BTC is currently trading around $45,800, representing a 0.6% drop on the day. Ether was also down nearly 2% to $3,800.
Both cryptocurrencies have seen consistent selling pressure during trading hours in the APAC region. Pretty much all of the YTD gains made by BTC and ETH, 60% and 40%, have occurred during American trading hours (8am to 6pm EST) as seen in the graph below.
The crypto market is no stranger to dents in its momentum and the US Federal Reserve and other major central banks unwinding liquidity-boosting stimulus packages is no different. LFG inflation :(
Nov. 10 and the ATH’s of $69,000 for bitcoin seems a far cry away given the 30% decline over the past 6 weeks. There has been a consistent trend over Q4 with many sellers dominating the market during the APAC trading hours of 8am to 4pm Beiing time. We again saw this trend continue despite the best efforts taken by the People’s Bank of China (PBOC) to soften the blows caused by Evergrande, the Chinese property development company.
As we’ve seen over the course of the pandemic, interest rate cuts made by central banks are done to inject liquidity into the economy. As such, hedges against inflation like bitcoin and gold usually react positively to rate cuts. Despite this, the 0.5% cut made by the PBOC has resulted in asian equities flashing red alongside the futures market which is tied to the S&P 500.
The 0.5% cut would suggest that China has been too cautious compared to the Fed and the Bank of England who recently announced rate hikes in 2022. In addition to the cautious rate increase, impending lockdowns are disrupting Beijing’s ability to improve market sentiment. Unlike Europe, China takes a no BS approach when it comes to lockdowns - “1 case” and everything closes down. Sure, its good to act quick, but when one of the biggest nations in the world shuts down, the knock on effect it causes to the global supply chain is detrimental.
The above chart shows the second highest spike in cases since January 2021. So while the new spike is only 136 cases, this has not stopped China shutting down in the past. The world, its supply chain and distribution channels need to be ready for the impact that this could potentially cause.
Given the impending lockdowns, supply chain distribution and elevated global price pressures, it’s squeaky bum time for central banks to decide whether they have any room left for liquidity injection to prioritise growth. For example, if we look back to 2020, inflation in the US was well below the 2% target compared to where it stands now at 6.8% as of November, which is a four decade high.
It is worrying times indeed for central banks who will be urged by the IMF to contain inflation as quickly as possible.
As of 20th December 2021
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Fantom DeFi Project Grim Finance Exploited for $30m (CD)
ConsenSys launches Ethereum scalability solution, partnering with Mastercard (LI)
MicroStrategy’s Saylor lays out ways firm could generate yield from bitcoin holdings (CD)
Publicis Sapient to use NFTs for plus track omnichannel sales (LI)
Goldman Sachs says blockchain is key to Metaverse and Web 3 development (CD)
Nike buys NFT fashion collectible startup RTFKT studios (LI)
CardCoins offers bitcoin payments over the lightning network (CD)
Avalanche adds USDC stablecoin in continued DeFi push
Banque de France completes final wholesale CBDC trial with HSBC (LI)
TassatPay raises $40m, unveils blockchain digital interbank network (LI)
KKR leads $350m funding for crypto bank Anchorage at $3bn valuation (LI)
Institutional bitcoin fund manager NYDIG raises $1bn at $7bn valuation (LI)
Reddit co-founder creates $200m initiative with Polygon for Web 3 (CD)
Crypto Connectivity startup GIANT raises $5m from CoinFund (CD)
Stocktwits to boost crypto coverage following $30m funding (CD)
Ethereum privacy startup Aztec raises $17m in Paradigm-led Series A (CD)
On-chain data hub Nansen eyes aggressive growth with $75m raise (CD)
Meme of the week
My name is Michael Burke, and I started working in the blockchain space about 4 years ago, firstly with Deloitte, now with R3, where I help our customers build enterprise solutions utilising the Corda platform. My interest in blockchain and cryptocurrency stems from the sheer potential of the technology to completely transform industries and value chains for the better.