Around the block

Special Commentary

January 13, 2023

Monthly cryptocurrency and blockchain-related highlights from the Truist Investment Advisory Group

Two highlights:

1. Crypto winter enjoying a brief respite

  • The total market cap of the crypto ecosystem, is down over 60% from its 2021 all-time highs, but bounced from $780 billion to $920 billion in the last few weeks.
  • The Fed onslaught of 7 rate hikes totaling 4.25% in 2022 has decimated crypto valuations. The recent rebound is alongside other risk assets stemming from an expected slower pace of tightening or even a Fed pause.
  • Investors should exercise caution interpreting this as an all-clear sign. Crypto specific risks and a persistent Fed remain headwinds.

2.  Bitcoin and Ethereum in focus

  • Bitcoin is approaching its next halving event in May 2024. Prior halvings (the amount of BTC awarded to miners is cut in half) have seen BTC prices advance in anticipation.
  • Ethereum is slated to undergo another upgrade (the Surge) late 2023. This could be more consequential than 2022’s Merge.
  • The Surge should magnify the quantity of transactions across the Ethereum blockchain network - a plus for real economy use cases

Industry developments

  • Starbucks launched Odyssey, extending its customer loyalty program with Web 3 technology and NFT’s, offering customer Journeys focused on coffee, connection and community.
  • Bitcoin miner Core Scientific filed for Chapter 11  bankruptcy but has since obtained financing from others, including Blackrock, to continue operating as it works through reorganization. 

Regulatory developments

  • Senators Elizabeth Warren (D) and Roger Marshall (R) introduced the Digital Asset Anti-Money Laundering Act of 2022, aligning crypto with traditional banks regarding illicit activity.
  • Rep Patrick Henry, Chairman of the House Financial Services Committee announced the first Sub-Committee on Digital Assets and Financial Technology and Inclusion.

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