Welcome to Around the Blockchain, Huobi Learn’s daily rundown of the crypto markets.
Fidelity Digital Assets expects more sovereign nation states — or even a central bank — to acquire bitcoin this year. In a recent report on crypto trends, the Fidelity Investments subsidiary stated that “if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers”. The report’s authors further said that even countries skeptical of bitcoin adoption would be “forced to acquire some as a form of insurance”; as such, they believe that “a small cost can be paid today as a hedge, compared to a potentially much larger cost years in the future”.
Bitcoin enthusiasts are flocking to Puerto Rico in droves, drawn by the US territory’s crypto-friendly policies, which include allowing American citizens to retain their passports while not requiring them to pay any taxes on capital gains. Additionally, Puerto Rico-based businesses that export their services overseas pay 80% less in corporate taxes than their US-based counterparts (4% versus 21% plus varying state taxes). However, this has drawn the ire of many locals, as the island’s capital gains tax exemption is designed for non-Puerto Ricans, while Puerto Ricans are subject to a 15% tax on long-term capital gains. The influx of the crypto-rich into the country has also pushed property prices to record highs, further inflaming the resentment felt by locals towards these new residents.
Walmart filed seven trademarks at the end of Dec 2021 as part of its plan to make and sell virtual goods (including electronics, toys, appliances, sporting equipment, apparel, and home decor) in the metaverse. One of the filings revealed that the major retailer is also considering offering users a cryptocurrency alongside NFTs, while another detailed possible “physical training services” and “classes in the field of health and nutrition that could be held in AR and VR environments.
Crypto.com Capital announced today that it had hired Jon Russell — a former tech journalist based in Bangkok, where he wrote for Tech Crunch and The Ken — as general partner. He will work on increasing the firm’s Web3 fund’s exposure to Asia-based projects. The fund was launched in Mar 2021 with $200 million in capital to target Series A and seed deals in DeFi, NFTs, blockchain gaming, and the metaverse. According to Russell, it will likely more than double its size, and an announcement is expected in the near future.
The European Central Bank (ECB) is concerned about inflation in the euro area growing beyond its own expectations but is not prepared to raise interest rates just yet. Due largely to COVID-19, annual inflation increased for the sixth month in a row to a record high of 5% in Dec 2021, leading to worries over the fall in real wages and interest income. However, ECB executive board member Isabel Schnabel said in a recent interview that medium-term inflation would “fall back below our target of 2%”, and that the ECB would “act quickly and decisively” if it determines that inflation may settle above 2%”.
Show me the money
According to data from Huobi Global, BTC is seeing decreasing price volatility, though it is unclear whether this pattern is bullish or bearish. The daily chart indicates that after several fluctuations, the market’s mood has once again stabilized. ETH remained stable over the weekend, fluctuating slightly between 3,250 and 3,400 amid very sluggish trading volume.
Analytics firm CryptoQuant compiled rates from a few major exchanges to show that funding rates had gone negative as traders took a break from making leveraged bets. Meanwhile, digital asset data firm skew. found that open interest (OI) in bitcoin futures had fallen to $16 billion from its Nov peak of about $26 billion, and OI for ether futures had dropped to $8 billion from its Nov peak of $13 billion. Additionally, both BTC and ETH saw decreasing implied volatilities at 60% and 69% respectively, due to falling demand for options.