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ETFS 21Shares Crypto Monitor - 17th March 2022

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Market Outlook

The total crypto market has been oscillating around the $1.9T mark as the vast majority of the large caps roam within a 5-10% range throughout the past week. However, Bitcoin performed better by almost 1%, Ethereum 1.3%, while XRP and Terra are up by 3.6% and 17.3%. The three biggest factors that tend to drive the US economy into a recession are an inverted yield curve, some kind of commodity price shock or Fed tightening. As of this morning, the Federal Reserve has announced its first interest rate rise in three years, approving a 0.25 percent hike.

Ichimoku Cloud Support For Bitcoin Near The $37k Mark

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Source: TradingView and CoinDesk

Bitcoin dodged a bearish scenario on Monday. As shown in the chart above, the Ichimoku cloud – a collection of technical indicators that show support and resistance levels, as well as momentum and trend direction – showed weekly support for Bitcoin near the $37K mark with a little tumbling overnight before stabilizing to rest near the $40K mark. However the leading cryptocurrency is still well below last week’s all-time high, $42,600. To further understand the chart, it’s important to know that the Ichimoku cloud collects several averages, plots them on a chart and computes a “cloud” in an effort to give a data-driven forecast.

Regulatory Updates

On the regulatory watch this week: US President Joe Biden signed an Executive Order titled Ensuring Responsible Development of Digital Assets, assigning government agencies to a number of tasks. Here are the key takeaways:

The Attorney General, in consultation with the Secretary of the Treasury Department and the Chairman of the Federal Reserve, has 180 days to submit an assessment of whether legislative changes would be necessary to issue a US central bank digital currency (CBDC). A corresponding legislative proposal will follow; within 210 days.

With regards to global competition, the Department of Commerce is asked to develop a framework for interagency international engagement with foreign counterparts to create an international forum to enhance the adoption of digital assets and standardized rules.

National security agencies have 90 days to supplementary annexes on cyber security. The order asked agencies to also make sure that US cryptocurrency laws align with those of the country’s allies to ensure international frameworks and partnerships are responsive to risks.

The Treasury, Commodity Futures Trading Commission (CFTC), Securities and Exchange Commission (SEC), Consumer Financial Protection Bureau (CFPB) among others are assigned to gather recommendations to develop a policy for the digital asset sector.

The Treasury Secretary is assigned to conduct a report on the future of money and payment systems. The report should delve into the impacts of digital assets on economic growth, financial growth and inclusion, national security, and the extent to which technological innovation may influence that future.

Just today, it was reported that Saudi Arabia is considering accepting yuan when selling oil to Chinese customers, as oil surges amid the Russo-Ukrainian conflict. This foreshadows the scenario we have long anticipated at 21Shares, an effort to hedge against the dollar's hegemony with the rise of central bank digital currencies (CBDCs). Back in 2020, our Director of Research Eliezer Ndinga pointed out that leaders from Iran, Malaysia, Turkey, and Qatar were looking at cryptocurrencies as substitutes to the US dollar in bilateral trade agreements, according to this article.

This Thursday, March 17, the Senate Committee on Banking, Housing, and Urban Affairs will convene a hybrid session titled, “Understanding the Role of Digital Assets in Illicit Finance.” The hearing will focus on the potential use of crypto to evade sanctions amid the Ukraine-Russia conflict. Attending this hearing as a witness is Jonathan Levin, Co-founder and Chief Strategy Officer of Chainalysis, which recently found that the share of illicit transactions in crypto went from small to nonexistent in the past year, you can read more in its Crypto Crime Report 2022. Chainalysis also just released a new public oracle to help identify sanctioned addresses engaging with smart-contracts.

On that note, Japanese authorities ordered crypto exchanges on Monday not to process transactions involving crypto assets subject to asset-freeze sanctions against Russia and Belarus. However, joining the likes of Kraken and Coinbase Global, Tether indirectly declined Ukraine’s plea to halt transactions that involve Russian users. “Tether conducts constant market monitoring to ensure that there are no irregular movements or measures that might be in contravention of international sanctions,” the company said in a statement.

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