The midweek was very tough in all markets due to inflation fears (US) and economic growth projections. Investors worry. Obviously, not everything is rosy with this recovery. You could say that there is still quite a bit of optimism, but every now and then optimism is put to the test. In general terms, Investors are convinced that the current problems are temporary and the recovery is going from strength to strength. However, often, doubt comes. During these days of doubt, the markets fall. Here’s what happened this week. We had a week of doubts.
The crypto market is a victim of this temporary pessimism. In times of doubt, investors shy away from risky (volatile) assets. Sorry. But it has been shown a thousand times that Bitcoin does not react very well to concerns around inflation. When inflation data skyrockets, investors take refuge in more conservative assets like defensive stocks in the security sector. As a result, technology and assets in the most speculative sectors suffer. I’m not saying it. The evidence says so.
Today’s recovery in the morning could be a sign that this week’s decline is the result of a passing fear. Fingers crossed. There is no reason to think that the current optimism has come to an end. These ups and downs are normal. I would like to believe that what we experienced this week was a simple hiatus. In other words, the good streak will continue.
Now, let’s talk about the most popular crypto news this week.
I hadn’t seen so much fanaticism for altcoins in a while. Which, frankly, worries me a bit, because that’s an indicator of the high level of greed present in the market. We no longer hear much noise from Bitcoin maximalists. Now we see radicals in every project. I mean an inordinate passion. I am not talking about common investors. I speak of blind devotion to certain projects. Now we have little cults and they react violently to any criticism no matter how subtle.
This bigotry is not uncommon in today’s postmodern world. I mean, it’s normal. But its intensity is usually a sign of extreme greed. What could be announcing the proximity of the end of the bullish cycle. Hopefully not. But so much devotion to a project tends to backfire in the long run. Every week an article of this type reaches the first places in popularity. It is already clear that we are in a period of extreme speculative euphoria. Now the only thing that matters is the percentage of the profit. Be careful, we are in dangerous territory.
What happened to the little miner? Apparently, the little miner is losing space. Because the trend seems to favor the giant miner. Institutions are buying Bitcoin and Ethereum. Retailers are buying altcoins and NFTs. But only a few seem to be mining. The minority is concentrating on the few.
This trend naturally involves significant systematic risk. A failure in one of these giants will generate its domino effect. Some regulatory mess from one actor will splatter the others. In short, the mining market tends to concentrate. And that phenomenon does not stop bringing its complications. What is happening with Marathon Digital is an example.
Certainly all this of the verifications is quite a complicated matter. On the one hand, you exclude many people by imposing obstacles. Remember that not everyone has their documents up to date (third world). On the other hand, verifications increase the security of the entire system. Plus, it’s a way to get the regulators off your back. Sooner or later, a company the size of Binance had to get more strict with its verification.
I am surprised by that 3% of lost users. I would have thought there were many more. Clearly, like it or not, we have a very reasonable cost-benefit calculation here. For Binance, the mandatory KYC verification presented more benefit than cost. Which means that it was a good move for the company. He gained a lot, he lost little.
The metaverse certainly promises a very wide universe of economic opportunity. NFTs games will surely seek to integrate. Which means that games like Sandbox will be in the eye of retailers. Nothing is better for investments than big promises. Here we have a combination of two things: An early arrival and great promise. Therefore, I am not at all surprised by this 6,000% increase.
The metaverse is the new frontier. And everything seems to indicate that the opportunities for the crypto market are limitless. Here we are talking about a game. But the thing do not ends there. Anything to do with intellectual property, digital commerce, education, and entertainment has a lot of potential in the metaverse.
Bitcoin suffers from constant turnover. Retailers sell Bitcoin to speculate on the altcoin market. It is the institutions that raise the price of Bitcoin with their purchases, but those purchases have their rhythms and depend a lot on the macroeconomic situation. In other words, it is natural that there are ups and downs. Investors’ mood is constantly changing. But nothing is eternal. We have pessimism today. Optimism, tomorrow.
Everything seems to indicate that this week’s fear around inflation is not permanent. Consumption is increasing. Hence, corporate income remains strong. Year-end economic activity may be strong enough to allay fears. Fingers crossed. The market fluctuates. The market goes up. The market goes down. Everything changes. We must be patient. This is not over.