Recurring market commentary on what’s happening in the crypto markets, summarized by the Crypto Broker team at Crypto Finance AG.
At the time of writing, Bitcoin (BTC) is trading at $39.6k (-2.8% in 7 days), Ethereum (ETH) is trading at $2.9k (-2.9% in 7 days), and the spread ETH/BTC is trading at 0.074 (-0.86% in 7 days). The rebound yesterday, led by stock markets, was not enough to turn the market positive over the course of the week.
Crypto markets could not escape global macro trends this week as correlation with equity markets remains high. Although some large companies like Meta and Microsoft beat expectations during the ongoing earning season, the general market sentiment is driven by fear. The main areas of concern persist and even seem to be becoming worse.
The authorities in Beijing ordered mass COVID testing of all its residents. As a result, people started panic buying groceries as they fear that a “Shanghai-like” lockdown will be imminent. The futures markets in the US are now pricing high chances of two rate hikes, totaling 125bps for the FED’s May and June meeting, driving the Greenback to higher levels than during the market turbulences in March 2020. With the EUR/USD trading as low as 1.053 (a level not seen since 2017) and the ECB lagging the FED by far in terms of tightening, inflation expectations in the Eurozone are rising. Additionally, Russia announced that they will halt gas supplies to Poland and Bulgaria, amplifying the risk of a complete gas embargo, which would inevitably lead to a recession in Germany.
Crypto news over the week
- Crypto-specific news this week were mainly on the positive side with Fidelity announcing the possibility to add bitcoin into 401(k) accounts if employers decide to offer this option.
- The Central African Republic is now the second country in the world to accept bitcoin as legal tender. Even though only few people have access to the internet it is going to be interesting to see if bitcoin can help people gain access to banking services, and also if other countries will follow.
- Yuga Labs confirmed the launch of their Metaverse “Otherside”, where land can only be purchased with APE coin. All the APEs spent on land will be locked up for a year, which will reduce the free-float. As Yuga Labs has a good track record with their projects, APE was one of the best performing coins in the past 7 days, up 53%.
- Optimism announced the launch of their long awaited token along with “The Optimism Collective”, which is their aim at establishing digital governance at scale. The initiative is split into two parts. Token House will use the OP token to incentivise projects, vote on and create protocol upgrades, and manage its treasury funds. The Citizen House is set to launch towards the end of 2022, and will govern retroactive public goods funding. Optimism has decided to take an unorthodox approach at its OP token airdrop. Users of the Layer-2 (L2) will be able to claim tokens, but so will active users of the ETH chain who have bridged to L2s besides Optimism, such as Polygon and Arbitrum. With this, they want to reward users who stay on the ETH chain, but are exploring the rest of the universe. If you missed this airdrop, don’t be upset because this is only airdrop #1.
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