Crypto

A challenging macro backdrop could dampen bitcoin’s upside in the third quarter

Published

1 year ago

July 2, 2023

A challenging macro backdrop could dampen bitcoin’s upside in the third quarter

It seems like bitcoin has a good setup for the new quarter, with major institutions signaling confidence in both the future of crypto and even in its U.S. regulators at the end of the month . Don’t get too carried away though – crypto is still part of the broader market, which remains in a challenging macro environment. The third quarter is historically the weakest for bitcoin. The average third-quarter gain going back to 2014 is just 4.67%, according to CoinGecko, and it’s posted a positive third quarter for only four of the nine in its lifetime. Before the recent rush of applications to launch U.S. spot bitcoin ETFs injected new optimism in the crypto market, it was a frustrating second quarter for traders. Between the end of the banking crisis in May and the BlackRock bitcoin ETF filing on June 15, regulatory pressure weighed heavily on sentiment and bitcoin traded sideways. That lull could come back in the next three months as industry drivers wrestle with macro drivers. “It’s clear that [the Fed] is not fully comfortable yet with the direction of headline inflation numbers,” Christopher Ferraro, president and chief investment officer of Galaxy Digital, told CNBC. “So while they pause rate hikes, they’re in no way yet committing to a permanent pause or even a rate decline.” Read more in CNBC Pro’s Quarterly Investment Guide Recession worries are likely to carry over into the second half of 2023 Wall Street analysts reveal their top ideas for the second half, including this red-hot solar name The AI-powered rally to start the year could broaden out in the third quarter A.I. enthusiasm drove up stocks this year. Here’s how investors can catch the next opportunity The Federal Reserve left interest rates unchanged at the conclusion of its June meeting, but said two more could be coming later this year. Some on Wall Street are anticipating the Fed will move in July and September. Powell has said the FOMC hasn’t decided if a new hike is likely to take place in July. “You see every day disparate and sometimes orthogonal data points coming out around is the economy growing? Is it shrinking? Are we headed for recession, are we not?” Ferraro added. “It’s a very uncertain macro environment, which will make this not a one direction move for any asset class, let alone bitcoin.” Cantor Fitzgerald’s Elliot Han said while bitcoin has finally reclaimed the $30,000 level, it failed to maintain it for several weeks as the macro challenges are “currently dampening upside for crypto.” Regulation and ETFs Beyond the macro backdrop, it’s clear developments in U.S. regulation and ETF applications will continue to be the main themes in the third quarter. The rush of efforts to get approval for a spot bitcoin ETF came at the height of the Securities and Exchange Commissions’ hostility toward crypto and many hope institutions like BlackRock , Fidelity and Invesco – which filed for a bitcoin ETF with Galaxy in June – can force some change. It could take a while, however. “From a timing perspective, I think it’s largely unknown” when a decision on an ETF could come, Ferraro said. “But … all these institutions have real concerted efforts and likely would not have put the effort in motion now if there wasn’t a strong belief that the market and the regulators, in particular the SEC, were ready to allow regulated products.” “Given all of the regulatory uncertainty and the court cases that are going on … it’s actually an opportune time for the regulators to allow regulated products into the market and help clear out some of the concern or lack of clarity,” he added. The rest of the world While that uncertainty continues in the U.S., other parts of the world are taking a friendlier stance toward the industry. U.K. regulators have developed a “Regulatory Sandbox” to allow crypto companies to test new innovations, continental Europe has an established exchange-traded products market for crypto, and Hong Kong has been clear and vocal about its desire to become a crypto hub for the world. “There’s still a disparity in the treatment of crypto in the U.S. and the rest of the world,” Han said. “The question is will the U.S. follow suit or continue with its litigious approach?” There’s a growing number of U.S. companies that are no longer willing to wait for regulatory clarity as the price of bitcoin ticks higher, he added – and many are expecting a big price surge in the spring they won’t want to miss. BTC.CM= YTD mountain Bitcoin is up more than 80% YTD “Some are looking to move their headquarters, or at the least establish large offices, in crypto friendly jurisdictions,” Han added. “One U.S. crypto company we know is now even seriously contemplating its public listing in London or Hong Kong and we’re also seeing more U.S. crypto companies looking to create offshore offerings” like Ripple and Coinbase . While Ferraro and others remain upbeat about the future of crypto and unworried that regulators will eventually find an appropriate path forward for American crypto businesses, it could end up being too little too late. “I am optimistic we will get it right,” Ferraro said. “I am fearful that the U.S. will take its time and while that happens, sticky capital and sticky intellectual capital gets formed elsewhere in the world, and then it’s hard to undo.”

Representations of cryptocurrency Bitcoin are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration

Dado Ruvic | Reuters

The third quarter is historically the weakest for bitcoin. The average third-quarter gain going back to 2014 is just 4.67%, according to CoinGecko, and it’s posted a positive third quarter for only four of the nine in its lifetime.

