Bitcoin’s Validation – Chung’s Weekly Summary (8/12)
Institutional clients are jumping on the crypto bandwagon as Bitcoin receives validation as a viable asset class.
Coinbase-Blackrock Partnership
Bitcoin ($BTC) pumped on a few positive news that saved the crypto market from crashing further as crypto market sentiment improves. Blackrock, one of the largest asset managers in the world, is giving its US institutional investors direct Bitcoin exposure with the launch of a spot Bitcoin private trust.
The world is still waiting for the US Securities and Exchange Commission (SEC) to allow spot Exchange Traded Fund (ETF) for retail investors. If Blackrock is allowed to offer direct exposure to Bitcoin for institutional investors, this move legitimizes crypto as an investable asset class.
The US Consumer Price Index (CPI) data remained unchanged for the month of July at 8.5%, leading to an increase in Bitcoin’s price. The price of gas fell in July and counteracted increases in the food and shelter indices.
However, the worst is not over as the glut could be curbed by the next FOMC meeting scheduled for 20-21. September, when another significant interest rate increase is expected.
While inflation in the short term is likely to dampen investor confidence in crypto, excessive government money printing (as occurred during the pandemic) is likely to force institutions to seek safer havens. The dollar will devalue over time, and alternative asset classes may offer an escape route for these institutions.
Weekly summary
Market sentiment
Market sentiment has improved significantly as Bitcoin regained a market cap of $450 billion. Ethereum, on the other hand, hit a two-month high above $1,900. It is now consolidating just below the $1,900 mark, suggesting that the market’s enthusiasm for the long-awaited merger is not waning.
OKX and LinkedIn conducted a study focusing on Web 3.0 which concludes that the blockchain ecosystem is experiencing a sustainable boom and talent demand in the area continues to be strong.
The demand for talent is directly linked to developments in the space. Countries that adopt a proper regulatory framework will have a head start in this new economy as adoption accelerates.
The rally in the crypto market is likely to continue over the next few days as interest builds in Ethereum. However, the next FOMC meeting is likely to result in a short-term sell-off as traders are likely to choose to lock in profits and not be exposed to risk.
Coins to watch
- Solana ($SUN) – Solana is one of the leading contenders for second place in the smart contract network category. Ethereum’s problem of scalability will not be solved with the merger and therefore the main beneficiaries could be BNB Chain and Solana.
- Solana has built consistently, and has reduced the frequency of power outages.
- Losses from the recent Solana hack are limited. Security lapses are an important part of growth.
- $SOL has a better risk/reward ratio compared to the likes of $BTC or $ETH.
- Cronos ($CRO) – $CRO is the native currency of the Cronos chain. It is also a bargaining chip.
- Crypto.com is starting to stamp its presence in more jurisdictions.
- The list of tools for $CRO is listed here.
- $CRO will likely follow the path of $BNB, as it shares an almost identical ecosystem.
- If $CRO comes close to its previous record high, an investor could realize a 6.4x return on investment based on the current price.
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