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Geopolitical tension sent crypto spiralling last week, killing off a nascent recovery for bitcoin and ether prices, among others.
The price of bitcoin began the week marching to the $44,000 level but sank on renewed tensions between Ukraine and Russia on Thursday. The price dropped from a high of $44,510 on the eToro platform to trade around the $40,000 level.
A second hit to crypto prices took place over the weekend on the news that a major NFT hack took place. The panic from NFT traders on social media sent the price even lower to trade around $38,000. At the time of writing the price has recovered a little and is now around $39,000.
Ether likewise rose above $3,100 early in the week before plummeting on Thursday on geopolitical tensions. The price reached as low as $2,561 on eToro before recovering to trade around $2,700 this morning.
Dominoes fall as Georgia signal crypto tax incentives
Georgia has become the latest state in the US to signal that it’s ready to incentivise the crypto mining sector.
The state has clearly seen some of its neighbours beginning to benefit from the burgeoning crypto sector and does not want to miss out on potential tax receipts from inviting businesses to its neighbourhood.
The measures in legislation are small but the intent is big. Like the legalisation of marijuana in the US, state-by-state, the dominoes are falling when it comes to pro-crypto policies.
The Governor of Colorado also recently announced he was open to the idea of taxpayers paying their bills in crypto, with the hope the state would be able to accept crypto payments by the summer. Governor Polis sees Colorado as the ‘first digital state.’
What is clear is that a variety of states are now vying to be seen as the most pro-crypto possible. This is a very positive signal for the market and the industry more broadly.
Sequoia bets big on crypto
Major investment firm Sequioa has made a $500 million bet on crypto, launching a fund to invest in tokens.
The fund will mainly buy cryptoassets on third-party platforms, functioning as a sub-fund to the flagship Sequoia Capital Fund which invests in firms in the cryptoasset space.
The move is a big bet from Sequoia on the cryptoasset market and marks an interesting moment, especially given some of the softness in token prices in 2022.
The firm says it is backing tokens with a 20-year lens. What is clear from this is that crypto is no longer about making a quick profit before diving out - major financial institutions are buying in and preparing to hold for the long term.
Long-termism is fundamentally a good thing and a huge confidence boost for the market at a tricky moment.
Morgan Stanley sees Ethereum risk potential
Major financial institution Morgan Stanley has called Ethereum a greater investment risk than bitcoin.
The firm grounded its scepticism in the fact that bitcoin has a ‘unique’ purpose, whereas the Ethereum blockchain has a sea of competitors in the likes of Cardano, Solana and others.
This is fundamentally correct. Bitcoin is far and away from the most powerful crypto for what it does. Similarities could be drawn with Dogecoin or SHIB, but really they don’t compare.
The comparison of Ethereum to other app-building blockchains is fair, however. The question for investors is to balance this risk and think about diversifying within the sector so as to have a stake in a variety of projects.
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