US Economy Decreased ‘Severely’ in the First Quarter of 2022

Jenson Nunez
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US Economy Decreased ‘Severely’ in the First Quarter of 2022

GDP crumbled down for the first time since the pandemic’s start in 2020, presenting clear signs of a slowdown in economic increase. But what does it mean for digital assets?

The US economy slowed markedly during the first three months of 2022. The data brought by the US administration, present clear signs of economic decrease for the first time in two years.

The North American nation’s gross domestic product (GDP), the broadest measure of economic activity, contracted at least 0.4% between January and March, the equivalent of an annual drop of 1.4%, highlighted the Office of Economic Analysis in a report launched this Thursday.

The metrics highlighted that the country’s economy decreased severely, considering that for the first quarter of 2021, it had marked a growth of 1.7%, or 6.9%, on an annualized basis. The slowdown comes amid a tense geopolitical panorama, with the current conflict between Russia and Ukraine causing oil prices to reach unprecedented peaks.

US Economic Decreasing

The government agency highlighted that the slowdown got generated by a surge in imports and a drop in private inventory investment, exports, federal government spending, and spending by state and local administrations, according to The Guardian. This situation is the worst performance since the second quarter of 2020 when the outbreak began.

The news arrived as a surprise, as the data reportedly crumbled down far short of economists’ estimates, which anticipated a 1% GDP increase. Paul Ashworth, the maximum representative of the US economy at Capital Economics, named the situation unexpectedly harsh.

Ashworth also highlighted that the report probably wouldn’t stop the Federal Reserve (FED), the country’s central bank, from continuing to raise interest rates. The Fed elevated rates in March when inflation reached a 40-year high of 7.9%. Fed Chairman Jerome Powell talked about a possible rate peak of 0.5 percentage points a few days ago.

The latest GDP data in the US coincided with recent inflation research. The Bureau of Economic Analysis highlighted this Friday that the primary personal consumption expenditure price index increased 5.2% from a year earlier.

The Fed’s favorite measure to track the inflation rate is the index, which follows the costs consumers pay for a vast range of products and tracks how behavior changes in response to market movements.

In Europe, the picture seems to be the same, as inflation in the eurozone is also rising to unexpected high peaks. In April, inflation in the nations of the European bloc reached 7.5%, according to estimates from the European statistics office revealed this Friday.

By: Jenson Nuñez

Ukraine Accepts Donations for the Sale of NFTs to Counter the Effects of the War

Alexander Salazar
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Ukraine Accepts Donations for the Sale of NFTs to Counter the Effects of the War

The website of Aid for Ukraine indicates that the initiative has risen by more than USD 60 million until now. It also states that they have already spent USD 45,103,538 on weapons, medical equipment, and first aid kits.

Mykhailo Fedorov, Deputy Prime Minister and Minister of Digital Transformation of Ukraine, recently wrote a tweet about war efforts. The official said the Ukrainian government would accept contributions in donations and purchases of non-fungible tokens (NFTs).

People can donate cryptocurrencies, fiat money, and NFTs through the cryptocurrency fund Aid for Ukraine. They point out on their official website that the initiative has raised more than USD 60 million until now.

They use all those funds to supply Ukrainians with weapons, medical equipment, and first aid kits. As of April 14th, the total expenses amounted to USD 45,103,538. Cryptocurrency exchanges FTX and Kuna and staking provider Everstake are in charge of powering the Aid for Ukraine platform.

The Government of Panama Approves a Bill to Regulate Crypto Assets

The National Assembly of Panama recently tweeted that they approved a bill to regulate the commercialization and use of crypto assets. They also mentioned the issuance of digital value, the tokenization of precious metals, and payment systems.

Congressman Gabriel Silva said that this law would allow Panama to consolidate itself as a Latin American hub for innovation and technology.

They aim to position Panama as a digital hub by transferring knowledge and developing innovative and disruptive businesses.

Goldman Sachs Issues a Bitcoin-Backed Loan for the First Time

American multinational investment bank Goldman Sachs recently took another bullish step into the cryptocurrency space. According to the Bloomberg media outlet, the financial institution offers Bitcoin-backed loans to its customers.

The investment bank decided to provide its first bitcoin-backed loan line after giving a cash loan in Bitcoin as collateral to a borrower.

In that way, they became the first Wall Street financial institution to offer loans in cryptocurrencies as collateral. Virtual asset service providers like Coinbase, Silvergate Bank, and Figure usually do that.

