Značka: Bloomberg

Bukele’s Bitcoin trade raises El Salvador’s sovereign credit risk: Moody’s

El Salvador’s historic embrace of Bitcoin (BTC) could have negative consequences on the country’s sovereign credit outlook, according to Moody’s Investors Service. Moody’s analyst Jaime Reusche told Bloomberg this week that El Salvador’s Bitcoin gambit “certainly adds to the risk portfolio” of a country that has struggled with liquidity issues in the past. Under the leadership of President Nayib Bukele, El Salvador has recognized Bitcoin as legal tender and issued a state-run crypto wallet to facilitate payments, transfers and ownership. Along the way, El Salvador has amassed a treasure chest of 1,391 BTC, with President Bukele famously “buying the dip” on several occasions by using Bitcoin’s volatility to add to his country’s holdings. Buying the dip 150 new coins added.#BitcoinDay #BTC— Nayib Bukele (@nayibbukele) September 7, 2021However, Reusche warned that accumulating more BTC would elevate El Salvador’s risk of default. “If it gets much higher, then that represents an even greater risk to repayment capacity and the fiscal profile of the issuer,” he said.PREDICTION: The El Salvador bitcoin bond will be ridiculously oversubscribed pic.twitter.com/2Kj0urm0SN— Pomp (@APompliano) November 23, 2021

In addition to downgrading El Salvador’s credit rating, Moody’s has warned that the country’s so-called Bitcoin volcano bond could limit its access to foreign bond markets. Proceeds of the volcano bond, which is expected to raise roughly $1 billion, will be used to fund El Salvador’s Bitcoin City project. Related: Tonga to copy El Salvador’s bill making Bitcoin legal tender, says former MPAttacks on El Salvador’s Bitcoin gambit by legacy financial institutions are nothing new. In November 2021, the Washington-based International Monetary Fund warned El Salvador against using Bitcoin as legal tender. Meanwhile, the World Bank has rejected the country’s request for assistance in implementing its Bitcoin Law over alleged environmental and transparency concerns. Nevertheless, El Salvador has remained steadfast in embracing Bitcoin and in creating an attractive environment for crypto investors and entrepreneurs. Last week, finance minister Alejandro Zelaya said the country’s Bitcoin Law has already attracted foreign investment.

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Binance CEO CZ richest crypto billionaire at $96B: Bloomberg

Changpeng Zhao, the CEO of Binance, tops the list of richest crypto billionaires with an estimated net worth of $96 billion.According to Bloomberg CZ ranks 11th among the world’s richest people as Binance retains its position as the biggest crypto exchange in terms of trading volume.CZ, the 44-year-old crypto entrepreneur, overtook Asia’s richest billionaire Mukesh Ambani despite Bloomberg excluding his personal crypto holdings such as Bitcoin (BTC) and the exchange’s in-house Binance Coin (BNB) tokens.The industry is growing.— CZ Binance (@cz_binance) October 26, 2021According to Bloomberg’s estimation, CZ stands just behind Oracle co-founder Larry Ellison, whose net worth currently leads by roughly $11 billion. While this was the first time Bloomberg estimated CZ’s fortune, Binance’s growth trajectory signals a possibility of exceeding tech goliaths such as Meta’s Mark Zuckerberg and Google co-founders Larry Page and Sergey Brin.Currently, Zuckerberg, Page and Brin and rank 5th, 6th and 7th respectively, with Tesla CEO Elon Musk ranking leading the billionaires’ list with an estimated fortune of $263 billion.Top 10 richest billionaires. Source: Bloomberg Billionaires Index.Data from Cointelegraph Markets Pro and TradingView confirm that the price of BNB appreciated over 1,300% in the past year alone. If calculated, CZ will become the first crypto entrepreneur to enter the top 10 billionaires list.Price performance of BNB token FY 2021. Source: TradingView.Related: Former Binance execs say exchange is worth $300B: ReportThe success of Binance globally can be attributed to CZ’s ongoing efforts to accrue operational licenses across all jurisdictions globally. Despite regulatory hurdles, Binance maintains an ongoing partnership and acquisition streak to remain a leader in the crypto trading space.Most recently, the crypto exchange finalized the acquisition of Swipe, a prominent crypto Visa card provider that operates at over 70 million locations worldwide. In addition, Binance also launched a $1 billion initiative to fast-track the development of the Binance Smart Chain ecosystem and advance mainstream adoption across the financial technology sector.

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Bitcoin could outperform stocks in 2022 amid Fed tightening — Bloomberg analyst

The Federal Reserve’s signaling for tighter monetary policy in 2022 could provide short-term headwinds for risk assets such as stocks and cryptocurrency, but there’s a good chance that Bitcoin (BTC) still comes out on top as investors recognize its value as a digital reserve asset, according to Bloomberg commodity strategist Mike McGlone. The January edition of Bloomberg’s Crypto Outlook described the Federal Reserve’s plan to raise interest rates in 2022 as a possible “win-win scenario for Bitcoin [versus] the stock market.” The reasons stem from the fact that the S&P 500 Index is currently the most overextended above its 60-month moving average in over two decades and that Bitcoin is seeing growing mainstream appeal as an inflation hedge.“Stretched markets have become common, but commodities and Bitcoin appear to be early reversion leaders,” McGlone said. “It’s a question of bull-market duration, and we see the benchmark crypto coming out ahead.”Minutes from the Federal Reserve’s December policy meeting revealed on Wednesday that central bankers are ready to aggressively curb their stimulus support more quickly than previously expected. The plan, at least for now, includes three interest rate hikes in 2022 accompanied by a reduction in the Fed’s balance sheet, which currently stands at nearly $8.3 trillion in Treasurys and mortgage-backed securities. Markets may be overreacting short-term but looking beyond hard to overestimate how hawkish the Fed minutes were. QE reduction + 3 hikes OK, but 3 hikes + accelerated QT was not in anybody’s radar.— Alex Krüger (@krugermacro) January 6, 2022Although stimulus reduction is usually considered negative for risk assets, a broad category that includes equities and cryptocurrencies, McGlone believes Bitcoin is in a unique position to outperform in this environment:“Cryptos are tops among the risky and speculative. If risk assets decline, it helps the Fed’s inflation fight. Becoming a global reserve asset, Bitcoin may be a primary beneficiary in that scenario.”Within the broader cryptocurrency market, the Bloomberg analyst said he expects the “enduring trio” — namely Bitcoin, Ether (ETH) and dollar-pegged stablecoins — to maintain dominance throughout the year. BTC/USD is in a clear downtrend that has accelerated following the release of the FOMC minutes. Data from Cointelegraph Markets Pro and TradingView showed a sharp decline in the value of Bitcoin on Wednesday following the release of the Federal Open Market Committee meeting minutes. The flagship cryptocurrency plunged below $43,000 for the first time since September and is currently down 8% over the past 24 hours.

