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by Nikolas Kessler, Euro on Sunday
MWith the exception of the two stablecoins Tether and USD Coin, which are not subject to any notable price movements because they are linked to the US dollar, all cryptocurrencies in the top ten by market capitalization have recorded gains, some of them significant, on a weekly basis. Fed Chairman Jerome Powell, who announced at the beginning of the week an even more aggressive approach in the fight against high inflation, was unable to change this. Tighter monetary policy is commonly seen as a drag on risky assets, which include cryptocurrencies. At the current level, however, the turnaround in interest rates should be sufficiently priced in.
Instead, market participants are focusing on positive project-related news, such as the top winner Cardano, or simply letting themselves be carried away by the significantly brightened mood on the overall market. Fears that cryptocurrencies are losing their appeal in the rising interest rate environment are not confirmed. Instead, there are currently even rumors that the hedge fund Bridgewater Associates, founded by Ray Dalio, could invest directly in digital assets itself in the first half of 2022. That would be an enormous confirmation for the thesis of institutional investors entering the market as a price catalyst for Bitcoin and Co, which some advocates have been upholding for years.
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In the short and medium term, crypto fans should be prepared for persistently high fluctuations despite the recent gains. The Ukraine war and the high correlation with the stock market are still explosive.
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US crypto exchange operator Coinbase recently announced major investments to expand the platform’s international business and functionality. In the first step, the company is building its own marketplace for non-fungible tokens (NFT), which should be ready to go soon. NFTs are a megatrend within the crypto scene and could bring Coinbase up to 1.3 billion dollars in additional sales annually, John Todaro from the analysis house Needham calculated with a view to the previously leading NFT marketplace OpenSea. This could also provide new impetus for the stumbling Coinbase share.
Cardano has gained a whopping 30 percent in value on a weekly basis after co-founder Charles Hoskinson commented positively on the project’s growth prospects. Two major upgrades are expected in July and October, which will improve scalability, among other things. This is also necessary, because the enthusiasm for the blockchain project is so huge that the transaction volume was at times higher than that of the much larger coins Bitcoin and Ether. Investors willing to take risks can use the ETP to speculate on a continuation of the rally, bearing not only the price but also an issuer risk.
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Image sources: Wit Olszewski / Shutterstock.com, Jaruwan Jaiyangyuen / Shutterstock.com, Finanzen Verlag
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