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Crypto Investors Gear Up For Goldman Sachs’ $2B Shocker

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Crypto Market’s leading assets traded in the green on June 27, after going through major downdrafts. Bitcoin, XRP, Cardano, Doge, and the like have recovered after months of downturn. Dogecoin and Solana in particular have regained over 20% in the weekly index.

Bitcoin’s price too rebounded 20% since crashing to a low of under $18,000 last week.

But a recent report of Wall Street giant Goldman Sachs looking to raise $2 billion to buy up distressed assets of beleaguered crypto lender Celsius has generated quite an attention.

Anonymous sources familiar with the matter said if the proposed deal goes ahead, investors would be able to buy Celsius’ assets at potentially steep discounts in the event of a bankruptcy.

The move comes after Goldman’s recent bullish push into crypto, including establishing its own trading desks and gauging interest from institutional investors in lending products.

For those new to the market, Celsius was on the brink of insolvency after suspending user withdrawals from the platform earlier this month, citing “extreme market conditions”. This in turn accelerated a price crash that sent bitcoin spiraling under $20,000.

According to a Forbes report, Goldman Sachs’ reported deal for Celsius’ crypto assets is likely to infuse some degree of confidence into crypto traders who were left rattled by the mega sell-offs.

Recently. digital assets exchange FTX was reportedly in talks to acquire a stake in BlockFi after the trading platform extended a $250 million credit to the lending firm.

Crypto Bailouts To Embattled Projects

According to a report from the Wall Street Journal, FTX is currently in talks with BlockFi regarding purchasing a stake in the firm, but so far no equity agreement has been finalized.

FTX founder and CEO Sam Bankman-Fried a.k.a SBF, has provided a helping hand to many crypto projects amid a bear market that forced many firms to cut down staff.

However, it’s not clear if FTX’s reported intent to buy a stake in BlockFi was linked to financial difficulties at the crypto lending firm amid a bear market.

On 22nd June, Trading firm Alameda Research, under SBF’s management, announced it had provided loans worth 15,000 Bitcoin [BTC] to Voyager Digital which is seeking to cover losses from its exposure to Three Arrows Capital [3AC].

Will The $2T Crypto Market Crash Trigger Mass Recession?

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The current turmoil in the crypto market has seen several big names in the industry collapse which has fuelled FUD that a global recession might be underway. The market cap has dwindled by more than $2 trillion in value in a matter of months.

Retail traders who invest big have been on the receiving end, some of them losing their entire life savings. This has triggered a discussion on the spill-over effects on the broader U.S. economy.

According to a CNBC report, a few economists and bankers remain unperturbed. Speaking in an interview, they said there is a lesser chance of affecting the broader U.S. economy for one solid reason i.e, Crypto is not tied to debt.

“People don’t really use crypto as collateral for real-world debts. Without that, this is just a lot of paper losses. So this is low on the list of issues for the economy,” said Joshua Gans, an economist at the University of Toronto.

Gans says that’s a big part of why the digital asset market is still more of a “side show” for the economy.

“Crypto Borrowing Exist In an Industry-Specific Echo Chamber”

The economist then went on to say, traditional assets remain relatively stable over a certain period of time making them good collateral compared to crypto.

“What you haven’t seen with these assets class, simply because of their volatility, is that same process by which you’re able to use it to buy other real-world assets or more traditional financial assets and borrow off that basis,” explained Gans.

“People have used cryptocurrency to borrow for another similar currency, but that’s sort of contained in the crypto world.”

Meanwhile, Wall Street veteran and Bitcoin bull Mike Novogratz has just given one of the grim outlooks yet. This week Novogratz  told MarketWatch that “the economy is going to collapse,” adding, “We are going to go into a really fast recession, and you can see that in lots of ways.”

He however did not make any reference to the crypto market.

Novogratz, CEO of crypto merchant bank Galaxy Digital, pointed to the housing market, which is finally cooling down after a two-year successful stint, and inventories piling up as signs of an impending recession.

El Salvador Minister Calls Fiscal Risk “Extremely Minimal” Despite Reduced Bitcoin Reserve

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 El Salvador’s Finance Minister Alejandro Zelaya on Monday has refuted concerns that bitcoin’s price tumble would hurt the Central American nation’s fiscal health. Speaking at a press conference, Zelaya said

“When they tell me that the financial risk for El Salvador because of Bitcoin is really high, the only thing I can do is smile. The fiscal risk is extremely minimal.”

After charting history by becoming the first nation to make bitcoin a legal tender, El Salvador has been at the receiving end of credit agencies around the world with Moody’s reducing the country’s debt rating to CAA1 in July 2021, indicating that it is at risk of defaulting on loans.

International Monetary Fund [IMF] too had sent out warnings and urged the Central American nation to reconsider and change its decision.