Cryptocurrencies are increasingly relevant in the economy, and traditional banks have not overlooked them. A growing number of financial institutions are incorporating those assets among their services.

Apollo Hires Christine Moy as Chief Digital Asset Strategist

American investment management firm Apollo Global Management recently hired Christine Moy to lead its newly-formed digital asset strategy department.

They stated that, in that newly-created post, Moy would lead digital asset strategy across the company. She will be responsible for looking for new ways to apply blockchain technologies.

The firm considers that she will also play a crucial role in their strategy to invest in the most innovative digital asset companies. They want to focus on those transforming the financial services sector, for which they will invest between USD 50 million and USD 250 million.

The application of blockchain technology in various financial services worldwide is growing over time. For that reason, banks are looking for experts in that area to help them optimize their operations and make more profit.

By Alexander Salazar

Goldman Sachs Confirms its First Bitcoin Loan

Jenson Nunez
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Goldman Sachs Confirms its First Bitcoin Loan

The attacker labeled his Bitcoin as collateral to obtain loot in cash. The attack is the latest sign of Wall Street’s focus on digital currencies. Cryptocurrency-backed loans are now a bitter reality on Wall Street.

United States banking giant Goldman Sachs took another step in accepting digital assets after bringing a first loan supported by Bitcoin (BTC). According to Bloomberg and its recent report, the giant bank brought US dollars in cash to a borrower in exchange for Bitcoin as collateral. The funds in digital assets were under the client’s control.

The new crypto lending feature seems to be part of a line of credit item activated by the consolidated financial entity. A Goldman representative gave vital information to CoinDesk about the service by highlighting that it recently expanded a secured line of credit where it lends fiat collateralized with BTC.

Wall Street Explores Crypto-Lending

While details about the new service are still few, the move arrives within Goldman’s most recent focus on consolidating its presence in the crypto environment. Recently, the bank has made many efforts to expand its offering of products connected to the new asset class.

The institution was the first big US entity to achieve an over-the-counter crypto sale. Specifically, Goldman carried out a trading operation with a Bitcoin-linked tool named a ‘non-deliverable option.’ The bank has already highlighted that it intends to set an expansion on its OTC offering to Ethereum.

This week, an important representative of Goldman, Mathew McDermott, revealed that the financial entity is exploring non-fungible tokens (NFTs) in financial instruments to achieve the “tokenization of real assets.”

The decisions show that Wall Street is increasingly taking new steps toward digital assets and the digital market. Investment bank Cowen built a digital asset unit in March; The world’s most prominent asset manager, BlackRock, recently played a vital role in the $400 million funding round for Circle, the creator of the USDC stable coin.

These names are just a simple demonstration. Other popular banking institutions like Morgan Stanley and JPMorgan have also immersed themselves in the crypto environment’s wide ocean, bringing Bitcoin exposure to their high-net-worth customers.

Goldman seems eager to secure its footing amid growing competition from financial entities to enter the burgeoning market. In addition to its diverse methods and its digital asset division, the bank recognized that it intends to bring a full spectrum of digital asset investments, which could even add a spot for Bitcoin.

News of Goldman’s first bitcoin-backed loan comes just months after a CoinDesk research teased that at least a dozen central US banks are going into digital currencies as collateral for loans. The giant bank Goldman Sachs was one of those highlighted in that research.

By: Jenson Nuñez

Bitcoin Whales Reserves Hit 7-Month High despite Warnings of BTC Price Drop to $20,000

Audy Castañeda
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Bitcoin Whales Reserves Hit 7-Month High despite Warnings of BTC Price Drop to $20,000

Bitcoin’s correlation with stocks has increased to alarming levels, according to some market analysts.

Bitcoin (BTC) prices could drop 20% in the coming months, but that has not deterred its wealthiest investors from hoarding.

The amount of Bitcoin held by “single entities” with a balance of at least 1,000 BTC, or so-called “whales,” has risen to its best levels since September 2021, data from Glassnode shows.

Interestingly, the number increased last week despite Bitcoin price falling from $43,000 to around $38,000.

Marcus Sotiriou, an analyst at GlobalBlock, a UK-based digital asset broker, viewed the latest surge in Bitcoin whale holdings as a bullish indicator, recalling a similar move in September 2021 that preceded a price rally of BTC to $69,000 all-time high in November. 2021.

“Since whales have a substantial impact on the market, it’s important to take note of this metric,” he said.

