Crypto Morning: Global inflation macro scenario weighs again and Bitcoin (BTC) loses gains of the week

Charlie Taylor

The cryptocurrency market again follows the US stock exchanges, which point to an opening with losses this Wednesday (18). In the last 24 hours, Bitcoin is down 1.8% to $30,040, according to data from CoinGecko. In seven days, BTC shows a drop of 3.2%. Ethereum (ETH) is down 2% at $2,045. In Brazil, Bitcoin operates down 4.4%, trading at R$148,827, according to the Bitcoin Portal Index (IPB). Still shaken by the turmoil in the last week with the crisis in the Earth ecosystem, cryptocurrency investors are looking again at the macroeconomic scenario and the performance of US stock markets. In an event promoted by the Wall Street Journal, Federal Reserve Chairman Jerome Powell said that the US central bank is determined to reduce inflation, currently at the highest level in 40 years. Bank of England Vice President Jon Cunliffe said at the same conference that cryptocurrencies may face more hurdles ahead amid tightening monetary policy and heightened demand for assets seen as safer. For him, most retail investors who have bet on digital currencies probably don’t understand exactly what they bought or the risks involved. In an article in the New York Times, economist Paul Krugman also highlighted the inexperience of small cryptocurrency investors, with less support to shoulder losses in recent months. And the market has one more worrying factor that would trigger more volatility on stock markets: Sri Lanka’s looming default of $12.6 billion in international bonds could spill over into other developing countries facing rising inflation, Bloomberg notes.

Future of stablecoins

With the losses caused by TerraUSD, many in the market wonder what the next cryptocurrency to collapse will be. In an interview with Forbes Brasil, Paolo Ardoino, the technology director of the company behind the largest stablecoin on the market, stated that it will not be Tether (USDT). “We are confident that we can redeem the entire $75 billion,” he said in reference to the volume of Tether in circulation on the market. Ongoing preliminary research on the Terra blockchain research and governance forum indicates that 90% of the nearly 2,000 users who have participated in the survey so far are against the “hard fork” proposal, which would result in the creation of another version of the network and of the LUNA token. Terraform Labs’ legal team has resigned shortly after the turmoil caused by the stablecoin’s loss of parity, according to The Block. The token capitulation resulted in one of the biggest loss events of the last five years, according to analysis by Glassnode, comparable to the liquidation periods in 2018, March 2020 with the emergence of Covid and May 2021.

‘Fourth cycle’

Humberto Andrade, trading analyst at Mercado Bitcoin, notes that the collapse of the Luna cryptocurrency has impacted discussions on cryptocurrency regulation in the United States. “This is directly reflected in the on-chain data [obtidos a partir do blockchain], in which the volume indicators are shown at very low levels, with a reduction in purchases by long-term investors”, he said in an article in Valor. Interestingly, a governance token called MKR, used to help operate the decentralized stablecoin DAI, has gained about 40% in the last week in the wake of the TerraUSD crisis, Bloomberg points out. In its first annual report on crypto industry trends, venture capital giant a16z highlights that the sector is in the midst of the “fourth cycle of price innovation” and that while the crypto market can be “volatile and its cycles chaotic, there is an underlying logic at work”.

meme coins

Dogecoin, Elon Musk’s preferred token, is trading down 1.2%. On Tuesday, Tesla’s CEO said the deal to buy Twitter for $44 billion may “not go ahead” until the social network provides more information about how many fake accounts there are on the platform. The last seven days have been turbulent and with a strong impact on so-called meme coins. But while Dogecoin and Shiba Inu accumulate losses in the period of 17.3% and 23.7%, respectively, ApeCoin is down 4%. For Igor Rodrigues head of trading at Mercado Bitcoin, the governance token of the Yuga organization, which will also be the exchange currency in the negotiations of the “Otherside” metaverse, stands out for its real use cases, “with more technology and professionals involved than the traditional meme coins”. Other altcoins are also trading at a loss on Wednesday such as Binance Coin (-1.3%), XRP (-0.7%), Cardano (-3%), Solana (-3.4%), Polkadot ( 6.4%) and Avalanche (-2.5%), according to data from CoinGecko.

Other highlights

Coinbase Global, the largest U.S. cryptocurrency exchange, has decided to slow down hiring amid a devaluation of shares, whose price has dropped 74% since January. By early 2022, the company had announced a tripling of its workforce, according to the Wall Street Journal.

The startup Arabyka, which specializes in blockchain traceability, implemented the technology in a batch of organic Minamihara coffee exported to Japan, according to Forbes. The intermediation between the producer and the startup is part of the work of Cocriagro, an innovation hub based in Londrina.

Popularity and economic potential cryptocurrencies should stimulate the integration of banks with the digital asset market in the future, in the assessment of Reinaldo Rabelo, CEO of Mercado Bitcoin. “This movement that we observed, with announcements by BTG Pactual, XP and Nubank offering cryptocurrencies directly from their platforms and not through funds, is already an indication of this integration,” Rabelo told E-Investidor during his participation in the Congress. National Meeting of Finance Executives, held in Fortaleza.

Wells Fargo CEOCharlie Scharf, told a Wall Street Journal event that some of the underlying technologies of cryptocurrencies could change the nature of how payment and loan systems work.

Betting on innovation, MasterCard has launched a biometric program that will allow consumers to make payments with just a smile or a wave of the hand. The company says the aim is to speed up payments, but the program is already causing controversy, according to The Guardian. In April, Mastercard launched the first crypto-limited card with Nexo.

The future of payment methods, including the role of the metaverse, will be the theme of the 4th edition of the “Payment View”, organized by IdeaD. The event will be held this Wednesday (18) online and in person at the Learning Village, in São Paulo. Carlos Eduardo Brandt, deputy head of the Central Bank’s Financial Market Structure and Competition Department, speaks at 12:20 pm on Pix and Open Finance. Click here for more information.

Regulation, Cybersecurity and CBDCs

Investors putting money in projects that promise fixed returns far above the market, they must be aware of the risk, according to an assessment by the Superior Court of Justice. In a decision published on May 12, the court denied an appeal to two investors who sought redress after being harmed by the Unick Forex financial pyramid.

The regulation of crypto assets should be discussed at a meeting of G7 finance ministers this week in Germany, according to French central bank governor François Villeroy de Galhau. “What has happened recently is a wake-up call to the urgent need for global regulation,” Villeroy said Tuesday at a conference in Paris, referring to the sell-off in crypto markets, according to Reuters.

in the netherlandsregulators want to ban retail investors from trading cryptocurrency derivatives and only allow access to wholesale markets, according to CoinDesk.

The government of El Salvador started to receive on Monday (16) representatives from 44 countries in Africa, Asia and Latin America – 32 central banks and 12 financial authorities – to debate cryptocurrencies and financial inclusion at the conference ‘Digital Financial Services and Financing for SMEs’. The event, which ends on Thursday (19), aims to highlight the benefits that Bitcoin has brought to El Salvador as a legal tender.

The China returned to account for a significant portion of Bitcoin mining, with 21.1% of the so-called hashrate, despite the activity being formally banned in the country in May 2021, according to a report by the Cambridge Center for Alternative Finance. US miners lead the ranking with 37.8%.

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