Crypto holds firm as football giant accepts Shiba Inu payments

What’s happening in the world of crypto and blockchain? eToro‘s Simon Peters, gives his breakdown of the last week.

Crypto prices hold firm. Is ‘crypto winter’ passing?

Cryptoasset prices held firm last week as investors assessed the landscape for crypto. Bitcoin has now held steady around the US$30,000 level for several weeks, raising the hope that the worst of the ‘crypto winter’ has now passed for price falls. 

Bitcoin began the week below US$29,000 and rose close to US$32,000 on Tuesday, before trading back under US$29,500. It has since rallied again and is now trading just shy of the US$31,000 level.

Ether has been subject to some continued volatility, likely down to some investor uncertainty around The Merge, which is now firmly on the horizon. Last week the ETH token began below US$1,800 before rising above US$1,950 on Tuesday. However, its value fell below US$1,750 later in the week before now trading back around US$1,850. 

It is likely that ETH will continue to be affected by externalised factors until the outcomes of The Merge are clear. The technical update of the blockchain has profound implications for its uses and the token values. Theoretically, it will have a ‘deflationary’ effect on the cryptoasset, which could prove to be a valuable facet in the current high inflation environment.

Ethereum has strong fundamentals

Despite ongoing price volatility, the underlying fundamentals around the Ethereum blockchain look really strong and are especially notable ahead of the upcoming Merge.

Fresh data from Glassnode shows a record number of addresses holding ether. While the nominal price has fluctuated significantly in the past few months, one thing is clear – there are more network participants than ever before and the blockchain is performing the function it was designed for. The amount of ETH in Ethereum 2.0 deposit contracts is also at record levels.

The indication here is that many investors and market participants are playing a long-term game of participating in the network and holding a position of interest, despite recent short-term volatility. This is potentially a good strategy, especially if you have conviction in the use cases of ETH – which is essential to a good investment case.

The Merge is going to be a huge test for the network and will likely give it a direction of travel for the foreseeable future. The function changes proposed for it are nothing short of a game-changer.

Investors will be watching closely for progress and if we continue to see positive signals such as more record addresses, then the indication is that the blockchain, and therefore the price potential, will grow ever stronger.

Institutional investors quietly build Cardano stakes

Cardano has had something of a dramatic rise and fall in the past two years. But despite losing a significant amount of its value from the all-time high set in August last year, it would appear institutional investors are quietly building up significant positions in the token, per the latest CoinShares digital asset survey.

There are two processes at play here. The first comes purely from a diversification aspect. Institutional investors who have a mandate to invest in crypto will need to look at the whole market, which comprises hundreds of tokens.

Cardano (ADA) is a major component of that market now – it is like buying a selection of tech stocks and making sure you include Meta – it’s not the ‘biggest’ one but it’s an important player.

The second more fundamental process at play here comes from the ‘active’ manager standpoint of picking potential winners. While we see the crypto space continuing to be a highly diverse market with a variety of major blockchains, there will also be winners and losers. 

Cardano, while not yet on the scale of a chain such as Ethereum, is a serious contender. From that standpoint, it is a no-brainer for fund managers looking at potential winning investments.

Relative to other sectors, crypto is still in its early stages. Who wouldn’t now jump at the chance, with hindsight, to have invested in Meta (formerly Facebook) in its early days? It’s really important to have a robust investment case when looking at any asset and crypto is no different. Institutional investors seem to be firming up theirs now. 

Major Brazilian football club takes Shiba Inu

Major Brazilian football club Sao Paolo FC now accepts Shiba Inu as payment for tickets. It’s easy to forget that crypto is a truly global phenomenon, but news like this is a good reminder. Brazil is becoming something of a powerhouse for crypto and this is a good example.

Like the recent announcement that SpaceX would be accepting Shiba Inu for certain merchandise payments, this isn’t exactly going to move the dial for the token in terms of price demand. 

But it is clear that dominoes are falling in the right direction. It is also a useful reminder that it isn’t just the US, UK and Europe who are engaging in big crypto ideas. Latin America is a serious player in the sector and shouldn’t be ignored by any means.