Welcome to the Crypto.com Monthly Research Roundup Newsletter!
In this month’s collaboration with The Economist, we explore the extent to which digital payments are trusted by consumers and what barriers may exist to basic monetary functions becoming predominantly electronic or digital.
- The move towards a cashless society—ranging from credit cards and payment apps to cryptocurrencies and CBDCs—is at a crossroads, and varies greatly between countries. In the short term, this move is also influenced by fluctuations in market sentiment, such as those witnessed in April and May 2022.
- Government regulation (or a lack of regulatory frameworks) are seen as the main barrier towards a cashless society by consumers, institutional investors, and corporate treasurers. There are clear signs this is changing, with frameworks, approaches, laws, and pilot projects being introduced in several countries globally.
- Consumer demand for all digital currencies is expected to increase, according to institutional investors and corporate treasurers. This may be intensified by the move to the metaverse, and in particular the rise of NFTs.
Read the full report: Digimentality 2022 – Fear and Favouring of Digital Currency
2. Alpha Navigator
Institutional-focused report focusing on macro trends, market-neutral pair trades, style-factor screens, thematic baskets, and event driven ideas. Read the full Alpha Navigator report here
- All asset classes were down during the past 1-month period, amidst inflation concerns, monetary tightening, and a volatile geopolitical environment. Gold outperformed at -1.87%. BTC and ETH dropped -29.29% and -33.95%, respectively.
- ProShares, the largest provider of Bitcoin-linked ETFs in the U.S., launched its short-Bitcoin CME futures ETF recently on 21 June, under the ticker BITI. Recall that ProShares also launched the first long-Bitcoin CME futures ETF (BITO) back in October 2021 – terrible timing, as Bitcoin peaked the next month, and BITO is down 68% since that debut. BITO was launched when fear of missing out was at its peak – now comes BITI amidst extremely negative sentiment, will it be late to the party again? More market insights can also be found in our Market Pulse newsletter.
- Loan-to-Deposit ratios among DeFi lenders show strength (ability to lend more) in their financial positions (typically, the ideal LDR is 80% to 90%).
- Borrowers hold on to their collateral positions on MakerDAO and AAVE, while Compound’s deleveraging has continued for some time.
- Floor prices of popular NFT projects such as BAYC and CryptoPunks continued to fall in June.
4. Monthly Feature Articles
Article 1: Decentralisation in Blockchain: A Multifaceted Overview
- In this report, we study the three facets of decentralisation: consensus decentralisation, governance decentralisation, and wealth decentralisation. For instance, we found that for Ethereum, the United States hosts 45% of the nodes. Germany ranks second with 12.9%, followed by Finland and Singapore with 4.3% each.
Article 2: Scaling Blockchains: Layer 1 vs Layer 2 – An Overview of Scaling Solutions
- Layer 1 vs Layer 2 scalability solutions differ in whether they focus on or off the blockchain. Layer 1 solutions upgrade the blockchain architecture, while Layer 2 solutions construct a third-party network on top of the main blockchain to improve it. For example, the Lightning Network is a Layer 2 solution built on top of Bitcoin, which is Layer 1.
VIP article: Security in Blockchain Trilemma
- The major Layer 1 blockchains cover security in 5 dimensions: protocol enhancement, attack protection, security partnership, security audit, and the exploration of cutting-edge technologies.
Read more about “Security in Blockchain Trilemma’’ in our monthly exclusive report for private members.
Not a member yet? Find out how to join here.
5. Scholar report
In this month’s Scholar Report, we take a look at how the cryptocurrency market is connected to the traditional money market. Check out the full analysis here.
- Stablecoins are the medium linking both cryptocurrency and traditional money markets, while coins indirectly affect the latter via stablecoins.
- The positive effect of stablecoin (i.e., USDT and USDC) issuance on the commercial paper issuance is statistically significant for commercial paper with maturities ≤ 4 days. This suggests that stablecoin issuers pursue liquidity because they purchase commercial paper with the shortest period of maturities.
- The negative effect of market capitalisation growth in coins (e.g., BTC, ETH, and BNB were studied in the paper) on commercial paper issuance is mainly driven by those with maturities ≤ 4 days. This result implies an inverse effect on commercial paper issuance compared to what’s seen on that of stablecoins.
6. Economic & Crypto Conference Calendar from Market Pulse
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Research & Insights Team