Weekly News Wrap Up
Traditional markets stabilized last week after “recession repricing” the prior week. U.S. Manufacturing PMIs showed manufacturing activity slowing for the 4th consecutive month, while European inflation remained stubbornly high. In crypto, Gary Gensler views all cryptocurrencies, except Bitcoin, as a security and Silvergate Bank‘s “going concern” warning spooks markets.
U.S. equities recovered this week: SPX +1.90%, DJIA +1.75% and NASDAQ +2.58%, while cryptocurrency majors BTC -4.81% and ETH -4.70% after a -4.72% and -4.75% drawdown respectively on Friday (03 March). BTC trades back in the range between $22,175 – $24,000 while ETH trades below $1,600 after breaking below the rising channel.
Meanwhile on a more positive note, Ethereum developers are aiming for March 14 to upgrade the Goerli test network, allowing for the withdrawal of staked ether (ETH). This test will be closely watched, as it is the largest public Ethereum testnet and the last opportunity for staking providers to ensure staked ETH is withdrawable before the Shanghai upgrade reaches the mainnet.
- Mitsubishi, Fujitsu and other tech firms to create ‘Japan Metaverse Economic Zone’. In a press release, Fujitsu said it is collaborating with nine other companies to create an interoperable metaverse structure called Ryugukoku (TBD) to propel the nation’s Web3 strategy. Ryugukoku (TBD) will serve as a virtual world to connect users to different Web3 services created by companies and government agencies.
Our View: we are starting to see differing approaches towards Web3 technology across different countries that will guide regulation and policy to facilitate, or hinder, innovation. Governmental support and buy-in from Japan’s largest brands are setting the country up to be a leader in the metaverse scene.
- Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), views all cryptocurrencies, except Bitcoin, as securities. In an interview with New York Magazine, he stated that almost every crypto transaction is under the SEC’s jurisdiction. His main argument is that there is a group in the middle and the public anticipates profits from the group’s action.
Our View: in our recent newsletter, we mentioned that this sets a dangerous precedent for U.S. regulation to consider all tokens as securities, which will ultimately limit the service offering for U.S.-base companies that have to comply with local regulations.
- Robinhood receives investigate subpoena on its crypto operations from the U.S. Securities and Exchange Commission (SEC), the company said in a filing. The subpoena was related to the supported cryptocurrencies on the platform, as well as its custody and other platform operations.
Our View: traditional brokerage platforms that offer cryptocurrency trading seem next in the SEC’s crosshairs after targeting crypto-native companies like Kraken and Paxos in recent enforcement action
- U.K. banks HSBC and Nationwide to ban cryptocurrency purchases with credit cards. The banks join a growing list of financial institutions in the country tightening restrictions on digital assets.
- Silvergate shares plunged 58% after warning on its ability to “continue as a going concern”. The crypto-friendly bank announced on 01 Mar that it would delay its annual filing and made the comments in its forward-looking statement. This led to high-profile crypto companies like Paxos, Circle, CBOE’s digital asset exchange, Gemini and Bitstamp suspending their partnerships with the beleaguered bank.
Our View: the collapse of Silvergate could provide U.S. regulators more ammunition in making it harder for crypto companies to establish a U.S. banking relationship, calling for greater limits on crypto exposure.
- Visa’s crypto strategy remains intact despite the crypto winter. The company denies a recent Reuters report that it is looking to slow down partnerships with crypto companies.
- Alchemy Pay scores license in Indonesia, partnering with a local fintech to offer low-cost remittances for crypto-users. The company obtained a license from the central bank of Indonesia to operate remittances and fund transfers in cooperation with local fintech firm Berkah Digital Pembayaran.
- The Naira Crisis is fueling Bitcoin adoption in Nigeria. The recent economic cash crisis in Nigeria, caused by the naira redesign, political climate, and economic conditions, has increased bitcoin’s value proposition for average Nigerians. In Africa, bitcoin offers an indispensable financial safe haven.
- Gaming engine, Unity, launches support for Web3 integration. The leading platform for game developers introduced an online storefront for decentralized tools, allowing integration of Web3 components like non-fungible tokens (NFTs) and the metaverse to bolster gameplay experiences. Unity added support for 13 different blockchain-based software developer kits (SDKs), from chains and products including Algorand, Aptos, Dapper Labs’ Flow blockchain, Immutable X, MetaMask, Solana and Tezos.
Our View: this is a significant development as Web3 gaming has traditionally been plagued with low-quality graphics and limited gameplay experiences without a powerful gaming engine.
- Coinbase trade volume surpasses Uniswap in 2023, countering expectations of a DEX surge. Research from Kaiko shows that Coinbase’s trading volume reached $93 billion, nearly double of Uniswap’s $57 billion.
Our View: after FTX’s collapse in November 2022, we witnessed a trend towards self-custody after trust in centralized exchanges was lost. However, the steeper learning curve and less friendly user-experience still acts as a significant barrier towards self-custody, seen from the data point above.
- Solana suffers yet another outage. A technical issue caused the alternative layer-1 blockchain to “fork”, creating conflicting versions of transaction history. This led to a significant drop in transaction throughput and froze nearly all on-chain activity. Validators restarted the network and downgraded to a lower version.
Our best strategy for medium to long term investment is to take at least 1-3 years in Moderate Portfolio because it has a good defense with 50% Fixed Deposit , 30% In DCD and 20% in Staking because we still have potential return in DCD and Staking especially in BTC.
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