Bitcoin historical quarterly performance since Q4 2013

	Q1	Q2	Q3	Q4
Average return	6.88%	36.47%	4.67%	93.38%
Number of positive periods	4 of 10	6 of 9	4 of 9	6 of 10

Source: CoinGecko

Before the recent rush of applications to launch U.S. spot bitcoin ETFs injected new optimism in the crypto market, it was a frustrating second quarter for traders. Between the end of the banking crisis in May and the BlackRock bitcoin ETF filing on June 15, regulatory pressure weighed heavily on sentiment and bitcoin traded sideways. That lull could come back in the next three months as industry drivers wrestle with macro drivers.

“It’s clear that [the Fed] is not fully comfortable yet with the direction of headline inflation numbers,” Christopher Ferraro, president and chief investment officer of Galaxy Digital, told CNBC. “So while they pause rate hikes, they’re in no way yet committing to a permanent pause or even a rate decline.”

[Analysis] “Cryptocurrency Holders Surge Over the Past Two Years”

Published

5 hours ago

December 22, 2024

Press Room

[Analysis] “Cryptocurrency Holders Surge Over the Past Two Years”

Image=Santiment

It has been observed that the number of cryptocurrency holders has surged over the past two years.

On the 23rd (local time), the on-chain analysis platform Santiment reported on X (formerly Twitter) that “the number of cryptocurrency holders has significantly increased over the past two years. The number of non-empty wallets for the top 4 cryptocurrencies by market capitalization has generally increased.”

Specifically, Bitcoin (BTC) has 54.7 million wallets (a 27% increase), Ethereum (ETH) 134.9 million wallets (a 47% increase), Tether (USDT) 657 million wallets (a 66% increase), and Ripple 575 million wallets (a 28% increase).

Crypto

Blockchain Revolution: How Cryptocurrency is Transforming Global Logistics – theafricalogistics.com

Published

13 hours ago

December 22, 2024

Press Room

Blockchain Revolution: How Cryptocurrency is Transforming Global Logistics – theafricalogistics.com

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The global logistics industry is undergoing a seismic shift, driven by the integration of blockchain technology and cryptocurrency.

These innovations promise to enhance transparency, efficiency, and security across the supply chain. From tracking shipments to streamlining cross-border payments, the synergy between blockchain and cryptocurrency is setting new benchmarks for the logistics sector.

1. Blockchain’s Role in Logistics

Blockchain technology, essentially a decentralized ledger system, enables secure and transparent recording of transactions. For logistics, this translates into the ability to track goods in real-time, authenticate the origin of products, and mitigate fraud. Key benefits include:

Enhanced Traceability: Every transaction, from the manufacturing stage to delivery, is recorded on an immutable ledger. This ensures that stakeholders have a comprehensive view of the supply chain.
Reduced Paperwork: By digitizing documents such as bills of lading and certificates of origin, blockchain eliminates the inefficiencies of manual processes.
Improved Trust: Smart contracts, self-executing agreements coded on the blockchain, reduce disputes and enhance trust between parties.

2. Cryptocurrency in Cross-Border Transactions

Traditional cross-border payments in logistics are often marred by high fees, long processing times, and currency exchange risks. Cryptocurrencies, like Bitcoin and stablecoins, are addressing these challenges by:

Lowering Transaction Costs: Cryptocurrency transactions bypass intermediaries, significantly reducing fees.
Speeding Up Payments: Transactions settle in minutes, eliminating delays common with traditional banking systems.
Enhancing Financial Inclusion: For businesses in emerging markets, cryptocurrencies provide access to global trade without reliance on conventional banking infrastructure.

3. Use Cases Transforming the Sector

Several real-world applications highlight the impact of blockchain and cryptocurrency in logistics:

Walmart’s Blockchain Initiative: Walmart leverages blockchain to track the origin of produce, ensuring food safety and traceability within its supply chain.
Maersk’s TradeLens Platform: Developed in collaboration with IBM, TradeLens uses blockchain to digitize and streamline global shipping documentation, reducing inefficiencies.
Cryptocurrency-Powered Freight Payments: Startups like Slync.io enable shippers to pay carriers using digital currencies, enhancing payment speed and reliability.

4. Challenges to Adoption

Despite its potential, the adoption of blockchain and cryptocurrency in logistics is not without hurdles:

Regulatory Ambiguities: The legal status of cryptocurrencies varies across countries, complicating implementation.
Scalability Concerns: Processing thousands of transactions per second remains a challenge for blockchain networks.
Skill Gaps: The logistics workforce often lacks the technical expertise to deploy and manage blockchain systems.

5. The Road Ahead

The integration of blockchain and cryptocurrency in logistics is still in its nascent stages but holds immense promise.

Industry players are investing in pilot projects to explore scalability and operational viability. The convergence of these technologies with artificial intelligence and IoT will further revolutionize the sector, enabling predictive analytics, autonomous supply chains, and more.

