Recurring market commentary on what’s happening in the crypto markets, summarized by the Crypto Broker team at Crypto Finance AG.
Market commentary
Good Morning and Happy Friday!
At the time of writing, Bitcoin (BTC) is trading at $40.7k (+0.34% in 7 days), Ethereum (ETH) is trading at $3k (-0.9% in 7 days), and the spread ETH/BTC is trading at 0.074 (-1.3% in 7 days).
Apparently, most crypto investors and traders took some time off over the Easter holiday: most cryptocurrencies traded in a very tight range with little volume. One exception was FTT, which saw some price action and rallied more than 16% on Sunday (on no obvious news). However, it reversed all gains the very next day.
China's zero Covid strategy remains
On Monday, China’s March GDP figures beat estimates with 4.8% YoY and 1.3% QoQ. The draconic lockdown in Shanghai, however, is not yet accounted for and a slowdown of economic activities could already be observed in March. It is questionable if the market has fully priced in the implications of continuing harsh lockdowns of entire Chinese cities.
President Xi Jinping made it clear that he drafted the “dynamic zero COVID” policy and therefore it is extremely unlikely that he will admit failure, especially ahead of the 20th National Congress of the Chinese Communist Party, where he is expected to be re-elected for an unprecedented third term, which could pave the way for a lifetime presidency. On top of that it has become evident that the current strategy cannot stop the transmission of the highly contagious Omicron strain.
The link between lockdowns in China and the crypto market might seem far-fetched but the spillover effects of a slowing Chinese economy and disruption of supply chains heating up inflation should not be underestimated and watched closely by investors of all asset classes, especially in times when the correlation between crypto and stock markets is high. The most positive outcome for markets would be if President Xi Jinping would find a way to make the transition into a “living with COVID” policy without having to admit defeat of past policies.
Potential future collaboration
The Financial Times reported that the CEO of FTX met with his counterpart at Goldman Sachs to discuss future collaboration as well as a potential IPO of FTX. This adds to recent news showing that Goldman is preparing to get involved in crypto. Other traditional financial firms might follow the prestigious investment bank as they fear of missing out. The process of traditional financial institutions starting to engage in crypto is slow, but it will open the market for institutional investors with deep pockets.
Further news
- This week, 21Shares announced the first BTC and ETH ETF in Australia, set to be listed next week.
- Optimism, the Ethereum L2, released a blog post titled “A New Chapter”, leading a speculative frenzy of the long awaited token airdrop to Optimism users. $SNX, the protocol with the highest TVL on Optimism, is up 24.6% on the week.
- The Ethereum Foundation released a report summarising its treasury composition and 2021 R&D spending. Most notably, 80.5% of the foundation's treasury is in ETH, which equates to 0.297% of the total ETH supply.
- Coinbase launched the beta of their highly anticipated social NFT marketplace. It is set to be powered by 0x, a decentralised exchange liquidity aggregator. $ZRX is up 40.9% in the last 24h.
Happy Trading!
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