Cryptos Decline As Monetary Tightening Fears Hurt

Cryptocurrencies declined more than 1 percent in the past 24 hours after a massive rally that catapulted Bitcoin to the $30k range and the overall market cap to close to $1.19 trillion. The Bank of England’s more-than-expected 50-basis points rate hike and hawkish comments by Federal Reserve Chair Jerome Powell in the congressional testimony dampened market sentiment across asset classes.

The Dollar Index, a measure of the Dollar’s strength against a basket of 6 currencies and a proxy for rate hike expectations added almost half a percent overnight and is currently at 102.88.

The CME FedWatch tool which also indicates market expectations on the Fed’s rate hikes currently shows a 74.4-percent probability for a 25-basis points rate hike in the next review by the Fed on July 26.

Bitcoin declined 0.69 percent overnight and is currently trading at $30.082.89. The 24-hour trading range was between $30,293.42 and $29,679.16.

Ethereum shed 1.6 percent in the past 24 hours and is currently changing hands at $1,872.71. Ether ranged between $1,902.75 and $1,865.19 in the past 24 hours.

4th ranked BNB (BNB) shed 2.5 percent overnight but is still holding on to weekly gains of close to 3 percent.

6th ranked XRP (XRP) dropped 2.7 percent overnight but has still gained 5.2 percent in the past week.

7th ranked Cardano (ADA) dropped 2 percent overnight. The crypto’s gains over the past week exceed 12 percent.

8th ranked Dogecoin (DOGE) declined 1.6 percent overnight. The weekly gains however exceed 7 percent.

9th ranked Solana’s (SOL) overnight losses are more than 4.5 percent whereas weekly gains are close to 11.5 percent.

10th ranked TRON (TRX) dropped less than a percent over the past 24 hours but is holding on to gains of 3.4 percent over the past week.

37th ranked VeChain (VET) gained 10.4 percent overnight despite the subdued sentiment in the crypto market. 64th ranked Bitcoin SV (BSV), 94th ranked Zilliqa (ZIL) and 20th ranked UNUS SED LEO (LEO) have all gained more than 8 percent in the past 24 hours despite the overall muted sentiment in crypto sphere.

40th ranked Stacks (STX) is the greatest laggard, declining 9.2 percent in the past 24 hours. 65th ranked Pepe (PEPE) also shed more than 8 percent.

Amidst the whipsawing crypto prices, 65th ranked Pepe (PEPE) dazzled as the biggest gainer over the past week with a 68-percent surge. 25th ranked Bitcoin Cash (BCH) which added 28 percent, stole the limelight for the highest surge over the past 30 days.

53rd ranked Conflux (CFX) continues to top gains on a year-to-date basis with a surge of more than 1055 percent.

Meanwhile, a recent paper published by International Monetary Fund dwells on the regulation of cryptocurrencies and the role of CBDCs with particular reference to the scenario prevailing in Latin America and Caribbean. The paper, titled “Interest in Central Bank Digital Currencies Picks Up in Latin America and the Caribbean While Crypto Use Varies” published on Thursday reiterates that for crypto assets to safely remain part of the payment system, they need to be regulated. The report argues that if well designed, CBDCs could lower remittances’ costs and improve financial inclusion.

The report also cites the case of El Salvador which had made Bitcoin legal tender, declaring it by law to be a valid payment instrument to settle transactions and financial obligations. However, the report notes that the nation’s experience with Bitcoin suggests there are risks to adopting unbacked crypto assets even when explicitly supported by the government. Unbacked crypto assets, the report notes are those that rely on supply and demand rather than on any asset for value and that are subject to significant price volatility.

The report also addresses the issue of outright ban of cryptocurrencies. The authors note that though a few countries have completely banned crypto assets given their risks, such an approach may not be effective in the long run. The authors have opined that the region should instead focus on addressing the drivers of crypto demand, including citizens’ unmet digital payment needs, and on improving transparency, by recording crypto asset transactions in national statistics.

The report also adds that if well designed, CBDCs can also strengthen the usability, resilience, and efficiency of payment systems and increase financial inclusion in Latin America and the Caribbean.

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