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The price correction of the past two weeks really does seem to be in our rearview mirror, with the price of bitcoin once again flirting with its record high. It must be said that the industry is really on a roll right now, with institutional players taking turns to jump on board with major announcements boosting the adoption of digital currencies.
First, we learned on Monday that Visa was officially launching its pilot program allowing payment for transactions on its network in cryptocurrencies. The cryptocurrency pegged to the U.S. dollar, the USDC, will be used in the process. Until now, if a customer wanted to use their Visa crypto card to pay at a merchant, the digital currency had to be converted into fiat money in order to complete the transaction. Visa’s latest step, which will use the Ethereum blockchain, strips out the need to convert digital coin into traditional money in order for the transaction to be settled. “We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we’re seeing demand from our clients to be able to build products that provide that access for consumers,” Cuy Sheffield, head of crypto at Visa, said.
The very next day, it was PayPal’s turn to launch its direct cryptocurrency payment service. The payment facilitation company is now allowing U.S. consumers to use their crypto assets to pay for purchases at 29 million merchants. At least, this will be the case within a few months. Unlike the product presented by Visa however, a conversion from cryptocurrencies to fiat money will take place. “This is the first time you can seamlessly use cryptocurrencies in the same way as a credit card or a debit card inside your PayPal wallet,” President and CEO Dan Schulman commented ahead of a formal announcement. “We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants.”
Goldman Sachs’ wealthiest clients will have access to the cryptocurrency market through the firm in the coming months. Indeed, according to CNBC, it has now been confirmed that in Q2 of this year the investment giant will introduce its various options to its high net worth clients. According to Mary Rich, global head of digital assets for the bank’s private wealth management division, Goldman Sachs is looking to offer a “full spectrum” of investments across the emerging asset class, “whether that’s through the physical Bitcoin, derivatives or traditional investment vehicles.”
U.S. Fed Chairman Jerome Powell said last week that a centralized digital currency was being actively explored. We learn this week that at least two prototypes of a digital dollar are nearing completion, developed by officials at the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT). They plan to unveil their research as early as July, said James Cunha, who leads the project for the Boston Fed. He told Bloomberg, “The Boston Fed and MIT hope to unveil some of their work in the third quarter, including at least two prototype software platforms that could move, store and settle transactions made with digital dollars.”
The NFT (non-fungible tokens) craze isn’t slowing down, quite the opposite. One of the strongest projects behind this new technology is definitely the NBA’s Top Shot product. It enables collectors to buy packs of “moments”, which are comparable to traditional collector cards. The only difference is that these moments are entirely virtual, their possession and rarity being recorded on the blockchain. Already, the rarest and most popular moments are trading for more than a quarter of a million US dollars on the secondary market. Sports legend Michael Jordan is now actively involved in the project. Indeed, the firm has just raised a new round of capital to the tune of $305M. Kevin Durant, Michael Jordan, the investment firm Coatue and a deep bench of 30 athletes plus the rapper 2 Chainz have piled into the non-fungible token (NFT) firm, the startup said. Citing a person with knowledge of the situation, the funding round places Dapper’s current valuation at $2.6 billion.
Finally, it should be noted that the Chigago Merchantile Exchange plans to launch “micro” bitcoin futures contracts starting in May. The new contracts, worth one-tenth of a bitcoin, will be available for trading on May 3rd and will be settled in cash. The goal is obviously to make the product available to a wider range of wallets.
What can we say about the technical picture except that we have all the indicators of a rebound and upcoming tests of the all-time highs, possibly leading us to a new upward price discovery. The action looks a lot like it did in January. We can see how this subsequently translated into February. Will April bring another strong push? Technically speaking at least, we can call the scenario plausible.
Rivemont Investments, manager of the Rivemont Crypto Fund.
The presented information is as of March 31st, 2021, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