But that hardly made any impact as, since last September, El Salvador’s government has purchased 2,301 units of the cryptocurrency, which fell on Monday to its lowest value since 2020.

In the past few months, El Salvador’s President Nayib Bukele had made it a routine to announce “buy the dip”, through his official Twitter handle and boast about locking in at lower prices. The country’s bitcoin reserves were around $71.4 million at the time of Bukele’s last Twitter update.

El Salvador’s Reserves Have Depreciated To A Low Of $52 million

Now, with market conditions massively driving down the price of Bitcoin, El Salvador’s reserves have reduced to a low of $52 million. Bitcoin’s value has dropped nearly 50% since it became legal tender in the country.

In addition to that, the country has continued to put on hold the much anticipated $1 billion offerings, which are supposed to fund El Salvador’s “Bitcoin City,” following turbulence in the markets.

The bonds were often touted as one of the nation’s last financial resort. According to a recent estimate from Deutsche Welles, the country’s BTC portfolio had shed some $40 million in value.

When confronted with the findings, Zelaya chose to downplay saying the loss hardly impact its economy. “Forty million dollars does not even represent 0.5% of our national general budget,” he said.

Cryptocurrency market value slumps under $1 trillion

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The value of the cryptocurrency market fell below $1 trillion for the first time since January 2021 according to the data site CoinMarketCap, reaching as low as $926 billion.

The global value of the cryptocurrency market peaked at $2.9 trillion in November 2021 but it has faltered so far this year. It has lost a value of $1 trillion in the last 2 months alone. And now the investors are ditching riskier assets in the face of high inflation and also fearing that the interest rates will rise by the central banks and it would potentially hamper growth.

The largest cryptocurrency, Bitcoin was down by more than 10% on the day, falling to $23,750. It is down by around 50% so far this year. Ethereum [ETH] fell over 15% to $1,210.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said,

“As inflation proves to be an even trickier opponent to beat than expected. Bitcoin and Ether are continuing to get a severe bruising in the ring.”

Anthony Scaramucci, the founder of Skybridge Capital, a 3.5 billion asset management firm has some advice for crypto investors on how to survive the bear market and a crypto bloodbath.

He said that investors should “Recognize that bear markets happen,” adding that “they probably happened one out of every five years if you look at it over the last 120 years.” He noted: “If you stay disciplined during those periods of time, you got yourself very wealthy, and I think that is the message for investors.”

If we look at this from another angle, though the value of the cryptocurrency is declining, there are still retailers who want to buy them at this stage according to a survey conducted by the Bank of America. So there is still a narrow hope that this bearish trend will end and the bullish notion will begin very soon.

Bank of America survey reveals 90% of Respondents plan to buy Crypto in 2022

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Bank of America survey reveals that 90% of respondents plan to buy crypto in 2022. Although this time of the year the situation of the cryptocurrency is depreciating and experts are terming this lowering graph to be Crypto Winter. Yet, in the midst of this, a survey conducted by the Bank of America states that most retailers are planning to buy cryptocurrencies as soon as this year.

According to a survey of 1000 people conducted by the Bank of America in early June, it has been observed that 90% of respondents are preparing to buy cryptocurrencies within the next 6 months.

In addition to this, the study reveals that the number of users who own cryptocurrencies was similar to the number who wanted to buy them. This means that the enthusiasm for cryptocurrencies is far from over.

However, there are critics such as Warren Buffet who are skeptical of cryptocurrency every now and then have something to say on his part.

According to the Berkshire Hathaway CEO, Bitcoin does not produce anything which is valuable whether or not its price goes up. According to him, cryptocurrency is a passive asset and investors hold them hoping its price will go up in the future.

Comparing BTC to other options, Buffet points out that Bitcoin as an asset could not beat or surpass other productive assets such as Farmlands and Apartments that produce food and rent. As a result, he says that he is not ready to invest in it even if all the bitcoins in the world are sold to him for $25.

According to the report by Bank of America, despite the massive decline of the crypto market, still, 30% of the respondents said they would not sell their cryptocurrencies during the next 6 months. This highlights their hope for the bearish trend to end and the bullish trend to begin once again.

Currently, Bitcoin has fallen far below the $30K support zone after almost a month of tight consolidation. Jason Kupferberg an analyst of Bank of America said in an interview for CNBC that he is hopeful about the state of the cryptocurrency and that it is going to change as he sees that the investors are positive about buying cryptocurrency in spite of the depreciating condition of the cryptocurrency and also the collapse of Terra’s Luna coin.

Here’s What Crypto Analysts Have To Say On Federal Reserve’s Next Move

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The crypto market-wide correction in Q2 is set to change as investors are fervently waiting for Federal Reserve’s action at next week’s meeting. As Santiment pointed out, price volatility is expected to continue over the next few days.

