Crypto Weekly: Mixed signals

Crypto Weekly: Mixed signals

Mads Eberhardt

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.

Source: Saxo Group
Source: Saxo Group
Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
Most of our staff in Singapore are working from home to help limit the spread of the coronavirus. We remain at your service on the details below. Thank you for your understanding.

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.