What happened this week in the world of blockchain and cryptocurrencies? The most relevant local and international events, along with engaging background reports, concisely summarized in the weekly review.
Selected articles of the week:
The Halving is an important event in Bitcoin’s life cycle. Every four years, the rewards for miners and thus the inflation of the cryptocurrency are halved. Historically, this event has played a central role in Bitcoin’s price development. This year, however, Bitcoin broke the old all-time high for the first time before the halving. The new upward trend was driven by the successful US Bitcoin ETFs and not by the lower inflation rate. It remains to be seen how deep this break in historical patterns will go.
The halving usually plays a central role in Bitcoin’s multi-year price cycles – but this year has broken the pattern.
Wall Street sells Bitcoin
The Bitcoin ETFs launched in January were a success across the board. USD 17 billion in net inflows within a few months pushed the Bitcoin price to a new all-time high. State pension funds made their first investments. However, the euphoria flattened out over the summer. The sluggish price performance and macroeconomic concerns prompted ETF investors to sell off considerably. Within two weeks, over one billion flowed out of the funds. The products have since stabilized again.
Over the past two weeks, sentiment has turned and both Bitcoin and Ethereum ETFs have lost considerable assets under management.
Tether generates billions
Stablecoins are digital currencies that are designed to maintain a stable value against a specific asset such as the US dollar. Tether was the first to rank at the top of all stablecoin providers for a decade. 70% of the USD 170 billion of stablecoins in circulation come from Tether’s kitchen. The company collateralizes the stablecoin with cash equivalents such as US government bonds. Thanks to the current high interest rate environment, Tether has generated more profit than some of the world’s largest financial institutions – and with fewer than 100 employees.
According to its own statements, Tether generated an impressive profit of USD 6.2 billion with its leading stablecoin USDT last year.
Where is the Bitcoin selling pressure coming from?
The uncertainty surrounding the US economy has taken a heavy toll on Bitcoin and Ethereum, especially after poor figures revived fears of recession. Outflows from ETFs are evidence of this. Nevertheless, one crypto market has proven resilient during the economic turmoil: decentralized finance. DeFi is a blockchain-based financial market that operates without intermediaries such as banks or brokerage firms. An overview of the leading protocols.
Decentralized Finance (DeFi) is a blockchain-based financial market that operates without intermediaries like banks or brokerage firms.
Central bank must change course
In addition: In response to record-high inflation following the Covid crisis, central banks around the world had to raise interest rates. The Federal Reserve Bank ended this rate hike cycle in July 2023 at 5.50%. Since then, interest rates have remained stable and inflation has cooled. However, the US Federal Reserve will soon have to expand the money supply again. The first interest rate cut in four years is expected as early as next week. This could provide a tailwind for risk assets such as Bitcoin.
A summarizing review of what has been happening at the crypto markets of the past week. A weekly report in cooperation with Kaiko.