In particular, Bitcoin’s price has shed nearly 40% from its peak of almost $70,000 per BTC late last year. Ethereum too is down by nearly half.

Other major coins like Binance’s BNB-2.7%, Ripple’s XRP -4.9%, Solana, Cardano, Terra’s luna, and Avalanche have all fared poorly, erasing $1.2 trillion from the combined crypto market in a matter of months.

Experts attribute its correlation to other risk assets, which as a whole have reacted in tandem to war in Ukraine, disruption in the supply chain owing to Covid cases surge in China, current interest rate hikes, and future balance sheets machinations by the Federal Reserve.

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Here's What Crypto Analysts Have To Say On Federal Reserve's Next Move 2

Joe Haggenmiller, head of markets at leading crypto finance company XBTO Group says “Macro uncertainty has driven all risk-on assets downwards over the last few months, including bitcoin.”

During the Covid-19 pandemic, the Federal Reserve came with a massive stimulus program doubling its balance sheet double, and interest rates fell to an all-time low. As a result, markets were flooded with liquidity in a bid to offset the economic damage of Covid-19 and lockdowns.

The Crypto market might recover if Fed adopts a less aggressive stance

After the pandemic showed signs of receding, inflation reached unprecedented levels causing the Fed to reverse its earlier policy.

Recently, Federal Reserve chair Jerome Powell signaled a half percentage point interest rate hike for the next week’s meeting. Due to this, the market is braced for the central bank to begin reducing its huge $9 trillion asset portfolio as it fights rising inflation.

But some feel the central bank might become less hawkish to avoid a recession-like scenario. Marcus Sotiriou, an analyst at the U.K.-based digital asset broker GlobalBlock said, “This is bullish for risk assets like bitcoin and equities in my opinion.”

Nonetheless, Bitcoin, crypto, and stock market traders are carefully watching for any telltale signs that the Fed might divert from its move when it meets this week.

Robinhood grabs other stars as it lets go of one

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Christine Brown, the Robinhood executive in charge of the trading platform’s cryptocurrency ambitions, announced her departure in a tweet on Tuesday. Brown, who worked at the firm for five years, said she would stay in the crypto area, although she didn’t say what venture she would be engaged with. Brown said,

“I’m moving on to start something new. I joined RH when it was under 100 people—before we even offered a crypto product. Watching us grow through IPO and serving more than 22m users has been the greatest professional experience of my life.”

Furthermore, Robinhood Chief Operating Officer Gretchen Howard told local media,

“We’re so grateful to Christine for her contributions over the past five years – from leading our self-clearing initiative to scaling our Crypto team. We’re excited to follow her entrepreneurial journey going forward.”

Robinhood gets closer to its all-around-the-clock dream

Because RH Markets hasn’t been able to grow its user base in recent quarters, the company is doing the next best thing: providing existing consumers even more trading time. Customers will be able to purchase and sell shares from 7 a.m. until 8 p.m. Eastern time, according to the investing app.

Customers can trade from 9 a.m. to 6 p.m. today on Robinhood. They can now log on after work or other duties, or check their phones first thing in the morning, thanks to the extra hours.

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The more clients can trade equities around the clock, the more the stock market will mirror the cryptocurrency market, where traders sometimes feel compelled to follow Asian markets after they go to bed, and even on weekends. Robinhood has also advocated for quick transaction settlement, which it claims will reduce client risk. It also has the potential to lower the company’s capital requirements.

After-hours trading was once thought to be too risky for typical investors, but in the last two decades, electronic trading and looser rules have made after-hours trading accessible to a far larger number of investors.

Retail traders should have the same access to services as institutional traders, according to RH, and this new functionality reflects that attitude. At the same time, it appears to contradict RH’s recent shift toward encouraging investors to use tried-and-true investment practices. Although Robinhood has been known for its speed, this may not be a competitive advantage.

FTX embarks into Australian crypto market

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Following the acquisition of a key financial license in Australia, prominent cryptocurrency exchange FTX has officially opened its doors, as reported by local media. The company’s CEO Sam Bankman-Fried announced its formal debut of FTX Australia during a virtual talk to a gathering assembled for the country ‘s yearly Blockchain Week.

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Sam Bankman-Fried, CEO of FTX

Following the acquisition of an undisclosed company that formerly held an Australian Financial Services Licence, the crypto exchange has established a local presence. Other big exchanges, such as Binance and Kraken, had previously created a local presence in the last two years, and this decision seems to be in line with them.

Australians have had access to the exchange’s global basis for a while, but FTX is seeking to be in the foreground of the regulatory curve by satisfying policymakers and engaging with authorities ahead of time. In addition, Bankman-Fried said,

“We’d love to work with regulators and lawmakers on understanding the crypto ecosystem and build out regulatory frameworks for analyzing them.”

