MARKET WRAP

1. US GDP Shrinks, Crypto Traders Demonstrate Uncertainty

CoinDesk – Apr 29, 2022 at 3:18am

For the first time since the pandemic, the U.S. economy demonstrated a contraction, against the expectations of analysts who predicted gross domestic product (GDP) to grow by 1% in the first quarter of 2022. Instead, it declined by 1.4%, according to the Bureau of Economic Analysis.

The shrink itself can be attributed primarily to trade and inventories industries, whereas consumer spending and business investment remained rather strong. This indicates that the decline is not a significantly alarming change for investors and large businesses, as consumption, fixed investment, and demand are still quite high in terms of GDP.

Still, it has been observed that Bitcoin has been on track for a 15% decline this month, following a trend observed in the previous months. While the GDP contraction is relatively unalarming, it still has the potential to disincentivize the more risk-averse from partaking in cryptocurrency investments if a recession does arrive, on the off chance.

Bitcoin stabilized around the $40,000 price level, representing a median value of a three-month price range, with a possible decline still to be seen. Other cryptocurrencies were mixed, corroborating the notion that traders are experiencing uncertainty. ETH, trading at around $3,000, also stands at a midpoint price range over the past three months, and it is down 13% this month. SOL is down 11% and DOGE 4% over the same period.

Interesting developments regarding Elon Musk’s acquisition of Twitter have, however, caused Dogecoin transactions to spike, reaching a 3.5-month high.

2. Elon Musk Purchases All of Twitter for $54.20 a Share; DOGE Takes Off

CoinDesk – April 27, 2022 at 1:57am

Twitter sold all shares of its company to Tesla CEO Elon Musk at his offered buying price of $54.20 per share. The total valuation of the sale amounts to $44B in cash, resulting in the complete and utter privatization of Twitter.

In early April, Musk revealed that he had obtained a 9.2% stake in Twitter for $2.89B. At the time, he indicated in a regulatory filing with the SEC that he hoped to make Twitter “the platform for free speech around the globe” with his investment. Since then, Twitter shares have risen about 5.5% to $51.63 on Monday. The $54.20 per share offer price represents a 38% premium to the share price on April 1, 2022, which was the final trading day prior to the announcement of his stake in the company.

Naturally, the crypto world has tuned into this ongoing Twitter takeover given Musk’s support of Dogecoin (DOGE). Earlier this week, its price spiked nearly 9% within the hour of reports of the sale going public to a price of $0.14. Since then, the price has increased by more than 20%. Likewise, Twitter (TWTR) futures trading also jumped 6.48%. 

While the price of DOGE and Musk’s actions are not directly correlated, speculation that Musk might include DOGE as a payable currency within the Twitter platform certainly has a noticeable impact on its price.

3. Central African Republic Is the Next Country to Adopt Bitcoin as Official Currency

Bloomberg - April 28, 2022

With the declaration of Bitcoin as an official currency, the Central African Republic becomes the second nation after El Salvador to accept cryptocurrency as legal tender.

According to Flux Trends financial expert Bronwyn Ruth Williams, Bitcoin is an attractive alternative currency for underdeveloped countries where the regulation of the supply of national currencies is unregulated because it provides them with the ability to receive international loans. In addition, the technology used for cryptocurrency is cheaper and simpler than other forms of traditional finance.

The Central African Republic is a country that has large natural stores of diamonds and gold, but it is also one of the poorest countries in the world. Several years of conflict and political crisis before its presidential election in December 2020 severely impacted the economy and damaged its international relations, resulting in the suspension of some humanitarian aid and financial support.

4. Goldman Sachs Officially Provides “Bitcoin-Backed” Loan

Yahoo! News - April 29, 2022

Goldman Sachs is the first bank to provide bitcoin-backed loans to its customers en masse. While many banks on Wall Street have explored using cryptocurrency as collateral, Goldman Sachs is the first to actually take this step of integration.

According to Bloomberg, a spokeswoman of Goldman Sachs shared that the firm recently extended a secured lending facility to accept Bitcoin owned by borrowers as collateral for fiat currency loans.

Previously, bitcoin miners reluctantly sold portions of their Bitcoin rewards gleaned from block production in order to cover the expenses of their energy-dependent mining operations. Today, with a Bitcoin-backed loan, miners can reap the rewards of their work without having to sell it off thanks to a bitcoin-backed loan. The move by Goldman Sachs is certainly an indication of its insistence to impact the space.

This news follows various headlines regarding Goldman Sachs’ swift approach to the world of crypto. Within the past two months, Goldman Sachs offered its customers a new way to approach purchasing ETH through its Galaxy Digital fund. The firm also partnered with FTX to launch a new “crypto alliance” and explore OTC crypto trading.

5. BlackRock and Fidelity Launch Crypto ETFs

Coin Bureau - April 13, 2022

Last week on Friday, investment fund giant Fidelity announced two new exchange-traded funds (ETFs), which focus on Metaverse and cryptocurrency assets. The two investment securities do not contain crypto-assets themselves but provide investors with exposure to the “evolution and future of the internet” via companies that support the digital ecosystem. According to Fidelity, the ETFs are comprised of various companies, “including those involved in crypto mining and trading, blockchain technology, and digital payments processing,”

Less than a week later, BlackRock, the world’s largest asset manager with over $10 trillion worth of assets under management, followed suit by offering its own Blockchain ETF. The new ETF is another addition to the “Megatrends” investment category from BlackRock, comprised of other investment themes like Agriculture Technology and Emergent Food.

Prior to the new ETF launch, BlackRock issued a report, in which the firm forecasted major changes to the global market environment – one of which is the emergence of blockchain technology around the world.

“The way we watch television or decide what to eat for lunch is starkly different than pre-smartphone days. Yet, marketplaces themselves have not changed course: suppliers and platforms have steadily increased their power over personal data, economic rent, and financial access.

With blockchain technology, consumers are acquiring independence not historically afforded by marketplace dynamics: crypto assets empower users by offering financial inclusion to the unbanked and allow users to regain control over the $150 billion annual market for their personal data.”