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CRYPTO SWOT: Bitcoin renewed its climb toward $30,000 with risk appetite rising.

Kitco Media
By Frank E Holmes
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Strengths

  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was XRP, rising 25.81%.

  • Crypto Exchange Kraken signed a multi-year global pact with Formula One team William Racing, marking the trading platform's first major sponsorship deal even as sports tie-ups with digital asset firms become increasingly unpopular. Kraken's logo will be placed on the halo and rear wing of William's car for the rest of the 2023 season, writes Bloomberg.  

  • Bitcoin renewed its climb toward $30,000 with risk appetite rising across global markets and concern about the fallout from Binance's legal woes waning. Bitcoin rose as much as 4.9% to $28,638 on Wednesday, writes Bloomberg.

Weaknesses

  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Stacks, down 15.48%.

  • Galaxy Digital, the company founded by Michael Novogratz, posted a fourth-quarter loss but said that the company's liquidity position remains intact after the recent turmoil in the banking sector. The net loss was $2.8 billion, compared with net income of $521.3 million in the year-earlier period. The loss was primarily attributed to unrealized losses on investments in its investment portfolio during the slump in token prices, writes Bloomberg.  

  • Sushi Swap CEO Jared Grey is no longer feeling "inspired" after a wave of regulatory crackdowns on crypto exchanges, including the DEX that he manages, has put immense pressure on the crypto industry.

Opportunities

  • Michael Novogratz, the founder of crypto financial services firm Galaxy Digital Holdings, said crypto markets "feel strong" this year, due to sellers' exhaustion and the easing of restrictions in China, with Hong Kong warming up to the digital-asset sector. Even though trading crypto has been banned in mainland China, the city of Hong Kong last year unveiled a plan to make itself as a center for digital assets and so-called Web3 firms, writes Bloomberg.  

  • A new Hong Kong-based fund plans to raise $100 million this year to invest in digital asset startups, as the city seeks to become a regional fintech hub. The fund will be led by Ben Ng, a venture partner at the Asian private equity firm SAIF Partners, and longtime tech investor Curt Shi. The two have secured at least $30 million in funding commitments, writes Bloomberg.  

  • As much as $5 trillion may transition to new forms of money such as central bank digital currencies and stablecoins by 2030, of which roughly half could be linked to blockchain technologies, according to a Citigroup research study.  

Threats

  • The U.S. took its most forceful move yet on Monday to crack down on crypto exchange Binance Holdings and its CEO, Changpeng Zhao. The CFTC alleged in federal court in Chicago that Binance and its CEO routinely broke American derivatives rules as the firm grew to be the world's largest trading platform. Binance should have registered with the agency years ago and continues to violate the CFTC's rules, writes Bloomberg.  

  • Sam Bankman-Fried was charged with bribing Chinese officials, adding a new dimension to the U.S. government's case against the FTX co-founder. The new charge was unsealed Tuesday in a revised indictment by federal prosecutors in Manhattan. Bankman-Fried is accused of authorizing the payment of $40 million to one or more Chinese government officials in order to get them to unfreeze accounts at Alameda Research, writes Bloomberg.  

  • U.S. banks already hesitant to work with crypto customers are now even warier of providing services to the industry after a string of regional-lender collapses. The closure of crypto friendly Silvergate and seizure of Signature Bank has left crypto firms struggling to find new banks for depository and payment services, Bloomberg says.
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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