He went on to say that the firm was doing everything it could to help build a strong, healthy ecosystem in the country that prioritized consumer protection. According to a statement released on Sunday, the domestic exchange would offer most of its parent company’s bells and whistles while offering its goods in the crypto derivative and spot markets. It has also been announced that options contracts, futures contracts, contracts for difference, and leveraged tokens will be issued by FTX Australia, which will be based in Sydney.

Australia serves FTX as regional hub

When asked why he thought Australia was a significant territory that global exchanges should pay attention to, the 30-year-old CEO said the country had a huge chance to advance the rest of the continent through innovation.

According to the exchange, the establishment of an Australian subsidiary highlights the firm’s long-term commitment to the local market and is the inevitable next stage in its global expansion.

Furthermore, the exchange was awarded a licence to operate in the United Arab Emirates this week, following the passage of the UAE’s Virtual Asset Regulation Law, which also established a watchdog to oversee the nascent industry.

Can Crypto Rise Above The Current Global Mayhem?

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The crypto market kickstarted the week on a positive note for the second consecutive day. On the 1st of March 2022, the price of Bitcoin gathered momentum as it hit $44K at one moment despite the selloff in other risky assets. Amid the geopolitical crisis arising out of the Russian invasion of Ukraine, cryptocurrency transactions in those two warring nations surged.

Speculators feel that the current spike in transaction volume was partly due to the announcement of sanctions from the U.S. and its allies. Miami bureau chief for Bloomberg Jonathan Levin put out a thought-provoking article on the current crypto market situation. Levin questioned whether the current market buoyancy is good for the digital asset industry.

“It’s not as simple as that”, argues Levin. Both Ruble and Hryvnia-based crypto trading pairs witnessed a sharp increase since the U.S. announced its first sanctions on Russia on Feb. 22, according to research firm Chainalysis. The experts pointed out the possibility that some of that may represent illicit funds. 

Ukraine and Russia are ranked No. 4 and No. 18 in Chainalysis’s Global Crypto Adoption Index. Levin said, “in that sense, it’s understandable for their residents to stash their money in digital coins amid the mayhem.” He hailed this as a victory for crypto innovation.

However, if it is being used to evade sanctions which he notes that it’s happening to some extent, is harmful to assets like Bitcoin.

The argument of crypto being a haven for illicit funds is getting old

According to Levin, cryptocurrencies’ main appeal lies in the fact that “they’re not issued or controlled by any state or central entity”. But critics in Congress and at regulatory agencies beg to differ, continue to refer to crypto’s illicit use. On the other side, there’s has been intense debate over whether monitoring digital assets are as difficult as envisaged.

Last month, the U.S. confiscated more than $3 billion worth of bitcoins stolen in a 2016 hack, highlighting the capabilities of authorities in tracking the on-chain money trail. Levin concludes that the pump in demand may help boost the prices in an upward momentum for now, but cautions that the asset class’s fight for broader adoption would be dented if it is directed towards funneling illicit activities.

Crypto Market Traded In Green As Bitcoin Touched 44K Amid War FUD

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Bitcoin posted some much-awaited recovery after nearly approaching the $44k mark on 28 February 2022. This comes close on the heels of heightened negativity among investors towards the dominant coin in 16 months. Altcoins too followed a similar trajectory with many prices returning to mid-February or earlier levels.

This price surge took many traders by surprise in the backdrop of looming geopolitical tensions that were already causing market stagnancy. In fact, as rumors of war evolved into full-scaled reality, prices swiftly dropped. However, less than 24 hours after Putin’s official announcement, the market cap had managed to salvage some of its losses as it nears $2 trillion.

According to prominent data analytical platform Santiment, markets have remained hesitant and stayed in a ranging pattern for most of the past few days prior to today’s breakout. But sentiments took a deep turn to the south, as social commentary began to shift negatively, as per the report.

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Santiment in its report observed that in the past, after a week of FUD and negative posts from the crypto communities, prices tend to bounce back higher. However, the report cautioned of short-term volatility that may impact given the rapidly evolving global political environment.

Is Bitcoin bouncing back only a short term affair?

The insight also raised the close correlation to global stocks which it termed as ‘concerning’ and that drifting away from it will be a ‘great sign’. Reading along with the same, the report added,

“Any breakout away from this kind of correlation, which today was a very good early sign, is excellent as a signal for a continued breakout for BTC and the rest of crypto.”

On the other hand, some analysts continue to remain cautious about geopolitical risks despite Bitcoin [BTC] and other cryptocurrencies trading higher on Monday.

Data from Glassnode indicated that a large portion of Bitcoin held by investors at around the $60,000 price level has found new buyers at the $35,000-$38,000 price range. That hint of a possible short-term price low. Some speculators however feel that BTC could follow a similar recovery pattern given its strong correlation with the S&P 500.