Weekly Roundup
All Quiet on the Crypto Front
Was hoping to get a bit more of a thought piece out before this weekend was through, but I haven’t quite gotten the piece where I want it to be, so in this edition of the newsletter, I’m just going to share some of the work I did for Finder this week (and last).
Some Context
Things have gotten a bit quiet in digital asset markets, at least compared to some of the chaos we’re seeing in forex and bond markets.
BTC’s Relative Stability
Below is some commentary I provided to The Street in response to the CPI numbers that were released on Oct. 13:
"Crypto markets dumped upon receiving the news that the consumer price index was up 8.2%," said Frank Corva, senior analyst for digital assets at Finder. "While this number is down slightly from last month, it’s still extremely high."
This isn’t good news for risk-on assets like cryptocurrencies in the short term, Corva noted, "as people have less discretionary funds to use speculating in the nascent crypto market."
"However, with the US dollar and fiat currencies around the globe dramatically losing their purchasing power, the big question now is: Will the market begin to price Bitcoin more like a hedge against currency devaluation and less like a risk-on asset?" he said.
Corva noted that in September 2022, the Invesco QQQ ETF (QQQM) fell about 13%, and the SPDR S&P 500 ETF Trust SPY fell 9.3%, while the price of Bitcoin fell only 1.6%, according to Finder's BTC Price Predictions Report.
You can read the full piece here.
Mastercard Embraces Crypto
Mastercard recently announced that it will help its customers gain exposure to crypto markets by offering custody and trading services.
Below is some of my commentary on Mastercard’s move:
Frank Corva, senior digital assets analyst with Finder, said that "at this point in this crypto bear market, any news that supports broader crypto adoption is good news."
"So, it’s great to see Mastercard helping its clients to gain some further exposure to crypto markets," he added. "That being said, it’s important for Mastercard users who might employ Mastercard’s new crypto services to understand that Mastercard seems to only be offering IOUs for crypto assets."
Corva explained that Mastercard is teaming up with Paxos as well as other financial institutions to offer its clients crypto custody and trading services.
[…]
"This is good in that it allows clients to get some exposure to the crypto asset class for the purpose of speculation, but it doesn’t grant clients true ownership over their digital assets," he said. "To truly own your crypto assets, you have to hold the private keys to them, and it doesn’t seem that Mastercard’s program gives users the ability to do so."
You can read the piece in which this commentary was featured here.
And to better understand what I mean by “IOUs for crypto assets,” feel free to check out the following video:
Am I a YouTube sensation or what?
ETH in a Downtrend vs. BTC
When charted against BTC, ETH has been losing value over course of the last five years.
I’ve only recently noticed this trend, and I chose to explore it further in a piece I wrote for Nasdaq this week entitled “Will ETH Continue in Its Five-Year Downtrend Versus BTC?”.
Here’s an excerpt from the piece:
In June 2017, you could have traded 1 ETH for over 0.15 BTC. As of October 2022, that same 1 ETH would only get you about 0.066 of a Bitcoin.
The blue line on the chart shows this downtrend. [See chart in article]
The big question now is: Can ETH break out of this pattern?
You can see that it temporarily did in September 2022 leading up to the Merge, but it has since retraced and fallen back into the downtrend pattern.
That being said, ETH’s value hasn’t retraced as severely from the trendline as it did during the 2019 to 2020 crypto winter.
It’s hovering much closer to the trendline during this crypto bear market as compared to the last one, though it’s still struggling to break the trend.
Incoming Volatility?
Lastly, while things are quiet in crypto for now, we will likely see some volatility sooner than later. Could be to the upside or downside. I don’t have a clue.
Remember: Conservative DCAing is often your safest bet as an investment strategy.
And that, my friends, is all I have for you.
I hope you all have a beautiful week. Big hug.
Best,
Frank
Twitter: @frankcorva
