This crypto market analysis is from eToro Analyst, Simon Peters. Here are his views on the current situation in the Crypto Industry.
Global equity markets, such as the S&P 500 and FTSE 100, saw an average run last week. Market-moving news was few and the three biggest crypto assets, Bitcoin, Ethereum, and XRP all consolidated in price. Bitcoin stayed around the $9,000 level, despite a brief foray into the mid $9,400s (at the time of writing this article). It is not beyond the realms of imagination for bitcoin to break $10,000. However, it will be a significant moment if that occurs and the price remains steady.
Grayscale Trust puts its trust into Bitcoin – and its miners
The $2.5bn Grayscale Bitcoin Trust has reportedly been pursuing enormous amounts of Bitcoin. They are managed by crypto-asset investment firm Grayscale and the purchases have started since early May. The independent research estimates that the amount being bought is 150% of the Bitcoins currently being mined.
So, who is selling, if Grayscale’s appetite is to be satiated, which it presumably is? It could be that there are some savvy retail investors out there who entered the asset class early or at a low this year. Others might be recognizing the big players entering the market and are looking to solidify their gains. As a result, the supply and demand for bitcoin is currently at a happy equilibrium.
Goldman Sachs off Bitcoin
Goldman Sachs gave an interesting presentation on Bitcoin last week in which they recommended against the use of the crypto assets in investors’ portfolios. They also argued that Bitcoin and cryptocurrency, in general, should not be considered an asset class.
It was an illuminating read and it highlighted the importance of educating people more on blockchain technology and crypto-assets. Goldman Sachs gave its own reasons for BTC not being an asset class, such as it not being an inflation hedge. However, if the crypto asset community can engage and work with these high-level institutions more regularly, perhaps they will open their eyes to the many upsides to it.
I believe contrary to what Goldman Sachs posts in its presentation that crypto-assets offer no diversification benefit. There is a whole host of coins all with different use cases behind them. Some interesting predictions were also in the market outlook section, which looks at approximate debt levels in the US in the medium term.
One chart shows government debt is set to surge and reach as much as 150% of GDP by 2030. Despite being clearly skeptical of Bitcoin as an inflation hedge, Goldman Sachs has inadvertently highlighted the sort of situation in which bitcoin is designed to thrive: massive government debt and fiscal stimulus.
Bitcoin 401k Sounds Ok
Gemini announced a new partnership this week with Bitwage. Bitwage offers payroll and HR services and provides a way for employees to have their salary paid in bitcoin. It also allows employers to provide matching or profit-sharing contributions to their employee’s 401k accounts. This helps those companies that are struggling to meet the US government’s loan program conditions.
Dubbed the world’s first bitcoin 401K, the Bitwage/Gemini initiative bridges an important gap between the traditional market and the new crypto industry. This gives people the ability to invest in ‘actual’ bitcoin for the long term all the while keeping it inside a tax-efficient wrapper.
Facebook Libra gets a revamp
Another development in the Libra project is that Facebook announced it was rebranding the Calibra wallet to Novi. One big question remains, will users need a government ID to be verified? If so, how can the Libra project make this work for the millions of unbanked in the current financial system?
Nevertheless, given most people have Facebook, WhatsApp, or Instagram, this project is still an important step forward in the adoption of crypto. Users of these apps will be able to send crypto assets easily without having to input a 25+ alphanumeric wallet address. Making the process as easy as possible is of paramount importance. This will shows skeptics that cryptos can compete with and even improve on traditional payment processes.
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