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
The Central African Republic adopts Bitcoin (BTC) as legal tender! Following in El Salvador's footsteps, the Central African Republic has officially adopted Bitcoin (BTC) as legal tender. The cryptocurrency will now coexist with the CFA franc. It is now the second country to turn to Bitcoin to protect the purchasing power of its residents. The country has 4.83 million inhabitants (a small number), but it is important not to underestimate the impact this will have on the perspective of countries' monetary policies. El Salvador and the Central African Republic are now examples for the rest of the world.
The National Assembly of Panama approves the bill for the regulation of cryptocurrencies. Panama seems well on its way to adopting Bitcoin (BTC) and cryptocurrencies as a means of payment. Indeed, on Thursday, April 28, the National Assembly of Panama approved the bill relating to the regularization and use of cryptocurrencies. If the president signs this bill, it will be officially adopted. This measure could also allow Panamanian citizens to pay their taxes in crypto-assets. According to various experts, this new set of laws could greatly help the unbanked population.
Two major banks in Argentina now allow users to buy cryptocurrencies. Argentina’s largest private bank, as well as a fully digital bank, now allow their customers to buy and sell cryptocurrencies. These services are being offered in part to combat the country’s rising inflation and are set to expand to neighboring regions. In fact, the country’s inflation rate reached 6.7% in March, its highest level in two decades. This is yet another example of the growing accessibility of cryptocurrencies worldwide and their utility for the general public.
It is now possible to get a loan backed by Bitcoin (BTC). Goldman Sachs, the renowned American investment bank, has just launched its first Bitcoin (BTC)-backed loan. Coinbase is the first company to have taken out this loan. Thanks to its large cryptocurrency reserve, the platform was able to obtain fiat currencies to finance its projects without having to sell a portion of its bitcoins.
In Portugal, an apartment was sold for 3 bitcoins (BTC) without even being converted into euros. This is a first for Portugal and, more broadly, for Europe: a real estate transaction has taken place entirely in cryptocurrencies. An increasing number of countries, companies, and individuals are accepting crypto-assets.
Surfin’ Bitcoin 2022: the 100% Bitcoin event will take place from August 25 to 27 in Biarritz! This event is organized by StackinSat. With content tailored for both beginners and experts, discover the schedule and ticket prices for this edition, which promises to be even more remarkable than the last. More than 80 speakers will take turns across two stages. For the first time, there will even be a BFM Business TV set. The program will focus on 4 main themes: finance and regulation, economy and geopolitics, mining and energy, and technology and tools. Check out their website and ticketing service if you are interested: https://surfinbitcoin.com/.
Fundamental Analysis
Source : https://www.coingecko.com/fr
At the time of writing, the price of Bitcoin is 28,000 $ (on 05/12/22).
Over the last few days, we have witnessed a capitulation phase in the crypto-asset market. As a reminder: the phases of capitulation bear markets are phases of the acceleration of the decline, and they precede a rebound. Like a sort of “purge” before a normalization of sentiment and the resumption of a bull market period.
We can cite several reasons for this surrender:
To combat inflation in the United States, the Fed raised its key interest rates, which impacted many companies, particularly those in the technology market. The NASDAQ (tech companies) as well as the S&P 500 (the 500 largest US companies) both dropped. These sharp declines are leading major Wall Street institutions and funds to hedge against risks and reduce their exposure to risky assets. Since Bitcoin and other crypto-assets are risky assets, there has been a strong disengagement by these large institutions, which may have negatively impacted the price of Bitcoin.
The algorithmic stablecoin TerraUSD (UST) experienced what is called a depeg, meaning it failed to maintain its value at 1 $, which is the primary role of a stablecoin. To summarize, an algorithmic stablecoin uses an algorithm that can issue more tokens when its price rises and buy them on the market when its price falls, helping to stabilize it at a desired value, in this case 1 $. Other stablecoins like USDC, USDT, or DAI operate on different and more robust principles, so their situations should not be confused with that of UST. I invite you to read one of our articles on stablecoins. This stablecoin unfortunately failed in its role, which had a chain-reaction effect on DeFi protocols and on the LUNA crypto-asset, which is the project's token.
The UST stablecoin accounted for 18 billion euros and the Terra (LUNA) project 35 billion euros. Furthermore, the Luna Foundation Guard (LFG) was forced to to resell its Bitcoin reserves (42,000 BTC, or approximately 1.3 billion dollars) in order to stabilize its stablecoin, but without success. This heavy BTC selling certainly had a strong impact on prices and helped cause the capitulation we recently experienced.« For your information, none of our portfolios were directly exposed to UST and LUNA. We select our stablecoins and projects with care, even if it is of course difficult to foresee this kind of event.
These two elements had a significant negative impact, which led us to the capitulation event. These events are healthy and allow us to start fresh on a solid foundation. If we are investing for the long term and in carefully selected, unleveraged projects, there is nothing to do for now until the market finds its bottom. We are in very favorable zones for DCA (dollar-cost averaging) and at very attractive price points. Indeed, when the market is gripped by fear, there are very good deals to be made.
I remember the last capitulation in March 2020, BTC had dropped to around 4,000 $. Today, even after a drop of more than 50 %, it is at 28,000 $. Below is a logarithmic scale chart to have a better view:
Here is a text that I find very relevant: The reason you are not buying BTC below 30,000 $ right now is the same reason you didn't buy BTC at 4,000 $ during the March 2020 COVID crash or at 3,000 $ during the December 2018 bear market low: the FEAR. Afraid that BTC might drop to 20,000 $. But 3,000 $, 4,000 $ or 5,000 $ doesn't matter anymore. Neither does 20,000 $, 30,000 $ or 40,000 $ in 2 or 3 years.
Don’t forget that a year and a half ago, in January 2021, when BTC first hit 30,000 $, we were in a period of euphoria. When we hit 30k $ again in the summer of 2021, we were in a zone of fear, and today, we’re in a zone of extreme fear. The fundamentals are changing rapidly.
Invest for the long term, accept volatility, select your projects carefully, and you will be rewarded for your patience. That at least is our vision.
If you have any questions, comments, or would like to know more about our service, please feel free to contact us: crypto.assets.manage@gmail.com
— Warning —
This is not investment advice, no one can predict the future.
You are solely responsible for your own investment decisions.
We are not responsible for any losses resulting from a decision made based on the information in this letter.
