Author Archives: Julia Wheeler

Salvadoran President to Bitcoin Investors: Your BTC Investment Is Safe, Will Immensely Grow After Bear Market

Nayib Bukele, president of El Salvador has spoken out about bitcoin investments in the midst of heavy BTC sell-off.

El Salvador has bought 2,301 Bitcoins since September 2013, when BTC became legal tender in the country. El Salvador’s Bitcoin investment has lost 50% , or more than $50 million, due to the falling price of bitcoin.

Bukele tweeted Saturday: “I see that some people worry or anxious about bitcoin market prices,”

I advise you to stop looking at the graph, and just enjoy your life. Your investment in BTC is secure and will continue to grow even after the bear market. Patience is key.

Due to the large bitcoin position on El Salvador’s balance sheets, many people are concerned about El Salvador’s fiscal well-being.

Alejandro Zelaya (Swiss finance minister), dismissed concerns last Wednesday, declaring that there is ‘extremely low fiscal risk’. He said that if they inform me that El Salvador is at high fiscal risk due to bitcoin, I will only smile.

Bitcoin dropped to levels not seen since early in 2020, this weekend. BTC trades at $20,141 as of the writing. This is 12% higher than the previous 24 hours and 33% higher than the previous seven days.

Bukeke’s optimism is shared by some, such as the bitcoin bull Michael Saylor or Skybridge Capital founder Anthony Scaramucci.

Others are less optimistic about bitcoin’s future. BTC will fall to $12K, according to Jim Cramer from Mad Money. Doubleline Capital Jeffrey Gundlach stated that he would not be surprised if bitcoin falls to $10K. Rich Dad Poor Dad author Robert Kiyosaki stated that bitcoin could reach a bottom of $9K. Guggenheim CIO Scott minerd stated that bitcoin could plummet to $8K.

Citigroup CEO: Europe More Likely to Head Into Recession Than US

Reuters reported that Jane Fraser, CEO of Citigroup, warned Friday about the state of the global economy. Citi is America’s third-largest bank and has the most global focus.

At an investor conference in New York she spoke about the ‘three Rs’ that are affecting global economic growth. She stated: “It’s rates. It’s Russia. And it’s recession.

Fraser stated that Europe’s energy issues are having an effect on many companies in certain industries. Fraser explained that some companies are closing down because of rising electricity prices and energy costs. Citi executive stated:

Europe felt much more likely to enter recession than the U.S.

In order to combat inflation, major central banks have already begun planning interest rate increases and are preparing for the global first round of quantitative tightening. This move will likely reduce credit and increase stress in an already slowing global economy.

Fraser commented on the European Central Bank’s (ECB) actions, saying: “It feels like that the ECB has a few months behind the Fed in getting its arms around the inflation and without quite as much flexibility as the U.S. has.’

Fraser stated that the U.S. is asking more about interest rates and not recession. She noted, however, that the U.S. will have to be able to avoid a recession.

While it is not the base case, it is not impossible to avoid.

Jamie Dimon, CEO of JPMorgan Chase, stated Wednesday that an economic’Hurricane’ was coming to us, and advised investors to be prepared for its impact.

John Waldron , President and Chief Operating Officer at Goldman Sachs, warned about unprecedented economic shocks. He also predicted tougher times ahead.

Elon Musk, Tesla CEO, stated that he has a “very bad feeling” about the economy. This prompted President Joe Biden’s response. Musk stated that we could be in a recession for 12-18 months.

How Can Inflation Affect Cryptocurrencies like Bitcoin and Ethereum?

Investments in cryptocurrencies are appealing for many reasons. While cryptocurrencies can be a quick way for some to make money while they sing ‘wen lambo’, others prefer the trust in blockchain technology and a specific project. Some people may think that getting into cryptos is as simple as jumping on the hype train. This is primarily because of FOMO.

All of that aside, cryptocurrencies such as Bitcoin are often called an excellent inflation hedge or a store-of-value. As inflation continues to rise, how do cryptocurrencies and inflation intersect?

What is inflation?

Inflation refers to the process whereby a currency’s declining value, such as the US dollar, causes an increase in the cost of goods and services, which helps the economy grow. Cryptos, however, are not able to be altered in the same way as fiat currencies by changing interest rates.

bitcoin and ether rallied after the announcement of an interest rate hike by FEDs in May. They rose about 3.5% and 1.2% respectively. One factor responsible for large losses in crypto markets has been the soaring inflation. The United States Federal Reserve announced an increase of 0.5% in interest rates. This is the largest hike in interest rates in two decades.

Although cryptocurrencies experienced short-term price increases following the announcement of the interest rise, these price gains were not sustainable. Analysts believe that cryptocurrencies behave in line with equities and are similar to big tech stocks.

Bitcoin – An inflation hedge?

The USD’s purchasing power against BTC continued to fall in the post-pandemic period. It took a substantial dip in March 2020 and then dropped again towards the end 2020. Due to continuous money printing by the government, USD’s value also fell.

