The week has proven to be an interesting one for the cryptocurrency market, amid falling stocks and a devaluation of global currencies against the US dollar. In these conditions, the crypto-market appears surprisingly stable with bitcoin trading higher than the $20,000 mark for over 12 hours yesterday. Short-term BTC investments rose to their highest level of $172 million, reeling in unprecedented gains. Analysts and economists are beginning to describe the phenomenon as a ‘decoupling’ from conventional markets after short-term traders are flushing out of their positions. In this weekly briefer, we here at Stocks Telegraph go over the top stories of the week from the crypto-verse.
Crypto-Highlights of the week
- The prior week was one of the worst-performing periods for conventional global currencies, which were each impressively outperformed by Bitcoin. The British Pound dropped by 5.3% in the last week, whereas the Euro and Chinese Yuan each fell by 3.5% and 2.2% respectively. Even gold prices felt the heat, dropping by 1.7%. Surprisingly, during this time frame, BTC prices reported weekly growth of an incredible 6.3%.
- Following the Interpol notice earlier this week, the hunt for Terraform Labs co-founder, Do Kwon continues in full swing. South Korean authorities have reached out to the crypto-exchanges OKX and KuCoin to freeze $60 million worth of BTC belonging to the alleged fugitive.
- After being lauded for its smooth Merge towards a proof-of-stake concept, the market is celebrating Ethereum for its drastic reduction in its net inflation rate. This is a direct outcome of the elimination of mining and transaction fee burning. Ethereum’s incredible inflation resistance makes it a worthy competitor to Bitcoin, which many regarded as the better coin in this regard.
- François Villeroy, governor of the French central bank, has voiced his concerns to European Union lawmakers regarding “unduly complex” cryptocurrency regulations. He emphasized the need to avoid implementing divergent or contradicting laws or regulating too late. He further argued that this could lead to an unequal playing field, risking arbitrage and selective picking.
- Jerome Powell, the chairman of the US Federal Reserve has issued a statement suggesting that the central bank is considering the creation of a “digital dollar” with an extensive scope. He further pointed out that the central monetary institute is working with both Congress as well as the government’s executive branch to determine whether or not such a digital currency would be viable.
Crypto fear & greed index
The cryptocurrency market as a whole has seemingly moved beyond a phase of predictable downfall with market participants, analysts, as well as economists, closely following movements. Many point out that the uncertainty of the prior months has drained out traders with a short-term outlook. The market as a whole is now largely defined by staunch believers in the potential of cryptocurrency, which is why many suggest a possible decoupling from conventional economic indicators. However, this does not suggest that the market is confident, despite being in a state of transition, as is evident by a sentimental analysis through the crypto fear & greed index.
The crypto fear and greed index presently quantifies market sentiment at 22, which is within the extreme fear zone. Despite the flushing out of many short-term traders, it is apparent that the market still holds overwhelmingly bearish sentiment. However, it is worth pointing out that this comes as a slight improvement from last week when the index stated the market stood at a figure of 20. Much of this fear seems to tie into fears about the collective global markets, currency devaluation, inflation, and a potential looming recession. The index will be closely watched with time, as crypto believers anticipate a complete separation of digital markets from conventional ones.