Cryptocurrencies move down as interest rates rise and FIFA gets into the NFT space


eToro market analyst and crypto expert Simon Peters gives his weekly take on the world of cryptocurrency and blockchain.

Bitcoin and ether battle investor fear

Both bitcoin and ether battled investor fear last week, finishing well down week on week. This week appears to be posing something of a make or break scenario for cryptoassets as investors around the world take a deep breath ahead of the US Federal Reserve’s latest monetary policy announcement.

Bitcoin began last week trading just clear of US$40,000, but this collapsed on Tuesday as it fell precipitously below US$37,500. The cryptoasset recovered somewhat to above US$39,500 later in the week but is now trading back around US$38,000.

Ether meanwhile began last week above US$2,950 but fell to below US$2,700 by the weekend on the eToro platform. It is currently back above US$2,800. 

The turbulence of the cryptoasset market more broadly seems to be moving in lockstep with other assets as investors move away from riskier areas of the market such as tech stocks. Volatility is also high at the moment, as the price swings described above illustrate. 

Stock investors are said to now be holding their breath ahead of the Fed decision tomorrow – and this would broadly hold true for the crypto community too.

Markets are near pricing in a 50 basis point hike, which would likely send cryptoasset prices even lower than we’ve seen recently. But with the US economy appearing close to retreat, the Fed might hesitate on its current course.

Bored Apes hits Ethereum blockchain

Yuga Labs, the maker of the Bored Apes NFTs, has apologised after its metaverse land sale sent the Ethereum blockchain into meltdown.

The firm began selling plots of land for its metaverse game, Otherside, with plots sold using ApeCoin (which recently launched onto the eToro platform). The demand was such that some 55,000 plots were sold in the first few hours.

Indeed demand was so incredible it overwhelmed the Ethereum blockchain on which ApeCoin is based – no small feat. Trading of the NFT plots became so frenzied that transaction fees were around US$3,300 at one point, with almost US$100 million in Ethereum gas fees generated. 

The episode underlines a really important illustration of why metaverse and NFT technology is still relevant, and demand still exists. The market has been weak this year after a heady 2021, but this is largely caused by broader investor worries which are affecting traditional assets in the same way. 

The demand – and consequently money – is there for these assets, but as markets roil it is clear that many investors are holding their fire for the right opportunities. Yuga Labs’ sale wouldn’t have gone how it did otherwise. 

Algorand becomes FIFA blockchain sponsor

Proof-of-stake chain Algorand has made a deal with FIFA which will see it become a regional sponsor for the 2022 Men’s World Cup and an official sponsor of the Women’s World Cup in Australia and New Zealand in 2023.

The deal is a notable one for the blockchain as it has some interesting potential implications for NFTs. Algorand is going to be assisting FIFA with its digital assets strategy and it is heavily hinted it could assist FIFA in the creation of NFTs too – a potentially large market in and of itself.

Football and sports more widely are already a fast-growing segment of the NFT market, with loyal fans eager to show their support. FIFA is one of the largest and most influential sporting organisations in the world, so Algorand’s tie-up is something of a coup for the growing blockchain.

We’re seeing an ever more competitive marketplace for not just NFTs themselves, but the providers of that infrastructure, so this is a real boon for Algorand at a time when cryptomarkets more widely are under pressure and NFT valuations are being tested.

Argentine banks to offer cryptoassets

Two major Argentine banks – Banco Galicia and BruBank SAU – have begun offering their customers the ability to buy cryptos including bitcoin, ether and USDC. 

Argentina is by no means a major player in international crypto terms, but it is a much larger jurisdiction than El Salvador which has become a poster child for bitcoin adoption in recent months. 

But there is a deeper trend at play in Argentina, one which can often presage changes elsewhere. The nation suffers from one of the worst rates of inflation in the world currently at around 55% per year. 

As a result, Argentinians are highly suspicious of their own currency, the peso, and routinely turn to the US dollar as an alternative to protect their savings. This is so rife that the official exchange rate has an informal rival, the so-called ‘Dollar blue’.

What is important here is that Argentine institutions are now offering an alternative to Argentinians which doesn’t involve backroom paper currency dealing. Having access to alternative digital currencies is potentially hugely transformational for the country and a lesson for others that might be in the thralls of rising inflation themselves.

Read More: Cryptocurrencies move down as interest rates rise and FIFA gets into the NFT space

Notify of
Inline Feedbacks
View all comments