Inflation has already decreased the USD’s value by 85% over the past 50 years. This strengthened BTC’s reputation as an excellent alternative for fiat money. After reaching an all-time high at $69,000 in November 2021 bitcoin’s prices began to fall. The USD purchasing power against BTC began to increase around the same time. It increased in November-end 2021, and then again in February 2022.

Notably, USD’s purchasing power against BTC has been on an upward trend for most of the year. This puts at risk bitcoin’s inflation hedge narrative. Investors, particularly newcomers, are also affected by market volatility and the high cost of one BTC unit.

Investment alternatives such as bitcoin mining-backed ETFs or BTC ETPs offer decent exposure for investors of all levels. However, BTC traders, investors, and newcomers to the market are still plagued by the constant volatility.

Inflation and cryptocurrencies

BTC prices have not reacted negatively in the majority of bitcoin’s existence to policy uncertainty shocks. This is partly consistent with Bitcoin’s independence of government authorities. However, despite largely bearish market conditions and a significant role in setting BTC’s price trajectory for the past two quarters, socio-political factors have been a major factor.

BTC’s increasing correlation with the major indices-the S&P 500 & Nasdaq – could play a S&P 500 or Nasdaq role in the coin’s inflation hedge narrative.

Bitcoin’s value fell 57.02% to $69,000, its record high. This also hurt the coin’s ability to be used as a store-of-value. BTC was trading at $29,504.67 as of the writing date, which is close to the $30,000 psychological resistance/support level.

Since May 10, the coin has been in a rangebound trend between $31,500 to $28,380.

It is still unclear whether BTC will outperform fiat currency and traditional assets in the near future, as the market tends to be more bearish. Many analysts believe that the declining ROIs of cryptocurrency and bitcoin markets over the years have led to a maturing market.

Delivery App Rappi Launches Pilot Project to Accept Crypto Payments in Mexico

Rappi is one of the most popular Latam delivery services. Rappi, which last year achieved a valuation exceeding $5 billion in its Series G financing round, announced that customers will be able to use cryptocurrency as a payment method. Customers can purchase Rappi credit directly through the app.

The Rappi credit can then be used for payment of delivery services through the app. The company was founded in Colombia and became the first unicorn in Colombia in 2018. It is now present in nearly all of Latam including Mexico, Costa Rica (Costa Rica), Colombia, Peru Ecuador, Chile, Argentina and Uruguay. Rappi stated that the new pilot project would only be available to Mexican users, and did not mention an expansion.

The inclusion of cryptocurrency addresses the rise in the digital world as well as the need for new ways for users of the app to interact. Sebastian Mejia (president of Rappi, ) spoke out about the importance of innovation for the company’s future.

Rappi’s pillar is innovation. We are interested in the crypto industry and believe the future lies in the interconnection of crypto and non-crypto companies. This will allow for simple user experiences without complexity.

Implementation and other Instances of Crypto Integration

Although the pilot project is still in its infancy, the company announced that they are working with local exchanges to integrate their services and make it easier to use the app to transfer cryptocurrencies. Rappi mentioned Bitso (an exchange with a presence here) as potential participants.

Rappi explained that the company is working on improving the security of transactions between exchanges and the app. Others in Latam are also looking to incorporate crypto into their business models. Nequi, a Colombian fintech platform, is preparing for a entry into the crypto sector.

Japan Considers Stricter Crypto Regulations in Light of Russia Sanctions

Japan is going to tighten regulations regarding cryptocurrency exchanges amid concerns that Russia’s elites might use cryptocurrencies to bypass international sanctions. These platforms will have to verify that transactions recipients are not subject to financial sanctions.

According to Japan Today, the amendments to the country’s foreign exchange law and trade law will introduce this obligation. According to the publication, the revision will also prevent sanctioned entities and individuals from transferring crypto assets to third-party accounts.

Russia is now facing severe sanctions that limit its access to the global market for financial services and its gold and foreign currency reserves. According to reports, Russian officials are interested cryptocurrency and even willing to accept Bitcoin for energy exports. Moscow is showing increasing support for legalization of cryptocurrency, while experts and lawmakers are working on a comprehensive regulatory framework.

The Japanese government asked crypto trading platforms to improve monitoring and requested that they inform financial authorities about suspicious transactions. According to reports, the Financial Services Agency ( FSA) and Japan Virtual and Crypto Assets Exchange Association were searching for ways that Russian entities could avoid sanctions. They also ruled out blocking all Russian users.

Japanese law currently requires banks to verify that money transfer recipients aren’t subject to restrictions. However, cryptocurrency exchanges are not required to do this. Fumio Kishida, Japan’s Prime Minister, announced Monday that the government would prepare to introduce respective amendments during this session of parliament.

The crypto industry has had a variety of reactions to the conflict in Ukraine. While South Korean exchanges blocked Russians from accessing their platforms, major global platforms such as Binance and Kraken refused a request made by the Ukrainian government to unilaterally block all Russian accounts.