Stablecoins: A New Weapon against Inflation?

Audy Castañeda
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<strong>Stablecoins: A New Weapon against Inflation?</strong>

While the entire world seems powerless against inflation, certain types of stablecoins have the potential to outsmart.

Most fiat currencies, including those of major economic powers, are vulnerable to hyperinflation. Of course, whoever refers to inflation implies decrease in purchasing power. That is why it is recommended to invest in inflation resistant assets.

Cryptocurrencies can reduce the effects of hyperinflation, experts say, but Bitcoin’s performance over the past twelve months belies this. For example, El Salvador has lost over $60 million since making Bitcoin legal tender.

It is true that cryptocurrencies have yet to prove their worth when it comes to fighting inflation. However, the evidence points at the fact that they could at least slow it down. Some stablecoins have the potential to limit the effects of inflation on the purchasing power of citizens.

What Is the Stablecoins Contribution?

In the world of decentralized finance (DeFi), stablecoins are everywhere. In fact, stablecoins are used by dApps, market makers, crypto lending platforms, derivatives exchanges, and asset managers to optimize the experience for their users.

Beyond DeFi, stablecoins have created new opportunities for the most vulnerable categories, especially in countries where banking services are limited. Thanks to this asset class, citizens of certain developing countries can now participate in international financial markets safely and conveniently.

For example, international wire transfers, which used to require cumbersome procedures, are now much simpler and more affordable for foreign workers who want to send funds home to their families. Most of these workers discovered cryptocurrencies and stablecoins during the 2021 bull run, and governments have tried to tarnish the reputation of this asset class ever since.

Certainly, stablecoins offer many advantages, but their algorithms have not developed as fast as other segments of crypto. In addition, rising dollar inflation has caused new problems for this asset class.

Most stablecoins are backed by inflation-vulnerable fiat currencies. Therefore, when the purchasing power of fiat currency decreases, the stablecoin that follows its value also depreciates. Although the performance from yield farming rigs can be attractive, it should not be forgotten that the annual inflation rate in the United States is over 7.5%.

A New Generation of Stablecoins to Fight Inflation

Despite their drawbacks, algorithmic stablecoins are increasingly being used to fight inflation. Instead of replacing fiat currencies, this new generation of stablecoins tries to coexist with them.

For example, Volt Protocol is a lending platform that offers a native stablecoin called VOLT. To stabilize the token, the platform adjusts its price according to the Consumer Price Index (CPI). For example, if inflation reaches an annual rate of 7%, VOLT will be indexed at $1.07.

To prevent stablecoins from losing their credibility, their issuers must be able to provide reliable data on the Blockchain. This will allow investors to understand how fluctuations in the inflation rate affect their purchasing power and investments.

By Audy Castaneda

How High Can BTC Go Now?

Audy Castañeda
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0
<strong>How High Can BTC Go Now?</strong>

Experts debate whether bulls or bears will drive price developments in 2023.

The start of the new year also marked the start of Bitcoin price and crypto market predictions, both on social media and on major platforms. Experts debate whether bulls or bears will drive price developments in 2023. Last year, the bears took over, sending the benchmark cryptocurrency back to 2020 levels.

Bitcoin is currently trading at $16,700, even managing to post a small profit during today’s trading session. On higher time scales, the cryptocurrency continues to see sideways price action.

The Best is Yet to Come for Bitcoin

According to a CNBC report, the Bitcoin price is about to undergo an extreme trend reversal. Bullish experts, such as BTC bull Tim Draper, believe that the cryptocurrency will trend higher from its current levels.

Draper is convinced that the benchmark cryptocurrency will see a 1,400% rally, regain previously lost territory, and explode to a whopping $250,000 by mid-2023. Background: BTC bulls believe, among other things, that macroeconomic conditions will significantly increase the spread.

A certain demographic will lead this potential new wave of adoption, which will coincide with the upcoming Bitcoin halving. Although this event is not scheduled until 2024, the market has historically priced in its impact much earlier. Draper comments on this:

“I expect the dam to break soon as women control 80% of retail spending and only 1 in 7 Bitcoin wallets is currently in the hands of women.”

