Read in the digest:
- Bitcoin’s oscillations continue, sending the asset below $38,000 as gold continues to make a strong run.
- Andre Cronje bids farewell to the DeFi space, but his exit leaves investors in danger.
- Japan and Switzerland close in on Russian entities hoping to use cryptocurrencies as an exit strategy from sanctions.
- Ethereum fees in decline for the first time in months thanks to a slew of factors.
BTC Drop and Oil Shock as Gold Takes Center Stage
Bitcoin continues to make wild swings as the asset fell below the $38,000 mark once again with conflict raging in Europe. The decline to $37,596 is the lowest the asset has fallen in the last week despite a promising initial display.
At the start of the week, other cryptocurrencies faltered as well with Ethereum, Cardano, and Terra recording their fair share of losses. The global cryptocurrency market capitalization now stands at $1.73 trillion, but, over the last 24 hours, transaction volumes have been up by 20%.
At the macro level, oil prices continue on an aggressive ascent hitting nearly $140 per barrel in what can be seen to be the commodity’s highest level since 2018. With panic breaking out, gold broke the $2000 mark, signalling a surge in demand for the safe-haven asset over its digital rivals.
The 1 day price chart for Bitcoin (BTC). Source: CoinMarketCap
- Apple’s co-founder believes that Bitcoin is the only pure-gold cryptocurrency and has also referred to it as “the most amazing mathematical miracle.”
Why You Should Care
Macroeconomic events play a significant role in the direction of the cryptocurrency ecosystem, which has been especially prevalent in the recent mirroring of prices between crypto and the stock market.
Andre Cronje Quits DeFi
A key player in DeFi, Andre Cronje has disclosed his decision to leave the space after facing criticism based on a flaw in his latest project. The announcement was made by his long-time business partner, Anton Nell who will also be leaving the space.
The entrepreneur revealed that around 25 apps and services will be shut down on the 3rd of April including Yearn Finance, Bribe Finance, and Solidly. Their decision to leave the space could place investors’ funds at risk and cause uncertainty in the nascent DeFi space.
Hours after the announcement, DeFi tokens nosedived with SOLID tumbling by 66% to trade at $1.14, while FTM fell by 16%. The decision to quit may have been in the works for some time, as Cronje previously published a blog post titled “Building in DeFi Sucks” before deleting his Twitter account without any explanation.
The 1 day price chart for Fantom (FTM). Source: CoinMarketCap
- While DeFi grapples with the news, stablecoins and NFTs have continued their rise to the top. Stablecoins now have a market cap of over $180 billion, representing a huge leap when compared to the $38 billion that it had at the start of 2021.
Why You Should Care
DeFi is an integral part of the cryptocurrency ecosystem, with billions tucked away in project TVL. DeFi also constitutes some of the key offerings of several cryptocurrency projects like Ethereum, Solana and Avalanche.
Swiss Freezes Russian Crypto While Japan Looks to Stop Sanctioned Russian Entities from Accessing Crypto Transfers.
Switzerland has broken its vow of neutrality in the wake of Russia’s invasion of Ukraine, and has announced that it will be going after the cryptocurrency holdings of sanctioned Russian entities. The country’s reason for adopting a proactive response is cited as being a need to protect the integrity of its growing blockchain industry in compliance with international standards.
Japanese authorities have also indicated the desire to halt any attempts made by Russian entities to evade the sanctions imposed by western powers. The Japanese Financial Services Agency, in conjunction with the Japan Virtual and Crypto Assets Exchange Association, disclosed that a blanket ban for Russian users was not on the cards, and only those actively evading sanctions will be targeted.
Last week, Ukraine’s vice prime minister implored cryptocurrency exchanges to ban Russian users, but leading exchanges like Binance, Kraken and Coinbase indicated reluctance to carry out such a request. Since the start of the conflict, Russia has been hit by a number of sanctions, including the removal of the country’s banks from the SWIFT network.
- Russia’s use of cryptocurrencies to evade sanctions faces some hurdles like highly illiquid markets and the inherent difficulty of moving funds out of exchanges due to the hawkish nature of banks.
- Russia’s Central Bank does not want citizens to turn to cryptocurrency despite the plummeting value of the ruble.
Why You Should Care
Cryptocurrency regulations could arrive sooner than expected as a result of accelerated discussions caused by the Russian-Ukrainian conflict.
ETH Fees Drop Significantly
On-chain data indicates that Ethereum transaction fees are on a path of massive decline for the first time in months. The news seemingly comes amid falling activity on Layer 2 protocols as transaction fees now cost around $0.1.
The decline in transaction costs has been attributed to the “simmering” of the Ethereum NFT market in recent weeks. DeFi used to be a major contributor to ETH’s high gas fees, but the declining transaction volumes have also had a hand in bringing the new metrics to fruition with exploits plagueing the sector.
Ethereum has grappled with the subject of inflated gas fees for some time, lead to the mass migration of users to other competing blockchains. However, the planned switch to the Proof of Stake Consensus Mechanism is expected to provide a lasting solution to the network’s gas fee problem.
The 1 day price chart for Ethereum (ETH). Source: CoinMarketCap
- The decline in gas prices could not save Ethereum from falling by over 4% in the last 24 hours.
- Ethereum is now trading at $2,578 at the time of writing, a staggering 50% drop from the all-time high set in 2021.
Why You Should Care
Gas prices have long threatened the survival of the Ethereum network, leading to suggestions by key players on the best means of tackling the challenge. A quick and permanent fix to the problem would serve to put some distance between Ethereum and the rest of the competition.