CAM Crypto Snippets – 11th July 2022

Monday 11 July, 2022

The US job report came in better-than-expected last week (8th July) and for a short stint, the news eased the looming concerns around a recession. The S&P 500 welcomed the news with a sense that the Fed would ease its trajectory rate hike, rebounding 6% from its June lows, while the US 10-year treasury yield retreated to 2.75%. By the end of the trading week, market sentiment had reversed, indicating a more aggressive Fed rate hike of 3.5% by year-end 2022 as measured by Bloomberg’s WIRP (World Interest Rate Probability).  For some context, WIRP had the US Fed implied rate of less than 3.0% by year-end 2022 just in June.  In summary, market volatility and uncertainty should persist throughout the year over how the Fed and global central banks manage inflation and recession fears with monetary policy.

The “crypto winter” cleansing continued with Voyager—a US crypto lender, filing for chapter 11 (bankruptcy) on the 6th of July. While such news has rattled crypto market prices in the past, this news came and went, with little to no impact on token prices.  On encouraging news EU lawmakers showed signs of regulatory support for the crypto sector, with anticipated guidelines to protect against market manipulation and set conditions for assets like stablecoins. This is positive for the sector as it will encourage investors sitting on the sidelines awaiting regulation.

As of today, the overall cryptocurrency market cap hovers just shy of US$ 1 Trillion (AU$ 1.4 Trillion), with Bitcoin capturing 43% and Ether over 15% market share, respectively.

Figure.1, Source: Livecoinwatch as of 11 July 2022
Top 10 Cryptocurrency Market cap (AUD)

While the cryptocurrency market has experienced a major downturn in recent times, similarly to the global market as a whole, blockchain technology adoption, which is the bedrock of the cryptocurrency industry has been on the uprise.  While cryptocurrency volatility is common to crypto natives, what’s been interesting about this downturn has been the great interest from Institutional investors’ appetite for the asset classes within the traditional businesses.

For instance, in a note to clients, JP Morgan strategists, led by Nikolaos Panigirtzoglou, revealed the bank had begun placing a higher value on cryptocurrency as an alternative asset over other asset classes such as real estate.[1]

A MasterCard study has revealed that 51% of consumers in Latin America have made transactions using cryptocurrencies, and a third of citizens have used stablecoins.[2]

Additionally, there is a demand for more blockchain and cryptocurrency-related solutions. 82 percent of the respondents desire choices for cryptocurrencies at their banking institutions. Approximately 66% desire more freedom to switch between conventional and cryptocurrency payment methods.

NuBank, one of Brazil’s premier banks, home to over 40 million customers has recently integrated blockchain products into this offer. Wide stage adoption from the likes of high-net-worth individuals, investment funds, sovereign wealth funds, banks, and more will solidify blockchain tech and cryptocurrency as a more legitimate and globally esteemed alternative asset class.[3]

This website is owned and operated by Cosmos Asset Management Pty Ltd (ABN 34 639 356 068) (Cosmos Asset Management or ‘we’ or ‘us’). Cosmos is a corporate authorised representative (CAR number 1281643) of Millinium Capital Managers Limited (ABN 32 111 283 354; AFSL 284336) and a corporate authorised representative (CAR number 1281074) of Defender Asset Management Limited (ABN 29 608 281 189; AFSL 482722).

General advice warning

Any information contained in this website is general in nature and has been prepared without taking into account your objectives, financial situation or needs. A financial services guide is available and should be considered before dealing with us. Prior to acting on any information on this website, you should consider the appropriate of any information on it (and any financial product) having regard to your circumstances and you should carefully read and consider the product disclosure statement or information memorandum of the relevant fund (or financial product) before deciding to invest in a fund (or financial product).

All securities and financial products involve risks. Past performance is not an indication of future performance. Trading in financial products (including digital currencies) carries a high level of risk including the risk of loss of your investment in any financial product offered by us or through this website. Investing in the financial products offered through this website may not be suitable for all investors, so please ensure that you fully understand the risks involved and seek independent advice prior to making any investment.

Avatar for Von

Author: Von