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Crypto SWOT: bitcoin dips below $42,000 amid geopolitical tensions

Commentaries & Views

Strengths

  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Spook Inu (SINU), rising 1,971.90%.

  • Cryptocurrency companies and fintech firms are joining to meet an anti-money laundering rule, reports Bloomberg. Coinbase, Gemini and Robinhood are among the firms helping to build a platform to comply with a U.S. money-laundering rule as they seek to satisfy existing requirements and head off stricter oversight.

  • The Justice Department named a veteran cybersecurity prosecutor to lead a new team dedicated to investigating and prosecuting illicit cryptocurrency schemes carried out by cyber criminals and nation states including North Korea and Iran, writes Bloomberg. Eun Young Choi will be the first director of the National Cryptocurrency Enforcement Team which will identify and dismantle the misuse of cryptocurrencies and other digital assets.

Weaknesses

  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was CryptoGuards (CGAR), down 99.82%.

  • Investors stuck in the biggest Bitcoin fund, the Grayscale Bitcoin Trust (GBTC), are flooding the U.S. SEC with letters, writes Bloomberg, following a tweet from Grayscale Investments LLC. The tweet encourages investors to share their thoughts on the firm's application to convert the $26 billion GBTC into an exchange-traded fund (ETF). More than 170 letters have been submitted to the agency so far this month.

  • Bitcoin briefly fell below $42,000 this week, testing its 50-day moving average, as renewed fears of a possible Ukraine invasion by Russia weighed on global markets including risk assets. The biggest cryptocurrency on the market dipped as much as 5.4% while Ethereum fell 5.7%.

Opportunities

  • Coinbase Global (COIN) is aiming to take a bite out of the $700 billion U.S. remittance market to allow users in Mexico cash out in Bitcoin, Ethereum and Dogecoin. Recipients of cryptocurrencies in Mexico will be able to generate a redemption code on their Coinbase app which can then be used to receive cash at 37,000 retail and convenience stores across the country.

  • Berkshire Hathaway's CEO Warren Buffett initiated a position in the Brazilian-Bitcoin friendly Nu Holdings while dumping shares of Visa and MasterCard in the previous quarter. According to Bloomberg, Berkshire said in a filing made with the SEC on Monday that it purchased $1 billion worth of Nubank shares in the fourth quarter of 2021.

  • Bit2Me is the first cryptocurrency platform in the world recognized by the Bank of Spain. The exchange received the "green light" because, as explained by the company itself, it was the first to have conversations and request registration from the Bank of Spain. "Being the first company in the world to achieve this recognition speaks for itself about the security with which our service is developed," said CEO Leif Ferreira.

Threats

  • BlockFi, a company that paid cryptocurrency investors high interest rates for lending out their digital assets, has agreed to pay $100 million in fines to the SEC and 32 states over charges that it violated securities laws and made false statements about the riskiness of its activity, writes Bloomberg. The case marks the federal market regulator's first against a crypto lending platform, SEC Chair Gary Gensler said in a statement.

  • Binance U.S.  is allegedly under investigation by the SEC over its relationship with two market makers. A report from the Wall Street Journal says that the SEC believes the company's CEO, Changpeng Zhao, is affiliated with these trading firms.  

  • India's central bank reiterated concerns over cryptocurrency trading, comparing the virtual coins to Ponzi schemes, writes Bloomberg. Seeking a ban on cryptocurrencies, the Reserve Bank of India Deputy Governor Rabi Sankar said the digital coins threaten "financial sovereignty" and "undermine financial integrity" of a country, given that there are no underlying cash flows.
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