Hello everyone,
The purpose of this letter is to inform you about the current situation of the crypto-asset market, as well as recent news in this field. This letter is not investment advice, but merely a sharing of my personal point of view.
News
Ethereum (ETH): Visa is developing an automatic payments system. The company specializing in payment solutions has just announced its commitment to developing a tool in the Web3 sector. Developed on Ethereum (ETH), this solution allows users to make scheduled and automated fund transfers.
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Société Générale is making its very first DeFi transaction on MakerDAO. Société Générale – Forge has just completed its first stablecoin borrowing transaction in decentralized finance. The French bank's innovation branch used its vault on MakerDAO to withdraw 7 million dollars in DAI.
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Binance and Coinbase are betting big on Europe. Is Europe becoming the new promised land for the two major cryptocurrency exchanges Binance and Coinbase? It would seem that the exchanges are betting on the Old Continent to secure their place.
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Mastercard and Polygon partner to propel music artists into Web3. This is another masterstroke for the Polygon ecosystem, which has just forge a partnership with payment giant Mastercard. This cooperation is part of the new program for musical artists: the Mastercard Artist Accelerator.
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US debt default: Why this possibility is a cause for concern Time is running out for Janet Yellen and the US Treasury, which must act this week to prevent the United States from defaulting on its debt in the coming months.
The proposed solution is to raise the public debt ceiling once again. This debt has reached a colossal rate of 121% of GDP, and is now approaching its established ceiling of $31.4 trillion.
As a reminder, this famous ceiling is a ceiling in name only: since 1960, it has been recorded 79 times, to accommodate the growing debt of the world's leading economy.
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Stables: The name of the PMU's ambitious project bringing horse racing into Web3. The Stables Experience, which began on January 9, 2023, allows those primarily interested to sign up for the dedicated whitelist to dive into Web3-style horse racing thanks to a racehorse represented as a 3D NFT.
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Avalanche partners with Amazon. Ava Labs, the company behind Avalanche, has announced its partnership with Amazon Web Services (AWS) to accelerate blockchain adoption for the Amazon cloud computing platform's customers.
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The vote of the Neuilly-sur-Seine Youth Municipal Council was conducted via blockchain. It is well known. Blockchain can be used and is useful for many sectors of economic and social life. This is what the town hall of Neuilly-sur-Seine experienced by organizing elections with the Electis voting application, based on Tezos. This vote is a first and could lead to other events of this type.
Fundamental Analysis
Source : https://www.coingecko.com/fr
At the time of writing, the price of Bitcoin is 21,411 $ (on 01/17/23).
This first month of the year gives us a positive signal for the crypto-asset market. After a difficult year for the ecosystem and a bear market throughout 2022, the market decided to wake up with an increase of over 23 % in one week and potentially signal the end of the bear market.
That does not mean, however, that we are already starting a bull market that will reach new highs. Historically, what followed was a ranging period (a channel in which the price moves) that will slowly trend toward the old highs. We do not expect a powerful bull market reaching new highs before 2024 at the earliest.
The year 2023 could be a year of accumulation and a slow rise in prices. We are not immune to macroeconomic risks, which remain high at present. We still believe that the crypto market will be in better shape at the end of this year compared to the stock market. The crypto ecosystem is benefiting from a major boost that other markets do not have: the adoption.
Bitcoin cycles are set like a timer. We can see this in the chart below, which represents the MVRV ratio. It simply represents a division of market capitalization by realized capitalization.
Realized capitalization is an alternative approach to market capitalization as a measure of network valuation, rather than using the last traded price and multiplying it by the circulating coins as in the traditional calculation. Realized capitalization, on the other hand, approximates the value paid for all existing coins by summing the market value of the coins at the time they were last moved on the blockchain.
Glassnode
As we can see above, this ratio is below 1 for an average of 190 days in each 4-year cycle. These periods (in red) have each time represented the lows of each of the last three cycles. It is likely that the same will happen again. This punctuality is quite astonishing, set to the rhythm of the Halvings (the halving of the rewards programmed into the Bitcoin network protocol).
The impact of these halvings is perhaps destined to disappear over time due to the dilution of their importance relative to the total number of tokens already in existence.
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US inflation is down again this month, from 7.1 % to 6.5 %. There is a good chance that the Fed will slow down its rate hikes, which are currently at 4,5 %. The markets are waiting for the Fed's pivot. We can see that the previous pivots over the last 20 years were at 6.5 % in 2001; 5.5 % in 2007; and 2.5 % in 2019. See image below.
Source : https://tradingeconomics.com
It is increasingly unsustainable to maintain high rates because of the size of the US debt, which is steadily increasing. It is highly likely that we will not go higher than the rates of 2001 and 2007. We can easily understand why with the article that I presented to you in the «news» section: US debt default: Why this possibility is a cause for concern
The solution the Americans have considered is to raise the public debt ceiling once again. This debt has reached a colossal rate of 121% of GDP, and is now approaching its established ceiling of $31.4 trillion.
As a reminder, and at the risk of repeating myself, this so-called ceiling is a ceiling in name only: since 1960, it has been recorded 79 times, to accommodate the growing debt of the world's leading economy.
All of this means that we will probably never have very high rates (nominally, that is, adjusted for inflation, they are all negative). This implies a steady decline in the purchasing power of a dollar due to the money printing necessary for the system. All of this over the long term, of course.
Here is an example below, with a cost of living index made up of 50 % wheat and 50 % energy compared to the dollar. The dollar has lost 95 % of its value since 1972; the disaster began after the abandonment of the gold standard.
Institute of Liberties
Please note that all of this applies to Europe and the Euro, and unfortunately, even worse.
If you have any questions, comments, or would like to know more about our service, please feel free to contact us: tristan.g@crypto-assets-management.com
— Warning —
This is not investment advice, no one can predict the future.
You are solely responsible for your investment decisions.
We are not responsible for any losses resulting from a decision made based on the information in this letter.
