opinion

Crypto SWOT: Bitcoin is now up more than 70% since the start of the year

Kitco Media
By Frank E Holmes
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Strengths

  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Mask Network, rising 34.86%.

  • Turmoil in the banking sector, hotter-than-expected inflation data, and renewed hopes for a dovish Federal Reserve, has Bitcoin reaching levels not seen in about nine months. Bitcoin topped $28,000 for the first time since June 2022, reports Bloomberg, and is now up more than 70% since the start of the year.

  • Tether Holdings, the issuer of the biggest stablecoin, expects to post a profit of about $700 million this quarter, CTO Paolo Ardoino said. That’s similar to what Tether reported for the three months through December. The circulation of Tether’s stablecoin has increased by 18% since year-end to $78 billion, writes Bloomberg.

Weaknesses

  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Arbitrum, down 88.33%.

  • Investors withdrew $375 million from crypto-focused exchange traded products (ETFs) during the past month and $147.5 million in the past year, according to data complied by Bloomberg.

  • Tokens associated with crypto entrepreneur Justin Sun dropped sharply after the U.S. Securities and Exchange Commission charged him and three of his companies with offering and selling unregistered securities, as well as price manipulation. TRX, the token associated with the Tron network that Sun started, dropped around 12%, reports Bloomberg.

Opportunities

  • Cryptocurrency-exposed stocks rose after Bitcoin extended its gains for a fifth consecutive session, reports Bloomberg, with the digital asset reaching levels not seen in nine months. Bitcoin is up 70% so far this quarter putting it on track for its best quarter since March 2021.

  • A pair of former Jefferies Financial group executives at Crossover Markets Group have launched a cryptocurrency exchange aiming for high-frequency traders, with the backing quant investing giant Two Sigma and other firms in traditional finance and digital assets. The startup, named CROSSx, raised $6.35 million in seed rounding, writes Bloomberg.  

  • The forces that have re-awakened crypto prices have aroused activity in the digital-assets derivatives market too. Open interest in Bitcoin options has skyrocketed with the number of contracts rising to an all-time high in recent days, according to derivatives exchange Deribit, writes Bloomberg.  

Threats

  • Bitcoin pulled back from its highest price level since June and smaller cryptocurrencies slumped after the Federal Reserve’s interest-rate increase eased speculation that looser monetary policy would fuel demand for digital assets. Bitcoin dropped 3.5% after climbing to as high as $28,913, writes Bloomberg.  

  • A new investigation claims that Binance’s billion-dollar security protocols are being manipulated by users around the world through inside help. According to a CNBC investigation, employees and volunteers at Binance have allegedly been aiding customers in China to subvert the exchange’s Know Your Customer Controls.  

  • Terraform Labs co-founder Do Kwon was charged by U.S. prosecutors with orchestrating a yearslong cryptocurrency fraud that wiped out at least $40 billion in market value, reports Bloomberg. His indictment Thursday evening by the U.S. attorney's office in Manhattan capped a dramatic day that began with the news that Kwon, already a fugitive, had been arrested in Montenegro.
Kitco Media

Frank E Holmes

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., a boutique investment advisory firm based in San Antonio that manages domestic and offshore funds specializing in the natural resources and emerging markets sectors. The company’s no-load mutual funds include the Global Resources Fund (ticker PSPFX), the World Precious Minerals Fund (UNWPX) and the Gold Shares Fund (USERX).

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