Bitcoin at Risk of Falling Further

The price of Bitcoin has fallen from $69,000 in November last year to almost $40,000 as of the end of April 2022, driven lower primarily due to the Federal Reserve’s decision to aggressively raise interest rates and cancel its quantitative easing program to control inflation.

Interestingly, Bitcoin’s decline has mirrored similar downward moves in the US stock market, with its correlation to the Nasdaq Composite reaching 0.99 in mid-April. An efficiency reading of 1.00 shows that the two assets have been moving in perfect tandem.

“You should think of this high correlation as a gravitational field pulling on the price of Bitcoin,” says Nick, an analyst at data resource Ecoinometrics.

He further stated that, “If the Fed turns the stock market into a black hole, don’t expect Bitcoin to escape a big drop.”

Technical indicators are consistent with depressive fundamental indicators. In particular, Bitcoin has been falling from a “bearish flag” pattern and is at risk of further price declines in the coming months.

The downside target of the bear flag is below $33,000. Meanwhile, Brett Sifling, investment adviser at Gerber Kawasaki Wealth & Investment Management, says a break below $30,000 would open the door for a drop as low as $20,000.

All eyes on the Federal Reserve

Sotiriou remains long-term bullish on Bitcoin, noting that the US gross domestic product (GDP) shrinking by 1.4% in the first quarter of 2022 may cause the Federal Reserve to become less aggressive in avoiding a recession.

“As long as we see these macro headwinds persist, I think the correlation with the Nasdaq will continue,” the analyst told Cointelegraph.

“However, the longer this consolidation continues, the bigger the expansion will be when the Fed changes course from hard to dovish.”

Bitcoin’s Potential for “Asymmetric Returns”

Meanwhile, Nick believes that Bitcoin will recover faster than US stocks after the next big market crash.

He further explained by comparing the size and duration of BTC drawdowns, a correction period between two consecutive all-time highs, against tech stocks including Netflix, Meta, Apple, and others. Notably, Bitcoin rallied faster than said US stocks each time.

In his opinion, “Bitcoin doesn’t look much different than your typical stock investment. So do not worry too much about volatility and focus instead on long-term growth potential. Those who bet on lopsided returns will be rewarded over time.”

By Audy Castaneda

Avalanche (AVAX) Loses Over 30% in April, but DeFi Presence Leaves Room to Be Bullish

Audy Castañeda
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Avalanche (AVAX) Loses Over 30% in April, but DeFi Presence Leaves Room to Be Bullish

AVAX is trading below $65, but the network’s large DeFi ecosystem and use of DApps reflect its strong foundations.

Avalanche (AVAX) price is down over 30% in April, but despite negative price movement, the smart contract platform remains a top contender for decentralized applications due to its scalability, low-cost transactions, and its big footprint in the decentralized finance (DeFi) landscape.

The network supports the Ethereum Virtual Machine (EVM) and is unique in that it does not face the same operational bottlenecks of high transaction fees and network congestion.

Avalanche was able to amass over $9 billion in total value locked (TVL) by offering a layer1 proof-of-stake (PoS) scaling solution. This indicator is extremely relevant because it measures the deposits in the network’s smart contracts. For example, the BNB Chain, in operation since September 2020, has $10.4 billion in TVL.

Positive News Could Create Price Support

Although the price of the AVAX token has suffered and the TVL lags behind some of its peers, investors remain bullish, based on the fundamentally positive developments in April.

According to an April 14 report from Bloomberg, Ava Labs, the main developer of the Avalanche Blockchain, raised $350 million from investors. This deal valued the company at $5.25 billion, and according to data from DappRadar, Avalanche has almost 100 active applications, ranging from decentralized finance to non-fungible token (NFT) markets to gaming.

In early April, the organizations behind the Terra USD algorithmic stablecoin purchased a total of $200 million worth of AVAX for their Terra USD strategic reserves. Terra co-founder Do Kwon cited the strong growth of the Avalanche ecosystem and its large user base.

Even with the positive news, AVAX price is still 53% below its all-time high of $147, giving it a market cap of $18.4 billion. By comparison, the market capitalization of Terra (LUNA) is $31 billion, and Solana (SOL) has a total value of $33.3 billion.

Total Locked Value falls 10.5%, Downtrend of the entire Market Continues

The main metric for the Avalanche DApp has strengthened in the last 30 days, as the TVL of the network has rebounded to 121 million AVAX.

Avalanche DApp deposits peaked at 132.9 million AVAX on March 14 but dropped sharply in early April to the lowest level since January 3. As a result, the current TVL of $8.5 billion has dropped 10.5% in the last 30 days.