Carol Alexander, a finance professor at the University of Sussex, also believes that Bitcoin will rise again. She sees two rallies in the short term: the first could send the Bitcoin price back to $30,000 and the second to $50,000.

With FTX and Three Arrows Capital collapsing, Alexander expects less competition in the market, which could result in other prominent players pushing BTC higher. The professor explains it as follows:

“In 2023 there will be a controlled bull market, not a bubble, so we won’t see price exaggerations like we’ve seen so far. We’re going to see a month or two of stable, range-bound price trends and probably some short dips.”

Bearish Scenario: How Low Could BTC Go?

Better macroeconomic framework, acceptance, halving and supply adjustment and less competition. These are the factors that speak for Bitcoin.

However, there are also pessimistic voices. Eric Robertsen of Standard Charted, for example, believes that the bitcoin price could return to 2020 levels and fall as low as $5,000. Lack of investor confidence and further capitulation by crypto companies could trigger this scenario.

Low liquidity in this sector makes matters worse. Current market conditions could see further downside movement if the US Federal Reserve (Fed) continues its tightening monetary policy.

According to Mark Mobius, who successfully predicted Bitcoin’s drop from $30,000 to $20,000 by 2022, the cryptocurrency could fall to around $10,000 if the Fed tightens further. Mobius emphasizes that “with higher interest rates, holding or buying bitcoin or other cryptocurrencies becomes less attractive, because just holding the currency does not earn interest.”

By Audy Castaneda

Winklevoss Fights with Genesis over Debt Payment

Audy Castañeda
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<strong>Winklevoss Fights with Genesis over Debt Payment</strong>

According to Winklevoss, Digital Currency Group subsidiary Genesis owes $1.675 billion to Gemini. The controversy led three Gemini Earn customers to file a class-action arbitration request.

On Monday, Cameron Winklevoss, the co-founder of cryptocurrency exchange Gemini, accused Digital Currency Group CEO Barry Silbert of “bad faith tactics to get in the loop” in settling a $900 million debt payment.

The publicly released letter from one of the Winklevoss twins to Silbert alleged that Gemini had waited six weeks trying to bring in Genesis Global Capital and its parent company Digital Currency Group for a redemption discussion, but failed.

“For the past six weeks, we have done everything we can to engage with you in a good faith and collaborative manner in order to reach a consensual resolution for you to pay the $900 million you owe, while helping you preserve your business,” the Winklevoss letter read. “However, it is now becoming clear that you have been engaging in bad faith stall tactics.”

Winklevoss revealed that Gemini sent two payment proposals to Silbert and his companies, but has yet to receive a response or provision to resolve the issue. He added: “Every time we ask you for a tangible commitment, you hide behind lawyers, investment bankers, and process. After six weeks, your behavior is not only completely unacceptable, it is unconscionable.”

According to Winklevoss, Digital Currency Group subsidiary Genesis owes $1.675 billion to Gemini, which belongs to “Earn users and other creditors.”

Winklevoss vs. Silbert

Silbert also responded to the allegations, tweeting that DCG “did not borrow $1.675 billion from Genesis,” and that “DCG has never missed an interest payment to Genesis and is current on all loans outstanding; next loan maturity is May 2023.”

DCG delivered to Genesis and its advisors a proposal on December 29th and has not received any response. However, Winklevoss disputed these claims, revealing that Genesis borrowed the proceeds with promissory notes. His tweet reads as follows:

“There you go again. Stop trying to pretend that you and DCG are innocent bystanders and had nothing to do with creating this mess. It’s completely disingenuous. So how does DCG owe Genesis $1.675 billion if it didn’t borrow the money? Oh right, that promissory note…”

Class Action Arbitration Request

In response to the public dispute between Winklevoss and Silbert, three Genesis users have filed a request for class action arbitration against Genesis Global Capital and Digital Currency Group. They alleged that Genesis failed to return their assets and those of other Gemini Earn users and thus violated the Master Agreement between the two companies. They further accused Genesis of hiding its insolvency status from its clients.

