Crypto adoption will prevail, despite current bearish sentiment
There is an increasing number of market participants betting on the Fed to resume rate hikes of 50 bps instead of 25 bps.
February 28, 2023 - The crypto market remains mostly moving sideways in the last 24h, with investors still digesting the worsened macro data released last week. Indeed, there is an increasing number of market participants betting on the Fed to resume rate hikes of 50 bps instead of 25 bps. According to CoinShares’ Digital Asset Fund Flows Weekly Report there was an inflow of ~US$10mn in short Bitcoin investment products, while long Bitcoin investment products had ~US$12mn outflows. However, Bitcoin futures funding rates remain positive, suggesting that traders are still willing to go long Bitcoin. In our view, the market sentiment regarding risk assets has deteriorated after stubborn high inflation data, but we don’t think the Fed will resume 50 bps hikes, for now.
In a survey commissioned by Coinbase, 20% of Americans own crypto, and they are frustrated with the traditional financial system. The numbers have remained consistent since January 2022, drifting between 17% and 20% over the last 12 months. Demographically, younger adults are the most optimistic about crypto, with 36% of Gen Z (born between 1997 to 2013) and 30% of Millennials (born between 1981 and 1996) currently owning digital assets. We believe that, for this group, traditional asset classes have no longer been able to solely generate enough return rates to build an asset
portfolio. Therefore, this generation will have to rely on the emergent digital asset class to produce additional return rates to build and protect their future wealth, drastically increasing the crypto market stake in the world’s total wealth in the next few years.
Despite this level of adoption among, US regulators keep attacking the industry. The SEC subpoenaed the trading app and brokerage Robinhood over its cryptocurrency services. We see a demographic dynamic playing out with younger generations embracing crypto, while older generations, in decision-making positions at regulatory agencies, are trying to curb it. In our view, time is on the industry’s side.
We are a global cryptoassets exchange. We became the first business worldwide to use NASDAQ’s technology to offer cryptocurrencies trading. We are also the first exchange not charging trading fees, keeping our clients assets with Fireblocks, the main institutional cryptoassets storage company in the world, and also having insurance for those assets.
Therefore, we built a governance level in the crypto market only compared with that of traditional financial institutions.