This week in coins: Bitcoin and Ethereum lead to significant recovery among the best cryptocurrencies

by James · July 4, 2022

This week in coins. Illustration by Mitchell Preffer for Decrypt.

The crypto markets have recovered a bit last week’s brutal crash who shaved off more than 30% of the value from leading coins Bitcoin and Ethereumwhich fell to levels not seen since 2020.

Bitcoin has increased by more than 10% over the last seven days, trading at $ 21,013 at the time of writing, and Ethereum took back even more territory, rising more than 19% to $ 1,189.

Polygon Week was even better: It rose almost 59% to better than $ 0.57, supported by six weeks of whale accumulation – according to chain data analysis from Santiment-and a partnership announced this week with the on-chain carbon market KlimaDAO.

Cryptocurrencies that rose at least 40% over the seven days were Uniswap, up 45% to $ 5.33, and Shiba Inu, up 43% to $ 0.00001122. Meanwhile, Avalanche rose almost 33% to $ 20.10, and Solana rose almost 33%, to $ 40.05.

In fact, each of the top 30 cryptocurrencies managed to recover with double-digit percentages by the weekend, with the exception of Cardano, which still added 4% to reach $ 0.4845, and TRON, which rose 8% to $ 0.06445.

Bitcoin Cash actually fell 5.4% during the week, to $ 113.7 at the time of writing TRON’s stablecoin USDD has had for two weeks now traded under peg. It is currently $ 0.9768.

‘Fragmentation’

It was a relatively quiet news week, which probably contributed to the upswing in the crypto market.

On Tuesday, the Bank for International Settlements (BIS), a global organization of 63 leading central banks, published its Financial annual report 2022. The report says that crypto has two main flaws: the need for a “nominal anchor” and “fragmentation.”

A “nominal anchor” refers to stable coins, which links the value to fiat currencies, such as the US dollar (with varying degrees of success). The BIS states that the existence of stablecoins “indicates the pervasive need in the crypto sector to piggyback on the credibility given by the central bank account unit.”

The report argues that cryptocurrencies have not yet challenged the hegemony of central banks in providing an account unit for the economy: “The fact that stack coins must import the credibility of central bank money is very revealing for the structural shortcomings of crypto. The fact that stablecoins are often less stable than their issuers claim shows that they are at best an imperfect substitute for healthy sovereign currency. “

The report also points to the “fragmentation” of the sector, the abundance of various cryptocurrencies competing for supremacy, as “perhaps the crypto’s biggest mistake as a basis for a monetary system.”

The BIS report explains the usefulness of blockchain technology for central banks’ digital currencies, or CBDCs – mainly government-issued stack coins linked to domestic currencies. It also points to smart contract technology – self-performing financial contracts on blockchains – as one of a number of benefits that will “enable transactions between financial intermediaries that go beyond the traditional medium of central bank reserves.”

US and EU central bank governor honchos, Jerome Powell and Christine Lagardeargued separately for regulating cryptocurrencies this week, citing the rate at which the blockchain is growing, along with possible economic risks, although both also said that cryptocurrencies do not pose any immediate threats.

On Wednesday, US Congressman Jim Himes (D-CT) released a proposal outlining how the country can implement a CBDC, claiming that it can help safeguard the role of the dollar as the world’s leading reserve currency.

“The longer the US government waits to embrace this innovation, the longer we fall behind both the foreign government and the private sector,” Himes said in a statement. “It is time for Congress to consider and move forward with legislation that would authorize a U.S. CBDC.”

The next day, Powell said House Committee on Financial Services which Congress will eventually receive guidance from the Fed on how it can implement a CBDC.

“We are doing a lot of work,” he said, adding that once the Fed has drafted a policy recommendation, it will be up to Congress to draft appropriate legislation.

Finally, data from Arcane Research revealed that listed Bitcoin miners, such as Marathon Digital and Riot Blockchain, sold more Bitcoin than they extracted last month – a huge change from the first four months of the year, when miners sold 30% of their revenues.

Jaran Mellerud, an Arcane Research Bitcoin mining analyst, wrote in the report: “If they are forced to liquidate a significant proportion of these holdings, it could help push the Bitcoin price further down.”