Gemini and Winklevoss twins are also facing a class action lawsuit from investors for failing to register their Earn products as securities.

Gemini abruptly halted redemption of its interest-bearing crypto products, offered under Gemini Trust Earn, in mid-November, just after Sam Bankman-Fried’s FTX filed for bankruptcy. The move was made as the collapse of FTX triggered a liquidity crisis at Genesis Trading, one of the main borrowers of Gemini’s credit products.

By Audy Castaneda

BTC/USD Forecast for January 2023

Audy Castañeda
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0
<strong>BTC/USD Forecast for January 2023</strong>

Bitcoin continues to languish near dangerous lows, after flirting with a brief rally late in the second week of December.

With the arrival of the new year, the BTC/USD pair will start 2023 under the same shadows. Time has given no solace to Bitcoin bulls who keep dreaming of higher values ​​than were promised by influencers and crypto evangelists.

BTC/USD continues to trade at the lower depths of its range and is currently testing the 16,600.00 ratios. The world’s most famous cryptocurrency is now often used as a storyline in jokes when referring to the world of digital assets and all the things that have gone wrong.

Technical Analysts May Have the Sense of a Bottom in BTC/USD

Some potential speculators are wondering if now is a good time to buy Bitcoin because it is so “cheap”, and because it has produced what appears to be supported since late October. Anyone who answers this question with a yes should be treated with skepticism.

At best, BTC/USD remains just a speculative asset, having no intrinsic economic value. If you buy Bitcoin with long-term aspirations of great wealth, you might want to take a look at all the people who have bought BTC/USD at higher prices and lost huge sums of money.

It is reasonable if you are looking for a technical perspective as a potential bullish buyer, and are a day trader looking for quick profit potential. However, you must admit that, as a trader, you are playing with volatile fire.

Events in the world of cryptocurrency finance remain poor in terms of news flow, and positive stories are unlikely to emerge in the coming weeks. The 16,500.00 regions could be important as support for short-term buyers, but if Bitcoin turns vulnerable and the price sustains below, there are many reasons to suspect that the Bitcoin price could find an “express train” at lower depths.

BTC/USD Outlook for January

Bitcoin miners need a high BTC/USD price to make their transaction features worthwhile; they also need a higher Bitcoin price for BTC mining to be profitable. More importantly, exchanges like finance serve as the backbone for traders of BTC/USD and other cryptocurrencies. A lack of confidence in the stock markets is very bad for market conditions.

If Bitcoin falls below 16,000.00 in the coming weeks and shows a sustained ability to stay below this ratio, it could make BTC/USD holders very nervous and start forcing them to sell. If the selling turns aggressive, it doesn’t take much to think that BTC/USD may drop to new lows and surpass the depths seen in mid-November. A value for Bitcoin below 15,000.00 is not difficult to imagine.

If a trader wants to bet on pullbacks to the upside, it is very possible that profits can be achieved. However, the bet must include a tight take-profit target, a strict stop-loss mechanism, as well as good luck in choosing the right time to place the bet for the day.

By Audy Castaneda

Bitcoin in 2023 Can Double its Market Price this Year

Audy Castañeda
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0
<strong>Bitcoin in 2023 Can Double its Market Price this Year</strong>

New regulations are expected to arrive in some countries for cryptocurrencies. Some analysts believe that a new rally will come for Bitcoin.

Everything always depends on how you look at it, and that seems to indicate the year left behind for Bitcoin. Despite its annual fall, which means losing more than two-thirds of its price while it seems to stabilize between 16,000 at the bottom and 20,000 at the highest, the first cryptocurrency on the market sees how its low price has made a significant change to the whales in the last month.

Even some of the big investors continue to collect, at these prices that, considering demolition, hold significant amounts of value. This is the case of one of its great defenders, Mark Cuban, who returns to the refuge or reserve value of Bitcoin, to revile the role of gold.

