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Author: Admin | 2025-04-28
A brutal bear market in 2022. Numerous companies in the space have imploded and sentiment is quite poor. Bitcoin has traded like a risk asset over the prior year and has shown price sensitivity to interest rate hikes.One reason why Bitcoin has reacted poorly to higher rates is that the political response to higher inflation in developed markets has been to attempt to cap energy prices, widen sanctions, and micro-manage economic activity to facilitate the “energy transition.” An end to the war in Ukraine would likely reverse at least some of these policies and make Bitcoin mining more politically palatable. On the other hand, the war is also creating a more economically integrated Eurasia with incentives to adopt novel payments methods for cross-border trade, as Russia and China are doing with the digital RMB and possible gold-for-oil swaps.In developed markets, we think consumers will see Bitcoin act as a store of value over time and a hedge against M2 inflation rather than overt CPI inflation. In emerging markets, the focus is more on remittances and neutral alternatives to dollar hegemony.Meanwhile, should our recession expectations materialize, the Federal Reserve would likely pause raising rates amidst softening inflation, while money printing and government budget deficits continue. Merely a lack of bad crypto-specific news, under the above scenario, could cause the price of Bitcoin to climb a wall of worry back to $30K again.3. Financial institutions will tokenize more than $10B in off-chain assets.Institutions will employ blockchains to simplify custody and settlement, while reducing costs for customers. KYC/AML will be enabled using identity protocols and permissioned sub-networks/applications. Already, MakerDAO has plans to deploy $1B into U.S. t-bills and other government securities with the help of BlackRock and Coinbase, allowing DAI holders to earn a higher yield on deposits.1 Real world loans on platforms such as Goldfinch, TrueFi, Maple and Clearpool sum to another $300M+. KKR has tokenized one of its private funds in partnership with Avalanche and Securitize. The Monetary Authority of Singapore’s Project Guardian is a collaborative initiative with the financial industry that seeks to test the feasibility of applications in asset tokenization and DeFi. MAS recently participated in transactions against liquidity pools comprising tokenized Singapore Government Securities, Japanese Government Bonds, Japanese Yen and Singapore Dollar.Among open-source blockchains, we think Ethereum, Polygon, Avalanche, Polkadot and Cosmos are best positioned. We can also predict with high confidence that industry pioneer VanEck will originate
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