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Bitcoin slumped last week as fears over interest rate hikes and the end of quantitative easing plagued markets. 

The world’s largest cryptoasset began last week above $45,000 but slid across the week to now trade below $42,000. Ether meanwhile followed a similar trajectory, briefly trading above $3,500 but now well below $3,200. 

The moves down underpin what has emerged as a significant trend in 2022 - that cryptoassets don’t appear immune to rate hike environments. Moving to a similar beat to traditional stock markets such as the NASDAQ100, crypto appears to be struggling under an increasing rate environment.

Bitcoin is still in the upper half of the range it has traded in 2022, meaning if it can hold its level above $40,000, then confidence could return to the market. What is clear is the ebullience of the past few weeks led to the token being overbought and is now suffering the consequences of that. 

The Bitcoin 2022 conference held in Miami last week saw a slew of pronouncements on the cryptoasset and the space more broadly, but unlike in past years, nothing of serious note seems to have buoyed the price this time around. 

Elon Musk calls for Twitter dogecoin payments

Tesla chief executive and now biggest shareholder of Twitter, Elon Musk has suggested changes to Twitter that would include the incorporation of dogecoin payments.

The eccentric billionaire bought a 9% stake in the firm last week and was thereafter invited to join its governing board. Musk has since made a series of suggestions for the platform, which now include crypto.

He has suggested that Twitter’s Blue subscription model could permit payments made in dogecoin. During a thread on the platform on how users could pay, he added: “maybe even an option to pay in Doge [sic].”

Musk is perhaps one of the few public figures in the world who can move crypto markets just through the things he says. His pronouncements have already had an impact on the price of dogecoin, which soared from around $0.1425 to above $0.1550 – a jump of around 9%.

At this point it is unlikely that the price will move significant amounts further. But watchers will be looking for evidence that Musk’s ideas might become reality, as he is no longer an armchair observer, but an active participant in the Twitter platform’s future development.

Central American bitcoin dominos begin to fall

Two more Central American nations have taken a step closer to joining El Salvador in accepting bitcoin as legal tender.

Honduras, a special economic zone on the tourist island Roatán in the Caribbean has officially begun accepting bitcoin as legal tender. The zone labeled “Honduras Prospera” was created in 2020 in order to encourage investment and autonomous economic growth for the troubled nation.

The Honduran Government has officially enabled the use of bitcoin by businesses, individuals, and the local government. The economic zone will also be able to issue bitcoin bonds, similar to that of El Salvador.

Meanwhile in Mexico, the President has invited Samson Mow, former CSO of Blockstream, to the country to discuss the possibility of implementing bitcoin as legal tender. The message was conveyed by a Mexican senator, Indira Kempis, who is closely associated with legislative attempts to bring greater inclusion of crypto into the Mexican financial system.

While the plans for bitcoin in Mexico are still in their infancy, the potential adoption of the cryptoasset as legal tender in the nation would be a game-changer. Both El Salvador and Honduras are relatively small in the greater scheme of things, but Mexico is a major nation with nearly 130 million citizens. Were the country to make bitcoin legal tender, the potential for an explosion in usage would be extraordinary.

ETH hash rate hits an all-time high as The Merge approaches

The hash rate for ether has jumped 13% in three months as miners gear up for ‘The Merge’ and hit an all-time high (ATH).

The hash rate – which measures the performance of all the miners on the network – has been ticking up consistently as The Merge approaches, reaching a new ATH on 7 April. Miners are pushing hard to create more tokens before the Ethereum network from proof-of-work (PoW) to a proof-of-stake (PoS) system.

The Merge will see the implementation of a PoS system, agreed in order to reduce the inefficiency and poor environmental credentials of the PoW system. The Merge will quite likely ramp up the deflationary nature of Ether as staking is rewarded by the system instead of coin creation.

The booking hash rate is the signal that miners are plugging away to build more blocks ahead of this changeover. It is currently still planned for the second quarter of this year, and the potential implications for Ethereum and the crypto market more generally cannot be understated.