He goes further, however, indicating that he hopes that Bitcoin will drop much more to be able to collect more cryptocurrency, to the later sentence that “if you have gold, you are stupid” while encouraging people to buy Bitcoin on YouTube. His final judgment is that owning physical gold…is not practical in the digital world.

Bitcoin Could Double its Value, According to Michaël van de Poppe

While the very followed Twitter analyst of the cryptographic market Michaël van de Poppe considers that, in this recently started exercise, Bitcoin could double its value. From a technical point of view, it indicates that Bitcoin is moving with support at $12,300, and resistance at the top of the price at $18,600 at that time.

The analyst further notes that anything below its high, $18,600, can be considered a continuation of the trend. He also indicates, though, that if Bitcoin can break above $20,600, it could reach $29,200. dollars and, probably, it will continue to move towards 38,500. Only after that level, it would be necessary to think about sales.

Cryptocurrency Legislation in 2023

Another aspect to take into account in 2023 will be legislation. In the United States, with Congress about to start a legislature, beyond the antitrust regulations on Big Tech, experts believe that the turn will come to crypto regulation, especially after the bankruptcies that have occurred. In fact, there will be a new chairman of the House of Representatives Financial Services committee, Patrick McHenry, who is in favor, as a priority, of creating a clearer regulatory framework for cryptocurrencies and who should be in charge of that supervision.

To conclude, for this year, Changpeng Zhao estimates that the sector will have to manage the consequences and effects of the fall of FTX and that this fact will continue over time. Although he considers that, despite the declines among cryptocurrencies, the sector is likely to recover from this setback relatively quickly, given the market resistance. And this will happen, he says, regardless of whether the recovery comes in a month or a year for the crypto industry to show itself to be exponentially stronger.

By Audy Castaneda

Cryptocurrencies in 2023: the Top Three Predictions

Audy Castañeda
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0
Cryptocurrencies in 2023: the Top Three Predictions

There is a great opportunity to buy cheap cryptocurrencies, which most likely should increase in value in the medium and long term.

Crypto fans have had to go through a lot in the last 12 months. There were price declines, bankruptcies, and a lot of uncertainty in the market. Therefore, 2023 could be a new beginning for cryptocurrencies and the crypto market. What are the top three predictions and forecasts for 2023?

What can be expected from cryptocurrencies in 2023?

For now, one might expect the bear market to continue into 2023. Over the past few days and weeks, it doesn’t look like cryptocurrency prices are likely to see increases again. But there is a lot to suggest that 2023 could be another positive year for cryptocurrencies.

This would now be the second year of the current bear market; a return to the bull market this year is unlikely. A bear market in the Bitcoin cycle lasts 2-2.5 years. But that does not mean that cryptocurrency prices will not rise in the next 12 months.

Here are the three biggest predictions for the coming year:

Prediction #1: Bitcoin Price Sees a Longer, Strong Rally

The Bitcoin price could see a strong rally again in the coming weeks and months. The price of Bitcoin was able to rise from $3,500 to $10,500, a tripling.

This could be repeated one way or another in the coming months. Right now, the price of Bitcoin is probably severely undervalued, due to the latest interest rate hike by the US central bank, the FED. The course could increase again to a value that corresponds to the current adaptation of the cryptocurrency.

Prediction #2: Polygon Will Continue to Perform Strongly

The year 2023 should also be successful for Polygon (MATIC). This time, however, the price should rally stronger again, and could even move up a few spots on the cryptocurrency chart by market cap in the coming months. In 2023, we see a strong price increase in MATIC, as well as a rise in the listing.

Prediction #3: Binance’s Dominance among Cryptocurrency Exchanges Will Continue to Rise

In recent weeks, there has been a lot of discussion about Binance, and the financial situation of the largest cryptocurrency exchange. A Binance implosion seems highly unlikely as of today. The concentration of power in Binance should continue to increase in 2023, which will be watched critically by the crypto community. However, smaller exchanges are more likely to suffer from the crypto exchange confidence crisis, as most minor investors are more likely to trust the market leader.

Given the abovementioned, it is worth remembering that before making any major financial decisions, it is best to do your own research.

By Audy Castaneda

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