Inflation continues unchecked and uncertainty grows, waiting for the response and quite aggressive measures by the authorities. But, how is it that the markets have reacted to such information? How much longer will we have to endure the crypto winter? Put your coats on!
Last Wednesday, the inflation data in the United States was released, which confirmed that there is still a fairly high inflationary pressure and that in no way can it continue to be considered transitory, although I think that became clear to us a couple of months ago . Consumer prices increased by 9.1% year-on-year, breaking the record set in the previous report (8.6%), this being the highest inflation in more than 40 years. While that record was expected to be broken, analysts had forecast a rise of 8.8%, which fell pretty badly and created a lot of uncertainty among investors. The purchasing power of people is being affected in a considerable way; and the amount of investment, especially in the stock sector and in the crypto market, could fall in a worrying way, also driven by the dramatic falls in a large number of assets.
In addition, the Consumer Price Index (CPI), showed an increase of 1.3% compared to the previous month, in the basic basket and consumer products in the North American country.
However, the president of the United States, Joe Biden, has mentioned that this figure is unacceptable, and that it is also outdated, since the prices of some goods, such as gasoline, have dropped significantly in recent days. That is why, in a certain way, there is hope that the next report will begin to see a recovery or figures that will begin to stabilize; but remember, nothing is written.
Given this information, the cryptocurrency market reacted positively, in terms of the possible scenarios that were speculated after the high uncertainty and the macroeconomic environment, since after said announcement the cryptocurrency market would have a recovery of about 5 %, taking Bitcoin as the base asset.
In other news, the co-founders of what until a few weeks ago was the largest cryptocurrency hedge fund, Three Arrows Capital, have reportedly gone on the run, after declaring default on a host of creditors. The fund’s plaintiffs’ lawyers have mentioned that the whereabouts of the defendants are currently unknown, after they refused to carry out the liquidation process correctly. According to information from CNBC, they were quite nonchalant about holding meetings to discuss settlement terms, and once searched at their offices in Singapore, they found the offices empty, with a number of inactive screens.
We continue with some quite bad news, and that is that the world’s largest NFT trading platform, OpenSea, has joined the platforms that begin to feel the effects of the crypto winter, since the company’s CEO, Devin Finzer , has reported that they will carry out massive layoffs, cutting around 20% of their workforce. This is a consequence of the loss of interest in NFT trading in recent months, fueled by the crash in crypto assets. However, various companies continue to develop NFTs, such as Sony, who will soon implement the use of NFTs for its users on PS5 consoles.
Now with more optimistic news, the Paraguayan Senate last Thursday approved a bill that regulates the mining and trading of cryptocurrencies. Although said project had already been approved in December, a series of modifications were generated in May, for which it returned to the upper house and has finally been approved. The last step is for the country’s executive power to decide whether it is approved or vetoed. This law establishes that individual and corporate miners must request authorization for the consumption of industrial electricity in order to subsequently request a license. In addition, it seeks to create a registry for any natural or legal person that aims to provide cryptocurrency trading or custody services to third parties.
Bitcoin starts the week quite strongly, above $22,000 (+5.87%). We can find a very interesting resistance level near $23,300, which has marked one of the extremes of the sideways market generated in previous weeks. Let’s see if the world’s largest cryptocurrency is capable of breaching that level and recovering significantly.
In the case of Ethereum, the situation looks even better, since it is trading above $1,470 (+10.09%), continuing with a strong upward movement after a very positive weekend. The important thing here is that it has managed to break that resistance at $1,280, breaking out of that very marked sideways market. We may find a next resistance level near $1,770.
The news that presents us with a complicated situation in the economic environment and in the crypto market continues, since on top of that, the decision-making by the authorities and the measures that will be taken to counteract inflation, such as a possible rate hike, are lacking. more aggressive. However, there is still optimism on the part of large corporations and institutions, who are sure that this bear market will serve as a filter in which the strongest projects will be able to consolidate. That is why it is important to analyze the projects in which we put our money, analyzing the long-term picture. Without further ado, we wish you an amazing week.
