The cryptoasset market largely went into retreat last week as a clouded macro outlook took hold of sentiment that had, until recently, been moving solidly in the opposite direction, writes Simon Peters, cryptoasset market analyst at eToro.
Bitcoin began the week around $30,300 but trended down most of the week despite a brief spike above $31,000 on Thursday. The cryptoasset moved lower on eToro and is now trading around $29,800.
Ether saw a similar decline, beginning the week around $1,920 but moving lower through the week to now trade around $1,840.
Macro factors weigh on bitcoin
The US posted a mixed set of unemployment numbers last week and this seems to have weighed somewhat on previous ebullience from major cryptoassets such as bitcoin.
While the labor market is softening with hiring slowing, unemployment is still at multi-decade lows in the world’s largest economy. While this is not bad news in and of itself, it does suggest that the Federal Reserve might have some more impetus to continue to hike rates, and keep them higher for longer.
The pace of rate hikes last year weighed very heavily on cryptoasset markets and led to substantial volatility. The market environment has been broadly much more stable this year so far, but we’re unlikely to see the end of investor trepidation for some time – at least until the overall inflation picture normalizes.
BRICS currency rumors and what it means for crypto
Rumors abounded the internet over the weekend of a potential gold-backed BRICS currency emerging to challenge the global market dominance of the dollar. While actual confirmation of such a move is not forthcoming, US Treasury Secretary Janet Yellen was forced to respond in a press conference in Beijing.
Dedollarization and the rise of a BRICS alternative has become a major internet trope in recent months, and is much talked about within the crypto community. This has implications for major cryptoassets such as bitcoin as many investors see it as a ‘third way’ of sorts in the global game of dominance between fiat (or even gold-backed) currencies.
We’ve not had anything really tangible emerge from BRICS yet however, and while the dollar isn’t in the position it was, it is still a long way from no longer being global reserve currency. But cryptoassets will respond to developments in this area as they form a natural alternative to national currencies, particularly bitcoin which is totally decentralized.
Shiba Inu blockchain set to launch in August
Cryptoasset Shiba Inu is set to launch its own blockchain in August, the project developer Shytoshi Kusama confirmed at a conference in Canada. It is a very interesting step for what has been a fairly low-key, if very popular, cryptoasset.
The Shiba Inu blockchain will focus on NFT applications, metaverse and gaming and has seen strong growth in ecosystem tokens BONE and LEASH. The project is also launching a decentralised autonomous organisation or DAO, dubbed DoggyDAO which will be governed by holders of the token and will help to fund projects on the Shibarium blockchain.
Competition in the blockchain platform space is tough nowadays. Ethereum is obviously the giant in this arena but others such as Tron, Arbitrum and Polygon have created a varied and innovative set of ecosystems for users. The addition of more is no bad thing as this will always push the market to be more competitive and innovative, while giving investors more choice.