As a comparison, the TVL of Solana (SOL) decreased by 9.5% in the same period, reaching 4.8 billion dollars. Similarly, Ethereum smart contract deposits decreased from $88.3 billion to $80.1 billion in the same period, a 9% decrease.

To confirm whether the TVL drop in Avalanche is problematic, you need to look at DApp usage metrics. Some DApps, such as games and collectibles, do not require large deposits, so the TVL metric is irrelevant in those cases.

As DappRadar shows, on April 28, the number of Avalanche network addresses interacting with decentralized applications decreased by 14% from the previous month. By comparison, the Solana network saw a 60% increase in users, while Ethereum was flat.

Avalanche’s Strong DeFi Use Case Remains a Bullish Factor

Although Avalanche’s TVL has had the hardest time compared to other similar smart contract platforms, there is strong network usage in the DeFi segment. For example, Trader Joe’s 180,830 active addresses are higher than Ethereum’s leading DeFi app, MetaMask Swap, which has 116,210 active users.

The above data suggest that Avalanche holds its own against competing chains. Given that the price of AVAX plunged 29.5% in 28 days, investors should not panic as the decentralized application network released strong TVL and DApp usage data.

By Audy Castaneda

Bitcoin Disappoints Bull Run as AMZN Shares Experience Biggest 1-Day Drop Since 2014

Audy Castañeda
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Bitcoin Disappoints Bull Run as AMZN Shares Experience Biggest 1-Day Drop Since 2014

Surprises at the opening of the US market combined with a weakening dollar produce confusing conditions for holders.

Bitcoin (BTC) fell at the open on Wall Street on April 29 as US markets opened to volatility, including an 11% drop in Amazon shares.

Data from Cointelegraph Markets Pro and TradingView confirmed that the BTC/USD pair dipped to $38,622 on Friday from Bitstamp.

Despite a decline in the relentless US dollar bull run, Bitcoin showed few signs of strength as it held firmly below $40,000.

Everything Changes at the Fed

Macro factors held up against the largest cryptocurrency along with risk assets in general, commentators noted, as the Federal Reserve reduced its balance sheet.

On Twitter, Holger Zschaepitz, market maniac and author of ‘Schulden ohne Sühne?’ a book on states’ addictiveness to debt, posted that, “the start of #Fed deleveraging? Fed balance sheet has shrunk for the 2nd consecutive week. Total assets now at $8,939bn, equal to 36.6% of US’ GDP vs ECB’s 82% or BoJ’s 137%”.

For Amazon, meanwhile, the pain was immediately apparent, as missing earnings targets resulted in AMZN’s biggest intraday loss in eight years.

The S&P 500 was down 1% at the time of writing, while the Nasdaq 100 was down 0.9%.

Focusing on Bitcoin, popular trader and analyst Rekt Capital argued that the RSI might need to form a higher low and bounce to provide the market with the momentum for a short-term breakout. On Twitter, he posted that, “BTC ultimately rejects at this resistance. Now pulling back. Could BTC find a base and then rebound once the RSI Higher Low has been revisited?”

Whales Buy Again at the Bear Market Floor

Meanwhile, in its latest chart update on whale behavior, data from on-chain analytics platform Whalemap showed that buying behavior echoes the bottom of the late-2018 bear market.

According to their data, whales with balances between 1,000 and 10,000 BTC are busy accumulating BTC to the extent that they were when the BTC/USD pair hit $3,100 in December of that year. The volumes even exceed those of the $3,600 crash in March 2020.

“Whales are hoarding as much Bitcoin today as they were at the $3,000 lows,” commented analyst and indicator creator Charles Edwards.

“These are supports with approx. $40M – $400M in your wallets today. In 2018, that was $4 million – $40 million (but there were no ‘institutions’ at the time, either).”

This week, Whalemap published a map of Bitcoin’s realized price ordered by wallet size as a basis for its potential price target. The realized price shows what price each Bitcoin last moved at, making $25,000 to $27,000 a key trading point for buyers and sellers.

Data from on-chain analytics firms Glassnode and CryptoQuant show that not only has the trend of leaving BTC exchanges accelerated but also has reached levels rarely seen.

“The 30-day change in the Bitcoin Balance on Exchanges is reaching negative levels that we have only seen a handful of times in the last two years,” the On-Chain College Twitter account wrote alongside an annotated chart of the figures of Glassnode from the switch of the net position so that the coins change hands.

By Audy Castaneda

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