GB Market Commentary 27/05/2022
by Marcus Sotiriou
Yesterday the crypto market tumbled despite stocks dropping. Ethereum and most altcoins dropped significantly more than Bitcoin, as Bitcoin dominance (the percentage of the cryptocurrency market which is in Bitcoin) surges to highs not seen since October 2020.
We can see in the chart from Glassnode below that Bitcoin dominance is currently in an uptrend, which has correlated with bear markets. I think investors preferring Bitcoin in this environment is not a surprise, as they deem it as a safe haven during this time of uncertainty with macro headwinds. Even though Bitcoin is also falling, it is still draining liquidity from other altcoin pairs, as there is a lack of buyers in altcoins in this current market. This lack of appetite for altcoins which are further on in the digital asset risk curve his has been exacerbated by the collapse of UST stablecoin.
Cryptocurrency regulation in Paraguay is progressing steadily. A crypto bill introduced in December has been approved by the Chamber of Representatives in the country. Paraguay has cheap electricity costs, so cryptocurrency mining poses a lucrative opportunity for the country, which the bill provides clarity on. I suspect more South American countries to follow suit where currency devaluation is a prominent issue.