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Ethereum plunges 13%, down more than Bitcoin after Fed spooks crypto market

Ethereum’s native token Ether (ETH) plunged sharply hours after the U.S. Federal Reserve released the minutes of their December meeting, showing that they eye a faster timetable for hiking interest rates in 2022.The minutes showed that the Federal Open Market Committee (FOMC) is in favor of raising short-term rates “sooner or at a faster pace than participants had earlier anticipated.” According to the CME Group, trading in the interest-rate futures market showed a two-thirds possibility of the first increase in March.Ether turned lower after the minutes were released, dropping by over 13.50% to as low as $3,300. Its plunge mirrored similar downside moves across the crypto market, with Bitcoin (BTC) shedding a little over 9% to nearly $42,100.ETH/USD four-hour price chart. Source: TradingViewIncontestably, ETH/USD returned more losses to its investors than BTC/USD after the Fed’s spook. It appears traders decided to unwind tokens sitting atop better long-term profits than Bitcoin. For instance, Ether’s returns in the last 12 months — even after the Fed-led drop — came out to be around 175%. On the other hand, Bitcoin’s profits were nearly 15.75% in the same period.Performance of top fifteen cryptocurrencies. Source: MessariSimilarly, Ethereum’s top rival Solana (SOL) also logged more losses than Bitcoin, dipping by more than 13.75% after the Fed news. Nonetheless, its 12-month profits came out to be more than 7,500%, signaling further extreme corrections if the crypto market’s bias remains skewed toward the bears.ETH/BTC reaches key rebound levelEther also plunged against Bitcoin, according to the performance of a widely-traded instrument, ETH/BTC, in the past 24 hours.The pair dropped by a little over 5% to hit 0.077 BTC. In doing so, it also reached a critical support level near 0.078 BTC that has recently been instrumental in keeping Ether bullish against Bitcoin by limiting the former’s downside bias.ETH/BTC daily price chart showing its key support level. Source: TradingViewMeanwhile, the 0.078 BTC-support also appeared to be the lower trendline of Ether’s descending triangle. Descending triangles are continuation patterns that typically send the price in the direction of its previous trend after a consolidation period.That increases Ether’s potential to remain stronger than Bitcoin in the long run, as long as it breaks above the triangle’s upper trendline with convincingly higher volumes.Too soon to fear the FedFor months, Fed officials were stuck to the opinion that higher inflation in the U.S. drew its inspiration from supply-chain bottlenecks, with chairman Jerome Powell asserting that it would resolve by itself. But in the latest meeting, he showed less conviction toward the so-called “inflation-is-transitory” narrative.That is primarily because the U.S. consumer price index (CPI) reached a nearly 40-year high in November 2021, hitting 6.8% year-over-year. Meanwhile, core consumer prices, which exclude energy and food categories, rose to 4.7% from a year earlier; it came to be above the Fed’s preferred inflation target of 2%.”There’s a real risk now, I believe, that inflation may be more persistent and…the risk of higher inflation becoming entrenched has increased,” said Powell on Dec. 15 last year after concluding the FOMC meeting.U.S headline inflation over the years. Source: Bloomberg, Bureau of Labor StatisticsMadison Faller, a global strategist at JPMorgan Private Bank, told Bloomberg that investors should not fear the Fed, noting that their three planned rate cuts in 2022 would do little in curbing down consumer prices. Excerpts from her statement:“Growth and inflation will be decelerating throughout 2022, but nonetheless remain above historic trend levels. We think this will call for a much lower risk of a Fed-induced material market correction.”As Cointelegraph also covered, fears of persistently higher inflation, which, in turn, tends to devalue cash, have prompted mainstream investors to park their money in the crypto sector. For instance, Thomas Peterffy, the billionaire founder of brokerage firm Interactive Brokers Group Inc., admitted that he holds 2-3% of his net assets in crypto just in case the fiat money “goes to hell.” Likewise, Bridgewater Associates founder Ray Dalio revealed last year that his investment portfolio contains Bitcoin.The outlook against inflation promised to offer some respite to Ether, which tends to tail the Bitcoin price movements. Meanwhile, Sean Farrell and Will McEvoy, strategists at Fundstrat Global, noted that investors should increase their investments across the smart contracts sector to get the most from the next market rebound.”Given the current macro backdrop, leverage within the Bitcoin market, and recent robustness seen in the altcoin market, we think it’s appropriate to be overweight Ethereum and other smart contract platforms,” they said in a note, adding:”We probably would not bet the farm near-term on Bitcoin but think there is an opportunity in going long volatility via derivatives strategies.”The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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