Bitcoin is gaining ground but remains below $20,000.
On this day of fireworks and bombast in the United States, the crypto-currency also had something to celebrate.
Bitcoin eased back through the $20,000 threshold that has been a psychological vantage point since early summer for investors gauging the duration of the current bear market. The largest cryptocurrency by market capitalization was recently trading at around $20,300, up 5% in the past 24 hours. Bitcoin dipped below $19,000 at one point last week before regaining ground in a rally on Friday.
Ether rose further in Monday’s trading, along with several other major altcoins, as investors appeared to be more risk averse. The second-largest cryptocurrency by market capitalization was changing hands at over $1,150, a gain of almost 8% from the previous day. Among other major cryptocurrencies, SOL and SAND jumped over 9% and 8%, respectively.
Still, the Fear & Greed crypto index remained stuck in extreme fear territory as the sector absorbed its final blows, and analysts remained pessimistic about prices, at least in the short term, amid a lack of compelling evidence that inflation is under control and that the world economy does not fall into recession. Bitcoin and Ether are down more than 5% and 6% from their highs at the start of last week, and most other cryptocurrencies are also in the red over the same period.
“Bitcoin has been under steady pressure for most of the past week,” FxPro senior market analyst Alex Kuptsikevich wrote in an email. “A brief rebound early in the day on July 1 was more likely due to the emotional excitement of the start of a new period (month, quarter, semester) rather than fundamental changes in the situation. »
ETH price weakness continues as “the merger, which will see the network transition from a proof-of-work platform to a proof-of-stake platform, is rapidly approaching. Trading was light as the United States celebrated its Independence Day. US stock markets were closed due to the holiday, but European indices were up, with the Stoxx Europe 600 rising 0.5% on Monday.
Granted, Binance CEO Changpeng Zhao recently called the crypto winter a good time to buy bitcoin for investors who can wait for the next bull market. And a Mastercard survey reported that more than 51% of Latin Americans made at least one transaction with cryptocurrencies between March and April this year.
But the industry-wide cascade of bad news continued with cryptocurrency hedge fund Three Arrows Capital filing for bankruptcy last Friday, after weeks of speculation about its functional insolvency; US-Israeli cryptocurrency lender Celsuis, which laid off some 150 staff over the weekend as it battled a financial crisis that saw it halt customer withdrawals last month; the CoinLoan cryptocurrency lending platform, which limits the amount of withdrawals; and another Singapore-based cryptocurrency lender, Vauld, which has suspended all withdrawals, trades and deposits on its platform to explore restructuring options.
Mr. Kuptsikevich highlighted the challenging economic backdrop that is expected to continue to weigh on cryptocurrency markets.
“The global picture remains bearish, with equity markets pointing to no tightening of financial conditions by central banks,” writes Kuptsikevich. “On the weekly charts, BTCUSD remains below the 200-week average, after failing a tentative move higher last week. »
China’s blockchain revolution may not be here
Blockchain technology is a national priority for Beijing, having been cited in 2019 by the President of the People’s Republic of China Xi Jinping as an important opportunity to be seized, and mentioned as a key technology pillar of China’s five-year political plan in 2021. Read also: These cryptocurrencies whose price is ready for a rebound, and which you could buy at a good price today.
“We must take blockchain as an important breakthrough for independent innovation of core technologies,” Xi reportedly said, laying out the government’s policy to embed the technology into the computing fabric of the broader bureaucracy.
Thus was born the Blockchain Service Network (BSN), a state-supported infrastructure program that would allow enterprise developers to assemble and develop code to build blockchain-based applications with relative ease.
Of course, it is not a real blockchain per se. It’s a watered down version of it called “permissioned blockchain”. No company or government, in China or anywhere else, wants its key data to be in a decentralized state that it cannot control.
As the South China Morning Post reported last week, China is home to nearly 1,800 blockchain service companies that claim to be embedded in most sectors of the economy and bureaucracy.
There is a problem, however: Outside of China, companies have realized that enterprise blockchain is pretty useless. As CoinDesk reported in early 2021, IBM, which is effectively synonymous with enterprise computing, has disbanded its blockchain team. Soon after, Microsoft terminated its Blockchain service on the Azure cloud. The Food and Drug Administration, which once touted blockchain as part of a “smarter era of food safety,” has abandoned the initiative.
Technology market research firm Gartner noted in its hype cycle forecast for 2021 that “authorized and successful enterprise blockchain projects are rare. »
While topics like decentralized finance, payments, and tokenization all have some appeal, Gartner said the enterprise blockchain is stuck because “most users are stuck trying to line up cases of use on technology”.
“The value of the permissioned blockchain is difficult to understand because it does not implement the most revolutionary aspect of public blockchains, namely the minimization of trust and the elimination of central authority, achieved through consensus decentralized,” writes Gartner in another post on the subject.
In the case of China, companies are ramping up their blockchain efforts due to the many incentives available, such as a $140 million grant fund in Guangzhou – no matter how useful the technology really is. . If the government thinks the technology will help its economic ambitions and wants to spend money on it, companies will happily comply and play along.
This is especially true if they can leverage this with investors to juice up in a funding round. At one point, China had nearly 35,000 blockchain companies, according to publicly available company registration data. Of course, many of these were companies getting into the business of adding blockchain to their name to gain access to development grants, as well as outright fraud. According to the SCMP report, that number has dropped to around 1,800, meaning the herd has been reduced.
But one can still wonder what exactly these 1,800 companies are doing. On-chain data is essential to verify any statement involving the blockchain. But with these permissioned chains, it is impossible to use a block explorer to inspect the data and verify data volume claims, which is a central part of the “trust machine” that is the blockchain.
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