The month of June saw some continued overall weakness in the crypto markets carrying over from May, with weaker hands continuing to pass their assets to institutions and longer term players. The downward trend seems to have potentially bottomed out towards the last week of June with some hopeful signs of a recovery in the last few days of the month.
Reasons for the sinking prices are usually being explained by negative news from China with crypto crackdowns which continue to depress prices for the moment. On the technical side, analysts have been watching for the formation of the ‘death cross’ (when a shorter term moving average crosses downwards through a longer term moving average) which could signal further weakness to come before any return to more bullish moves. But as Warren Buffet famously stated, it is wise for investors to be ‘fearful when others are greedy, and greedy when others are fearful’. ‘Buying the Dip’ or Dollar-Cost-Averaging into weakness can be a good strategy for longer term believers in this space.
Eyes may return to Ethereum during July as the network prepares for arguably one its largest upgrades for some time. The London hard fork to introduce EIP-1559 is expected to take place some time this month barring any major issues, and is believed to change the economics of Ethereum such that it now becomes a deflationary asset. The changes should remove much of the volatility and uncertainty associated with paying gas, the fee required to successfully conduct a transaction on the network. EIP-1559 also introduces a fee-burn model for each transaction, that may add a deflationary element to the ETH currency, and correspondingly increase its appeal as a safe-haven, hard asset. Certainly one to watch this month!
- China started a bitcoin mining crackdown, with authorities in the hydropower-rich Sichuan province ordering crypto miners to shut down operations. According to reports, more than 90% of China’s bitcoin mining capacity is estimated to be shut down. Mining difficulty also declines where bitcoin hashrate dropped nearly 50%. Though it may not be good news for bitcoin miners in China, other countries in North America, or Russia, and Kazakhstan could stand to benefit.
- Bitcoin Taproot upgrade locked in. Taproot, an improvement of the Bitcoin Protocol, was locked in on June 12, 2021, reaching the signaling threshold of 90% of all blocks mined in the current difficult period signaling in support, and will be activated in November 2021. Read the upgrade details published by Coindesk Research.
- At the Bitcoin 2021 conference in Miami, El Salvador’s President Nayib Bukele announced that he will introduce legislation to make Bitcoin legal tender, alongside the U.S. Dollar, after September 7th. The country will provide $30 of Bitcoin to any citizen who downloads their new crypto wallet, Chivo. The announcement has spurred reactions in the region, with Paraguay and Mexico indicating interests in moving towards a similar direction. Other central banks such as Israel or Portugal, were also opening up for blockchain / crypto asset experiments.
- Another algorithm-based stablecoin failure, investor Mark Cuban calls for stablecoin regulation after trading tokens that crashed to zero. This is another good reminder that we can never underestimate the technology risk and market risks. Investors should be mindful of the risks associated with newly issued tokens, and not investing in too much due to short term market hype.
- Andreessen Horowitz has officially launched its largest ever crypto fund III, which has more than $2.2 billion to invest. The venture capital firm is also expanding its crypto unit with several key hires.
- PayPal will let customers withdraw crypto. “We want them to be able to take the crypto they acquired with us and take it to the destination of their choice,” says Jose Fernandez da Ponte, a Paypal executive in charge of crypto assets.
- Elon Musk has recently been fiddling around with Bitcoin sending the price to plunge, he made an announcement that once Bitcoin mining uses at least 50% clean energy, Tesla will start accepting Bitcoin again.
- Amber Group, a cryptocurrency financial services firm partnering with Tokenomy, has raised $100 million and valued the Hong Kong-based start-up at $1 billion.
- Chainalysis announced a $100 million Series E financing led by Coatue, bringing our valuation to $4.2 billion.
- Circle, the firm which is behind the fast-growing USDC stablecoin, has raised $440 million in a new funding round. The company could go public via a SPAC deal after the raise, according to sources.
- Interactive Brokers joins a growing list of payments providers and online broker-dealers that allow their customers to buy and sell cryptocurrencies, including Robinhood Markets Inc., Venmo LLC, PayPal Holdings Inc. and Square Inc. At the same time, State Street also sets up a digital unit to capitalise on the crypto craze.
- Coinbase jumps into high-yield crypto game with 4% Interest on USDC. Coinbase is joining the likes of Gemini and BlockFi in offering high-interest savings rates that far outstrip traditional banks.
- PwC and Elwood Asset Management have published their third annual report on the global crypto hedge fund landscape. Here are its findings. The report also indicates that half of the hedge funds are now investing in crypto.
- The World Economic Forum (WEF) has recently published a community paper on cryptocurrency guide for starters and a whitepaper on DeFi (Decentralized Finance) for policymakers. With DeFi being an uncertain area in the crypto industry, a policy paper from the WEF is considered as a guideline for regulators and DApp creators to understand what the compliance environment may look like in the future.
- Still confused about DeFi? Read about DeFi infrastructure 101, overview and market landscape from Chris McCann, a partner at RaceCapital.
- Why should India buy bitcoin? – an insightful analysis from Balajis Srinivansan, a former CTO of Coinbase and General Partner of Andreessen Horowitz.
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Crypto Investor Briefing is a Tokenomy newsletter, the content is for informational purpose only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.