Conclusion

Blockchain and cryptocurrency are not just buzzwords but transformative tools reshaping the logistics landscape.

By fostering transparency, reducing costs, and expediting processes, these technologies are addressing long-standing inefficiencies in the supply chain.

As adoption accelerates, businesses that embrace this revolution stand to gain a significant competitive edge in an increasingly digital and globalized economy.

Also Read

How cryptocurrency works: A step by step guide

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Crypto

My Top Cryptocurrency to Buy Right Now (Hint: It's Not Bitcoin) | The Motley Fool

Published

21 hours ago

December 22, 2024

Press Room

My Top Cryptocurrency to Buy Right Now (Hint: It's Not Bitcoin) | The Motley Fool

The performance of Bitcoin (BTC -0.53%) this year has been nothing short of extraordinary. It’s now up about 46% since the election on Nov. 5, and 146% year to date. Best of all, Bitcoin recently broke through the $100,000 price level to hit another all-time high just north of $108,000.

But what if I told you that there is another top cryptocurrency that is up more than 120% since the election, and 430% year to date? And that this cryptocurrency also just set a new all-time high? That cryptocurrency is Sui (SUI -3.69%), which now ranks 14th among all cryptocurrencies with a $13 billion market cap.

What is Sui and why haven’t I heard of it before?

If you’ve never heard of Sui, that’s understandable. The cryptocurrency only launched in May 2023, just as the market was emerging from the crypto winter of 2022. So, in many ways, its launch flew under the radar of investors. There were bigger issues to consider. The industry was still coping with the aftermath of the collapse and scandal of crypto exchange FTX in November 2022, and nobody was very interested in hearing about another new cryptocurrency launch.

But fast-forward to August 2024. That’s when 21Shares — the company that partnered with Cathie Wood’s Ark Invest on the launch of spot exchange-traded funds (ETFs) for Bitcoin and Ethereum (ETH -0.79%) — released a research report on Sui, detailing all of its unique characteristics. For example, it described how a new technical upgrade suddenly made Sui faster than any other top blockchain by a substantial margin. It pointed out how Sui was rapidly growing in terms of total value locked (TVL), which is a key metric showing the relative strength of a particular blockchain.

Image source: Getty Images.

The title of the report (“Is Sui a Solana (SOL -0.00%) Killer?”) was very provocative, at least for crypto investors. It suggested that Sui had the technological chops to take on Solana, which now ranks as the fifth-largest cryptocurrency. For several years now, Solana has been positioned as the next Ethereum, so Sui being tabbed as a potential Solana killer is a big deal. In fact, 21Shares suggested that there might be a $68 billion market opportunity for Sui if it was able to take on Solana and win.

How high can Sui go in 2025?

My primary concern right now with Sui is that it may be overheating. Just like Bitcoin, it is smashing through all-time high after all-time high. Right now, Sui is trading at about $4.50 after briefly testing the $5 price level. From the perspective of crypto traders, $5 presents the same psychological price barrier for Sui that $100,000 did for Bitcoin. It took Bitcoin a while to break through the $100,000 level, so Sui may not be able to break through the $5 price level by the end of this year.

But, in 2025, watch out. Just take a look at this comparison chart of Bitcoin and Sui since the presidential election. That leads me to think that the market is very bullish on Sui’s prospects under the Trump administration.

Bitcoin / U.S. dollar chart by TradingView

Moreover, consider the trading volume that Sui is now seeing on Coinbase Global (COIN 1.75%). Sui has become one of the 10 most popular cryptocurrencies on the platform in terms of 24-hour trading activity. Granted, the trading volume in Sui is nowhere near that of Bitcoin or Ethereum. But there’s more activity in Sui than in popular cryptocurrencies such as Chainlink, Litecoin, Cardano, Shiba Inu, and Avalanche.

Best of all, Sui has a major new product launch coming in 2025. It’s a $599 handheld gaming device that is currently available for pre-order online. If that product launch is a success, then it could be off to the races for Sui. It could easily double in price to hit the $10 price level.

This cryptocurrency could soar even higher if it ever realizes its full potential as the next Ethereum. Imagine if you had invested in Ethereum just 18 months after its launch. Most likely, you’d be a crypto millionaire by now. In December 2016, Ethereum was trading around $5, which is roughly where Sui is trading right now. Today, Ethereum trades for about $3,400.

That said, I can’t emphasize enough how speculative Sui is. It is still a baby in crypto terms. It has only been around for 18 months, and it can be difficult to get good data and reliable information about it. So, do your due diligence before investing in Sui, and keep your expectations in check. An investment opportunity like Ethereum might only come around once in a lifetime, so it’s asking a lot for it to happen with Sui as well.

Dominic Basulto has positions in Bitcoin, Ethereum, SUI, and Solana. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, Ethereum, SUI, and Solana. The Motley Fool has a disclosure policy.