As crypto prices climb, experts stay cautious

As crypto prices climb, experts stay cautious

Fear of recession in the West, surging inflation, rising interest rates and the geopolitical crisis continue to drive extra short-term volatility in the crypto market, and investors would adopt a wait-and-watch attitude

After being in the red for over a month, cryptocurrency markets have pared some of their losses and are trading up about 10 percent over the last week.

Global cryptocurrency market capitalisation also briefly reclaimed the $1 trillion mark.

The world’s largest digital currency by market cap, Bitcoin (BTC), is above the psychological level of $21,500, up 10 percent for the week and up 5 percent on Friday alone.

The second-largest digital currency, Ethereum (ETH) is up 15 percent for the week, trading around the $1,220 level, and a rise of around 3 percent on Friday.

Other major cryptocurrencies like Binance coin, Solana, Shiba Inu, and Ripple’s XRP have gained 10 percent, 11 percent, 7 percent, and 5 percent respectively in the past week.

Anndy Lian, Chief Digital Advisor of the Mongolian Productivity Organization, said BTC rallying together with US stocks was a cause of concern and the rally may be shortlived.

Investors should watch the US jobs report on Friday closely in the short term and until something concrete is set in stone, should not drop their guard, Lian said.

“Also bearing in mind that BTC is still down by around 70 percent from its all-time high and 50 percent lower in 2022. The short-term bull is not sustainable. The threat of more deleveraging is still a key concern for crypto. The global economic uncertainties and risks remain high. A wait-and-see mindset would be more suitable at this point in time,” Lian said.

Raj Kapoor, founder of India Blockchain Alliance, a think-tank, said BTC’s price rose thanks in part to a stock market rally following the release of the Federal Reserve’s minutes and cautioned that while prices have rebounded, the crypto market has not hit the bottom yet and crypto prices can be expected to drop further over the coming weeks or months.

“There are several reasons – starting off from bearish crypto headlines that continue to drag down bitcoin below key technical levels, intermittent talk of recession, many crypto deals falling apart. To add to that surging inflation, geopolitical crises, and rising interest rates continue to drive extra short-term volatility in the crypto and stock markets.  The crypto market has continued to move in tandem with the stock market in recent months, which makes it even more intertwined with global economic factors,” Kapoor said.

Crypto exchange Kraken’s Dan Held argued that the “mass contagion” of the domino effect of one cryptocurrency over the other seems to have been “contained” by FTX crypto exchange, whose CEO Sam Bankman-Friend recently said he and his company still had a “few billion” on hand to shore up struggling firms that could further destabilize the digital asset industry.

He added that crypto lending firm Celsius paid off all its outstanding loans for BTC, bankruptcies have already been filed and inflation fears are cooling off.

 

 

Original Source: https://www.moneycontrol.com/news/business/as-crypto-prices-climb-experts-stay-cautious-8799711.html

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Stablecoins Are Here to Stay – And Regulators Must Get On Board

Stablecoins Are Here to Stay – And Regulators Must Get On Board

The recent collapse of the TerraUSD algorithmic stablecoin has put the popular crypto asset in the spotlight. And its repercussions are only just starting to be felt, from talk of government regulation from US Treasury Secretary Janet Yellen, to Tether temporarily losing its USDT 1:1 peg to the dollar, to an all-time low of US$0.95, and with investors withdrawing more than US$10 billion in the past two weeks.

Kathleen Breitman, a co-creator of the Tezos blockchain, speaking to CNBC on the topic said: “As much as I relish seeing things that don’t make sense fail, there’s always a tinge of like, ‘Are people going to extrapolate from this that everything that’s a stablecoin is unsound?’”

At the same time, a statement from the G7 on May 20 warned that “no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory and oversight requirements through appropriate design and by adhering to applicable standards.”

Despite recent events stablecoins remain a necessary and popular part of the crypto ecosystem.

Despite recent events stablecoins remain a necessary and popular part of the crypto ecosystem. In a October 2021 report from DBS – Singapore’s largest bank – recognized that “Stablecoins have gained momentum” while also noting concerns about stablecoins to withstand high volatility. In fact, Singapore is no stranger to stablecoin innovation, with the launch of the XSGD pegged to the Singaporean dollar in 2020 by StraitsX, with a market cap of almost US$200 million and records over US$1 million in traded volume on a daily basis it’s the world’s largest non-USD fiat-backed stablecoin. I’m also impressed by the Jarvis Network, which has its own set of stablecoins collateralized with USDC, including SGD in late 2021.

These innovations support Singapore’s leading role as a regional crypto hub, with government and startups working in partnership.

Even after the Terra crash, stablecoins still have a total market cap of over US$160 billion, according to CoinMarketCap, with market leader Tether currently worth around US$73 billion, having surged from just US$4.1 billion at the start of 2020.

That said, Tether has not escaped the current slump unscathed, having lost US$11 billion in vale since its US$84.2 billion on May 11. In a statement on Monday May 23 Tether sounded an understanding note, welcome in the current situation, acknowledging that following its loss of peg that “it’s natural that investors might have questions about what stops USDT from facing a similar fate.” But confirmed it had US$70 billion of collateral. I agree the strength of Tether, compared to most traditional banks, has been its ability to process withdrawal of 10% of its assets in a few days.

Check the fine print

Despite these “collateralized assurances,” the data shows crypto whales leaving Tether for USDC. Not surprisingly these whales regard USDC, as the safer option, bearing in mind USDC reports its assets monthly. However, those same whales might want to check the small print.

Circle claims that each USDC is backed by a reserve dollar, and other “approved investments”, these are not detailed. Indeed, the wording on the Circle website changed from the “backed by US dollars” to “backed by fully reserved assets” by June 2021. The third most popular stablecoin, BUSD, created in 2019 as a collaboration with Binance and Paxos, which grew in market cap of around US$1B at the start of 2021, to over US$14.6 billion at the end of 2021, and is now up to over US$18 billion is I believe another winner from the Terra crash, due in large part due to the security involved with the token. As both regulated by the New York State Department of Financial Services, and publicly audited very month, its likely to benefit from the demand for secure stablecoins going forward.

I’m also heartened by the positive post-Brexit approach to stablecoins from the UK government, which clearly recognizes that stablecoins are here to stay, and we need all governments and regulators to get behind that fact.

As an industry we also need to recognise that algorithmic stablecoins are a “different kettle of fish.”

But as an industry we also need to recognise that algorithmic stablecoins are a “different kettle of fish.” I concur with Chris Burniske’s assessment that while it’s unwise to think they’ll never be a workable algorithmic stablecoin, if such an asset needs to either go up or stay stable to work, then it’s not going to survive the crypto market.

Let’s also not forget in the push to get mainstream adoption of crypto that that also raises the risk of contagion to the wider economy. The problem is if the folks who got hit hardest, the retail investors, who bet on LunaUSD because they were told it was “safe”, decide to pull back from other assets.

That said, a balance needs to be struck in terms of protecting investors, the risk in investing in altcoins is different from that with stablecoins. I’m in agreement that regulation needs to happen, but a balance needs to be struck, in protecting investors, and which also allows for rapid innovation which is key to the success of the crypto industry.

 

Original Source: https://blockhead.co/2022/05/29/stablecoins-are-here-to-stay-and-regulators-must-get-on-board/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j