Cryptocurrency Analyst
Summary: Reports from major crypto analysts have different projections of crypto, sending contrasting signals to the market. The SEC also had a week of contrasting signals as the agency both addressed positive and negative aspects. In another corner of the crypto space, four countries are collaborating to make tests on a joint central bank digital currency.
Analysts disagree on the projection of crypto
Bloomberg published a relatively positive report last week outlining the reasons behind why they presume Bitcoin can be trading at $100,000 and Ethereum at $5,000, whereas JPMorgan takes another stand on the short-term and sees many cryptos as overpriced at the moment. Bloomberg consider the crypto-market to be trading in a bull-run after the market has well-recovered from its substantial correction since May. They describe Bitcoin as the store of value, and Ethereum as the decentralized finance building block, as the majority of decentralized finance protocols are based upon Ethereum. According to Bloomberg, the Ethereum price can ride on the back of the growing optimism of decentralized finance protocols, with the possibility of Bitcoin following its lead. The Bloomberg report mentions a macro risk-off decline as the primary threat to the present crypto-market. With reference to threats, the JPMorgan report outlined that particularly other cryptocurrencies than Bitcoin are valued too high as the interest from investors will likely not justify these prices over time, potentially leading to a leg down.
SEC is having its eyes on the crypto-market
The United States Securities and Exchange Commission – known as SEC – is having its eyes on the crypto-market with several observations the week prior. The chair of the SEC, Gary Gensler, stated that crypto-assets will not last long unless they comply with a regulatory framework, as finance is ultimately about trust, urging the need for regulation. Some days following the before-mentioned statement, speaking to the European Parliament’s Committee on Economic and Monetary Affairs, Gary Gensler was somewhat optimistic on cryptocurrencies, stating: “I think the transformation we're living through right now could be every bit as big as the internet in the 1990s”.
It was reported last week that the SEC is looking into Uniswap Lab, the developer behind the world’s largest decentralized exchange Uniswap. The SEC is allegedly explicitly targeting Uniswap’s marketing and investor services. The agency’s push into decentralized finance protocols comes under a month after Gary Gensler declared that many protocols are not immune towards SEC regulation. However, this contributes to uncertainty due to the market not being aware of what regulation altogether means in this sense. This uncertainty is densely magnified by the fact that decentralized finance has been one of the key drivers behind the price growth the past year. If regulators introduce strict regulation, it may have large impact on the current industry within decentralized finance.
Several countries to start joint trial on CBDCs
The four central banks belonging to Australia, Malaysia, Singapore, and South Africa have agreed on a joint project to test central bank digital currencies – known as CBDC – in cross-border settlements. The joint project named Project Dunbar is brought into effect through a collaboration with The Bank of International Settlements (BIS) Innovation Hub. Project Dunbar plans to enable financial institutions to interact directly in digital currencies issued by foreign central banks, effectively cutting transaction costs and limiting the need for intermediaries. The prototype is expected to be shown for the first time in November of this year, while the results of the project are anticipated to be released in early 2022. Across the globe, a substantial number of central banks are testing various CBDC projects, heavily inspired by the technological nature of cryptocurrencies.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
