Bitcoin holds near $23.5K
Bitcoin continued its weekend camp near $23,500 through Monday as investors spent another day weighing fiendishly stubborn inflation and the prospects of a bigger-than-previously-expected US Federal Reserve rate hike.
The largest cryptocurrency by market cap recently traded at $23,481, roughly unchanged over the past 24 hours but below its highs of a week ago of over $25,000 – before surprisingly strong jobs and price data had markets growing optimistic about the prospect of a price of 50 basis points made increase instead of 25 bps.
“Markets have recently been pricing in interest rates that will stay longer than previously expected on inflation numbers that appear to be quite persistent,” wrote Brent Xu, CEO and co-founder of Web 3 bond market platform Umee, in an email CoinDesk: “A possible 50 basis point hike could also be on the horizon now.”
However, Xu also noted hopefully that crypto markets “haven’t seen a massive drop…that the more alarmist crypto Twitter commentators have been warning about.”
“My guess is that we haven’t seen a massive pullback because the forced sellers have already sold,” he wrote, adding, “The daisy chain of last year’s explosions appears to have largely ended. That’s not to say we can’t go lower from here, but a bottom of this cycle is likely to be here and we, in turn, are likely to be in an accumulation phase. I think we need to be prepared for sideways movement for some time.”
Ether was almost as flat, changing hands around $1,630. Most other major cryptocurrencies were flat or slightly down, with layer 2 platform Polygon’s MATIC token and decentralized finance protocol Aave’s AAVE token both down around 3% recently. The CoinDesk Market Index, a measure of the overall performance of crypto markets, fell about 0.36%.
After a week to forget, equity markets got back on track, albeit marginally. The tech-heavy Nasdaq, S&P 500 and Dow Jones Industrial Average (DJIA) were all up a few fractions of a percentage point. Treasury yields fell slightly but remained worryingly high at over $3.90 for a 10-year bond.
Certainly some crypto news on Monday was ominous for the markets, no more than a report from crypto asset manager CoinShares that short bitcoin funds had $10 million in inflows for the week ended February 24th and that long bitcoin funds $12 million wasted. the third weekly runoff in a row. And later in the day, crypto exchange Coinbase tweeted that it would suspend trading in Binance USD (BUSD) starting March 13 because the stablecoin failed to meet its listing standards, the latest major blow to the stablecoin sector.
However, at least one other analyst has been at least partially optimistic about the future path of crypto prices. In an interview with CoinDesk TV, Bruno Ramos de Sousa, head of new markets at crypto asset manager Hashdex, said that markets are “already in the recovery phase… have bottomed out.” Ramos de Sousa has seen increased interest from institutional investors in recent months.
“They are trained in the industry and are looking for interesting entry opportunities,” he said. “These are hedge funds, family offices, people who deal with ups and downs.”
Layer 1 Blockchain Conflux has a complicated relationship with China
Beijing is pro-blockchain but anti-crypto. She sees the former as a key technology, as important in the 21st century as Hypertext Transport Protocol (HTTP) was in the 20th; The latter is a speculative asset that inhibits the worst parts of capitalism.
Meanwhile, “China” tokens are rising sharply. “China” is in quotes because most of these projects like NEO, VeChain (VET) and Conflux (CFX) are making great efforts to limit their exposure to China. They have development teams in China, but the company is registered overseas.
You can use the technology within the country, just not trade the token. For example, a version of NEO is available on China’s Blockchain Service Network, but this exists as a separate universe from NEO that the rest of the world sees to comply with local laws.
In many cases, these tokens are separate from the project. You cannot see any China data on-chain and it could be questionable what is driving the token’s growth.
An exception is Conflux’s CFX token.
Can you trade Conflux’s CFX token in China? NO.
Can anyone in China interact with the west facing portion of the Conflux chain? Also no, these parts are separate.
But at the same time, CFX is the bond that binds the two together.
“There is only one chain, but we have two divisions,” Fan Long, co-founder of Conflux, told CoinDesk via email. “You can imagine the spaces acting like independent chains, but they share the same consensus engine. There is no security risk when moving assets between two spaces.”
Within China, CFX relies on Conflux’s sponsorship mechanism, which allows ordinary users to interact with smart contracts without owning crypto. The stuff still exists on the chain, minus the gas fees.
Developers of decentralized applications, such as China’s version of Instagram called Little Red Book, buy CFX directly from Conflux. You pay in Fiat and receive an official receipt. In many ways it would be comparable to paying a cloud service hosting bill.
“Since the public chain needs to have a domestic token governing their resources for gas and China is not promoting anything related to fungible tokens, we chose to have foreign entities to govern CFX’s token issuance,” said Long.
One can see on-chain how CFX is being used. Below is on-chain activity for a digital collectible, China’s version of a non-fungible token (which it calls “digital collectibles” and tolerates when no speculation is involved) on its version of Instagram.
In many ways, CFX could be seen as a success indicator for Conflux in China. But is there enough interest to drive and sustain triple-digit growth for the CFX token?
Solana (SOL) price rose in the last 24 hours after the protocol collapsed and frozen transactions over the weekend. The Solana Foundation said a root cause investigation is ongoing and will be updated as new information becomes available. Danny Nelson, CoinDesk’s Managing Editor for data and tokens, provided an update and Seth Ginns, Managing Partner at CoinFund, shared his reaction. Also, Kim Grauer, Director of Research at Chainalysis, discussed the prospects for illicit crypto volumes in a new report.
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