This week in crypto. June 14-20: crypto sentiment around the world and more...
Crypto news: crypto sentiment around the world
The tide is turning
El Salvador’s crypto adventure continues to echo around the world.
This week we saw Tanzanian president instructing the country’s Central Bank to prepare for wider adoption of crypto around the world and saying that “the age of crypto and blockchain was dawning”.
Following 9-months old requests Portuguese crypto exchanges Criptoloja and Mind the Coin were finally granted first-of-a-kind licenses by the Central Bank of Portugal.
Tunisian Minister of Finance and Paraguayan senator announced their intentions of introducing crypto-friendly laws, and a Russian billionaire Oleg Deripaska lashed out on the country’s Central Bank for not understanding the role of crypto in achieving monetary independence.
US still hesitating
In the meantime, the country whose citizens gained most out of Bitcoin in 2020 – USA of course – is still hesitating. The SEC (Securities and Exchange Commission) has once again delayed its judgement on Bitcoin ETF (exchange-traded fund) filed by VanEck investment firm – an event that crypto community has been impatiently waiting for. Crypto ETFs, already hugely popular in countries that dared to authorized them, like Canada, can play a big role in bringing crypto mainstream: even corporations with strict investment guidelines, or average savers who are afraid of buying crypto themselves or willing to put it into their retirement plans, can (indirectly) invest in crypto.
However, business cannot wait for SEC deliberations infinitely, and an increasing number of institutional investors, such as insurance companies are finding alternative solutions. Some buy crypto directly, like the Massachusetts Mutual Life Insurance Co. that invested $100 M in Bitcoin in December. Many more are turning to Grayscale crypto trusts – financial products available only to accredited investors, but still very popular (>$30 Bn AUM). Only since February, 6 American insurance companies have bought shares of Grayscale Bitcoin and Ethereum Trusts.
Pensions follow suite. A retirement plan provider ForUsAll, which primarily serves small to medium-sized businesses, will be joining forces with Coinbase to create a 401(k) plan with crypto exposure. A 401 is an employer-sponsored pension account, and the employees who benefit from it could enjoy their pensions with crypto exposure without having to ever handle crypto themselves.
With mixed signals from the Federal government, good news may come directly from the states. Wyoming, Florida and Texas are already known for their crypto-friendliness, attracting investors and businesses. It may now be the turn of Illinois, although we’ll have to wait for autumn to confirm it: a bill that would allow banks and other custodians to hold crypto for clients unanimously passed the House in April and is now waiting for the Senate reopening after summer vacations. If passed, Illinois would become the second state after Wyoming to deliver “crypto bank” licenses.
Markets
Bitcoin
Bitcoin price tried to leave the current range and rose beyond $41k on Tuesday, only to drop -17% to $34k afterwards. From the chartists’ point of view and important indicator called the “death cross” happened during the weekend – the MA50 (moving average price of 50 days) has crossed below the MA200 (moving average of 200 days), showing that the trend has changed direction and bearish sentiment prevailed.
With the increasing participation of traditional investors in the crypto markets we should indeed get used to traditional financial indicators like the MA. A study from Financial News shows that global investment funds now hold more than $43 Bn worth of bitcoins on behalf of their clients. Another one from Intertrust Global suggests that this figure is only going to increase: of 100 CFOs of hedge funds they polled about 98 are expecting their funds to have invested some of their assets in crypto by 2026.
Big crypto holders, whether they are whales from the pre-hype period or newcomer investors, don’t let themselves get intimidated by the “death cross” or misinformed attacks on crypto. They HODL and accumulate: the addresses hodling 100-1000 BTC have bought over 90k BTC in the past month (~$3.1 Bn), according to the Santiment data. Smaller hodlers should do the same: “paper hands” don’t do well in this market.
Ethereum
Ethereum has followed Bitcoin price trajectory, ending at around $2100.
Ethereum is also praised by the traditional investors who buy it for their funds. However, there’s another aspect to it that well-informed fintech companies are starting to grasp. The planned transition to Ethereum 2.0 will change the blockchain consensus from Proof-of-Work to Proof-of-Stake, to make the network less energy-consuming and more scalable. With a PoS consensus the blocks are validated by nodes who stake their ETH as a guarantee of their good intentions, receiving transaction fees in exchange. Eth 2.0 has already been launched as a parallel blockchain with numerous validators coming to stake their coins.
Now, with the help of the Swiss digital bank Sygnum, institutional clients can participate in Eth 2.0 staking too, and with an annual yield of up to 7% this trend is likely going to continue.
Quote of the week
“The average American may be at a structural disadvantage relative to large institutions and high net worth individuals, and we just don’t think that’s right”,
David Ramirez, CEO of ForUsAll retirement plan provider, on crypto exposure to everyone