed crypto currency is another smart way to diversify.

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The Tokenization Of Gold

Tokenization, based on the premise that all the tangible and intangible assets can be converted into digital tokens that represent them, was ripe for a token backed by gold, which have been a bright spot for investors this year, Fortune said.

The US-based Asia Broadband, a resource company focused on producing, supplying and selling precious and base metals to Asian markets, released its own mine-to-token gold-backed cryptocurrency, the AABB Gold token .

Through AABBG, were merging the stability of gold with the technological innovation of cryptocurrency and blockchain, which provides individuals the opportunity to invest in gold without the need to store the heavy physical gold, Torres says. AABB aims to have its stable and secure gold-backed token become a worldwide standard of exchange with the added benefit of demand-based price appreciation.

Because of its vertically integrated mine-to-token concept, AABBG is backed by $30 million of its own gold bullion, which comes from its mines in Mexico, as well as traditional third-party sources. The idea for AABBG is that the immutable blockchain provides a cost-effective and safe way to store data, and the long-term stability of the gold shields the investment from the high volatility of the crypto market especially recently.

Celsius Halts All Transactions And Withdrawals

Why Crypto Market Is Going Down : Bitcoin (BTC) Price Prediction ...

After the Terra-Luna crash market is extremely volatile accompanied by a massive sell-off in all coins. Last week, a cryptocurrency lending firm named Celsius Network froze all the transactions and withdrawals.

The company has explained that it is due to extreme market conditions and the firm has to protect the asset. However, the market welcomed the decision with an extreme fall in crypto price levels. Exchanges have noticed a blood bath in the last trading session.

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Whats Behind The Latest Bitcoin Drop

Many investors see Bitcoins price swings as part of the game, but volatility is tough for individual investors to deal with, Noble says. Like Yang, he warns against selling too fast.

Recent price fluctuation has followed new uncertainty over the countrys lingering fight with COVID-19, new regulatory actions by the U.S. government, as well as the new legislation pertaining to crypto in the infrastructure bill. In an industry as new and unproven as cryptocurrency, it doesnt take much to drive big swings in price. More generally, new short-term investors who are selling their holdings in reaction to the latest drop may be contributing to the drop in Bitcoins value, according to a report from Glassnode Insights, a blockchain analysis firm.

While fluctuations are expected, Noble says hes been surprised by drops earlier this year. I thought the market was maturing and these things would be less frequent and severe. Boy was I wrong, he says.

Some of this years drops have been caused by a combination of factors, Noble theorizes, from excitement about low-quality coins, to negative remarks from Elon Musk, to Chinas recent crackdown on crypto services. This mix of factors has potential to make sell-offs all the more violent, says Noble.

He likens the drop to the stock market crash of 1987, from which the markets took months to recover. But because crypto moves a lot faster today than equities did in the 1980s, Noble says we may see a quicker recovery.

Harsh Conditions For Bitcoin And Ether Continue

Recent harsh conditions for bitcoin and ether continued last week as both cryptoassets saw significant sell-offs continue, Mr Peters explains.

Bitcoins recent woes deepened as the cryptoasset slumped across the week, starting trading above $34,000 before losing ground. It is now trading around $31,791.

Likewise ether has come down heavily from recent highs, Mr Peters continued. ETH began the week above $2,000 but saw a quick sell off to trade below $1,900 at times. At the time of writing, the cryptoassets value is hovering very slightly above $1,900.

He added: With yet another poor performing week, speculation on the short-term price direction of major cryptoassets is rife, with mixed opinions on price depending on what metric/indicators analysts are looking at.

Long-term confidence remains high, however, with a recent survey of FinTech experts revealing more than half believe bitcoin is capable of becoming the global reserve currency by 2050.

In the survey from Finder, some 29% believed this so-called hyperbitcoinization could happen as early as 2035 though. Two thirds of respondents believed the current price levels of the cryptoasset were undervaluing the digital currency.

News.com.au yesterday presented similar arguments from experts in the crypto world.

They also quoted Adrian Przelozny, CEO of Australian cryptocurrency exchange Independent Reserve, who said while bitcoin is down 4 per cent today, it has grown 225 per cent in the past year.

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Investors Stick With Bitcoin Etfs Despite Cryptos Recent Slump

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  • Three Reasons Behind The Crypto Market Crash

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    • Total market cap has tanked to a ten-month low of $1.6 trillion.

    • Fed interest rate hikes are driving investors back to traditional assets.

    • Institutions are also cooling on crypto following an epic 2021.

    Total crypto market capitalization has fallen to its lowest level in ten months. A further $130 billion has left the space over the weekend resulting in a market cap slump to $1.62 trillion. It has not been this low since early August, according to CoinGecko.

    Bitcoin and Ethereum lead losses again during the Monday morning Asian trading session. Bitcoin has shed a further 3.1% to $33,486 at the time of writing, and Ethereum is down 4.2% to $2,443, its lowest price since January.

    Crypto markets are cyclical, but there are a couple of other factors driving the selloff at the moment.

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