In this week’s crypto update, eToro’s Simon Peters discusses crypto's wild mood swings and the correlation between burgers and Bitcoin, while Josh Gilbert looks at the implications of Vias and Mastercard’s sanctions on Russia.
Crypto goes through another wild swing
Crypto went through another wild swing last week, with bitcoin prices rising to more than $44,000 before dropping back to where it started the week, trading below $40,000.
Ethereum followed a similar pattern, starting the week around $2,600 before rising to around $3,000. It is now trading back down, around $2,500.
Price changes, like those in the stock markets, were driven by the geopolitical machinations in Russia, as uncertainty continued to rule and investors de-risked.
That being said, the swings we’re seeing are more broadly being caused by uncertainty among investors around the world. Despite regional changes in demand, cryptoassets are ultimately global and reflect that in their price changes.
Institutions turn to Grayscale
Grayscale’s Bitcoin Trust has seen consistent institutional investment into its flagship fund of late, according to data. Glassnode data has revealed that institutional investors have been consistently adding in millions each week, with nearly $140 million invested in the week ending February 25.
Whilst not consistent with other markets, it seems institutions are looking to increase their exposure to crypto in a time of mass sell-offs in previous cash cow sectors like technology.
Despite the positive inflows, GBTC may need to make hay while the sun shines. With Canada already approving the first bitcoin ETF, Grayscale may well soon see serious competition either at home or abroad. Based on the data it seems the demand is there, so it will be interesting to see what happens over the coming months with regard to increasing access.
Philippines instigates CBDC research
The central bank of the Philippines has launched a research project focused on central bank digital currencies.
In a recent speech, bank governor Benjamin Diokno discussed the project in hand, and how it intends to assess and build organisational capacity, knowledge, architecture, technology and policy. Whilst this project has been hinted at previously, it now seems it’s full steam ahead in terms of assessing feasibility.
However, it seems the Philippines is in no rush to implement CBDCs due to its heavy reliance on cash; unlike China which showcased its digital Yuan during the Winter Olympics.
It appears that while the race to implement the first properly functioning CBDC has not yet officially caught fire, with many countries in investigating territory and only really China having something close to a model, it won’t just be the preserve of major economies.
As seen by the Ukrainian conflict, the movement of money or the ability to access it via a plethora of means could result in a more global uptake perhaps more quickly than planned.
How about a side of bitcoin with that burger?
Shake Shack (NYSE:SHAK) US is offering crypto rewards to customers using the Cash App when purchasing food. Customers using the Cash App’s Cash Card or rewards program will recoup 15% of their purchase in bitcoin.
Whilst the offer is only valid until mid-March, this is just the latest consumer brand dipping its toe in the crypto market. According to executives in the WSJ, this promotion was purely a feasibility test – both in terms of attracting younger customers and whether the broader adoption of crypto makes sense for the business.
Shake Shack is not the first consumer brand to test and learn, and in my opinion, we may well see a raft of other brands trying small-scale promotions as they experiment with how crypto may or may not integrate with their businesses.
With fashion houses such as Gucci or Adidas getting into the NFT space, crypto rebates on purchases or increased purchasing options may soon become a more regular occurrence.
Master restrictions
The latest Visa and Mastercard restrictions will further tighten how Russians are able to access capital, meaning we may well see an increase in demand for cryptoassets.
Bitcoin is borderless, so at times like this, citizens can turn to cryptoassets to store and spend their capital. The restrictions from Swift, Visa and Mastercard could see demand pivot to cryptoassets that specialise in payments, such as XRP, given its ability to instantly and efficiently move money across all corners of the world through its decentralised blockchain.
The last few weeks have highlighted crypto's real-world use cases, and everyday consumers now understand there is much more to crypto than just an investable asset. This could shepherd in a new era of finance; payments in under a matter of seconds, decentralisation away from corporations or governments, and the provision of finances when traditional methods are not available.