Week in Review: Crypto Rally Gains Steam, Western Union Open for Business and Facebook Dabbling in Stablecoin
Cryptocurrencies have signaled recovery this week after a prolonged period of chaos dragged markets to consecutive yearly lows. Interestingly, the recovery began on Dec. 17, the one-year anniversary of bitcoin’s famous climb to $20,000. While it’s still too early to declare the end of ‘crypto winter,’ price action over the past four days suggests the worst of the downtrend may have passed.
The same cannot be said for stocks, which are currently mired in one of their worst downtrends since the financial crisis. For the first time since 2009, the Nasdaq Composite Index is approaching bear market territory, a feat that would have seemed highly unlikely just three months ago.
Flush of Green
Crypto markets saw an influx of $30 billion this week, as bitcoin and the major altcoins registered high double-digit growth rates. The following snapshot, courtesy of CoinMarketCap, highlights the extent of the rally over the past seven days:
Among the top-20 coins excluding stablecoins, weekly gains ranged between 19% and 143%. Bitcoin cash (BCH) skyrocketed above $200 to retake the fourth spot on the market cap ranking. BCH plumbed consecutive record lows following the Nov. 15 hard fork.
Bitcoin surged nearly 25% and clawed back above $4,000 for the first time in weeks. Trade volumes on virtual currency exchanges eclipsed $8 billion in the latter half of the week.
Bitcoin SV kept its foot on the pedal Friday, rising double-digits and extending its weekly climb to 51%. BSV, which is currently valued at $115, has jumped to no. 7 on the market cap list.
The combined market value of all cryptos reached $134 billion on Friday, having gained $33 billion since last Saturday.
Facebook Developing a Stablecoin
Several sources, including CCN and Bloomberg, have confirmed that Facebook Inc. is working on a new cryptocurrency for its WhatsApp messaging platform. Citing sources familiar with the matter, Bloomberg reports that Facebook is developing a stablecoin that would allow users to transfer money directly through the messaging app. Although a release date remains far off, Facebook’s entry into the crypto economy looks to be gaining traction.
Is Facebook interested in Coinbase? Read: Facebook’s Crypto Ad Ban Reversal Reignites Speculation Over Coinbase Takeover.
Facebook now has roughly 40 employees working on various blockchain applications; the potential foray into stablecoins confirms prior speculation over the company’s involvement in the space.
WhatsApp has an absolutely massive consumer base with over 200 million active users in India alone. According to the World Bank, India received $69 billion in remittances in 2017.
Western Union Opens Door to Crypto
After dabbling in Ripple’s state-of-the-art technology for the past year, Western Union has announced it is ready and willing to support cryptocurrencies.
In a short video circulated via Twitter this week, the global payments giant said it is “ready to adopt any kind of currency,” including crypto. This message was relayed by Odilon Almeida, Western Union’s CEO.
“If we one day feel like it’s the right strategy to introduce cryptocurrencies to our platform, technology-wise it’s just one more currency,” he said. “I think cryptocurrency may become one more option of currency, or assets, around the globe to be exchanged between people and businesses. If that happens, we will be ready to launch.”
Are we nearing the end of the longest bull market in history? The recent capitulation on Wall Street seems to indicate as much.
U.S. equities have been under intense selling pressure for the balance of the fourth quarter. On Thursday, the Nasdaq Composite Index came within half a percent of a bear market for the first time since 2009. (A bear market is generally defined as a decline of 20% or more from a recent high.)
Trade pressures, slowing economic growth and rate-hike jitters have left equity markets battered in recent months. The latest selloff intensified late Wednesday after the Federal Reserve raised interest rates for the fourth time this year but failed to quell investor angst over the impact of future adjustments on the market. Federal Open Market Committee (FOMC) members conveyed their outlook for two more rate hikes next year, down from a prior estimate of three but higher than what analysts had expected.
The Week Ahead
Cryptoassets have a long way to go before declaring the end of the bear market. Latest signs of a price recovery are encouraging, but a series of technical hurdles for bitcoin and some of the leading altcoins suggests the path of least resistance is lower (or, at the very least, sideways). That being said, a positive news cycle centered on increased business and institutional adoption could go a long way in convincing the bulls of a brighter future.
In traditional markets, trade volumes will decline substantially between Christmas and the New Year. The so-called Santa Rally is showing no signs of materializing this year, adding to growing doubts over the health of the bull market. Those doubts will likely be vindicated in the near future.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.