Tag: Morgan Stanley

Potential Fed Tightening Driving Short Term Crypto Sentiments: Analyst

by Blockchain News

The digital currency ecosystem has continued to experience volatility, with a declining market capitalization sweeping across the board.

BTC2.jpg

While the combined cryptocurrency market capitalization is down by 1.58% to $1.01 trillion, with Bitcoin (BTC) leading the losses.

Considering the state of the digital currency ecosystem, Morgan Stanley’s analyst, Sheena Shah, revealed in a note to clients on Monday that the nascent crypto market is still very much subjected to the Federal Reserve’s continuous quantitative tightening expectations. 

According to Shah, the fact that the stablecoin’s market capitalization has stopped falling is a very positive sign that institutional crypto deleveraging appears to have paused. 

“Stablecoin availability is a sign of liquidity within the crypto world and demand for crypto leverage. In early June, Tether (USDT), the largest stablecoin, saw its market capitalization fall 20% in about a month, causing the crypto equivalent of quantitative tightening,” Shah said in a note to clients.

“Around the same time, bitcoin fell 45% and traded below $30k. This week marked the first time since April that stablecoin market capitalisation has stopped falling on a monthly basis. The market cap is still down 20% from the peak (12% excluding TerraUSD), but this may be a sign that the extreme institutional deleveraging appears to have paused for now.”

Shah also pointed out that the price of Bitcoin typically weakened in Asian trading hours in June. The Morgan Stanley analyst noted this decline to align with their observation that U.S. treasury yields were rising most during the U.S. hours, a representation of Fed tightening expectations.

“We do not think that bitcoin weakening most during U.S. hours necessarily tells us that it was U.S. investors selling bitcoin as crypto traders could trade 24 hours a day. However, it does suggest that U.S. central bank monetary policy tightening expectations have been an important driver of the crypto bear market this year,” the note reads.

The digital currency ecosystem is expected to react in a very significant swing over the next few months until both the US and the global economy remain steady.

Image source: Shutterstock

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Potential Fed Tightening Driving Short Term Crypto Sentiments: Morgan Stanley

by Blockchain News

The digital currency ecosystem has continued to experience volatility, with a declining market capitalization sweeping across the board.

BTC2.jpg

While the combined cryptocurrency market capitalization is down by 1.58% to $1.01 trillion, with Bitcoin (BTC) leading the losses.

Considering the state of the digital currency ecosystem, Morgan Stanley’s analyst, Sheena Shah, revealed in a note to clients on Monday that the nascent crypto market is still very much subjected to the Federal Reserve’s continuous quantitative tightening expectations. 

According to Shah, the fact that the stablecoin’s market capitalization has stopped falling is a very positive sign that institutional crypto deleveraging appears to have paused. 

“Stablecoin availability is a sign of liquidity within the crypto world and demand for crypto leverage. In early June, Tether (USDT), the largest stablecoin, saw its market capitalization fall 20% in about a month, causing the crypto equivalent of quantitative tightening,” Shah said in a note to clients.

“Around the same time, bitcoin fell 45% and traded below $30k. This week marked the first time since April that stablecoin market capitalisation has stopped falling on a monthly basis. The market cap is still down 20% from the peak (12% excluding TerraUSD), but this may be a sign that the extreme institutional deleveraging appears to have paused for now.”

Shah also pointed out that the price of Bitcoin typically weakened in Asian trading hours in June. The Morgan Stanley analyst noted this decline to align with their observation that U.S. treasury yields were rising most during the U.S. hours, a representation of Fed tightening expectations.

“We do not think that bitcoin weakening most during U.S. hours necessarily tells us that it was U.S. investors selling bitcoin as crypto traders could trade 24 hours a day. However, it does suggest that U.S. central bank monetary policy tightening expectations have been an important driver of the crypto bear market this year,” the note reads.

The digital currency ecosystem is expected to react in a very significant swing over the next few months until both the US and the global economy remain steady.

Image source: Shutterstock

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Bitcoin Lightning Network Would be Practical for Small Payments than Debit Cards, Morgan Stanley Says

by Blockchain News

The Bitcoin Lightning Network attracts fees close to zero. It becomes more practical to use it when undertaking small payments than a debit card, according to leading investment bank Morgan Stanley.

As a layer two scaling solution on the BTC network, the Lightning Network (LN) boosts the blockchain’s capacity to undertake transactions more efficiently through micropayment channels. 

Therefore, transactions on lightning networks are more readily confirmed, cheaper, and faster than that processed on-chain or Bitcoin mainnet (layer one).

With more than 85% of sales in the United States happening in shops compared to online, Morgan Stanley believes partnering with physical stores would play an instrumental role in boosting Bitcoin as a medium of payment.

As a result, the Lightning Network is expected to bridge the gap based on its low transaction fees. An analysis of the  Bitcoin Lightning Network recently noted:

“Roughly a year ago the Lightning Network took off on Bitcoin. The on-chain transaction fees instantly started to go down and remained low ever since. Growing number of transactions sent at lightning speed with rock-bottom fees both on-chain and off-chain.”

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Source: Blockchain.com 

According to Arcane Research, the Lightning Network continues to gain steam because it recorded a 410% year-over-year growth.

Arcane Research also noted that the Lightning Network could radically change the business model of content providers in gaming, video, audio, and many more categories by providing a structure where continuous micropayments were made.

Meanwhile, merchants on Shopify, a global e-commerce giant, were recently given the option to receive off-chain payments through the Bitcoin Lightning Network after sealing a deal with Strike, a digital payments platform.

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Wall Street still not convinced on Bitcoin $100K this year: JPMorgan survey

by Cointelegraph

One of the world’s largest investment banks has its Bitcoin (BTC) price predictions ready for 2022.

In a recent poll, JPMorgan Chase asked its clients “where do you see Bitcoin trading at 2022 year-end?” Just 5% said they saw the digital coin reaching $100,000, and 9% saw it breaking previous all-time highs, reaching over $80,000. 

The bank is known for its wealthy client portfolio. While some BTC bulls may welcome the news that 14% of JPMorgan’s clients expect at least a 2x, it’s not the fireworks the crypto market is accustomed to.

On balance, however, the survey is generally positive. Most clients (55%) see BTC trading at $60,000 or above at the end of the year, with only one quarter expecting prices to slide from the recent lows of $40,000.

“I’m not surprised by Bitcoin bearishness,” said Nikolaos Panigirtzoglou, the author of the research note who works as the managing director for London at JPMorgan. He continued: 

“Our Bitcoin-position indicator based on Bitcoin futures looks oversold. The coin’s fair value is between $35,000-$73,000, depending on what investors assume about its volatility ratio versus gold.”

The group, which has over $2.6 trillion assets under management, is increasingly involved in the crypto space, particularly since its own token launch, JPM Coin in 2019. Part of the Big Four of American investment banks, it has been educating its customers and investors on the pros and cons of Bitcoin since July 2021.

Related: Arcane Research releases its crypto predictions for 2022

While its cards remain close to its chest, in September last year JPMorgan’s CEO, Jamie Dimon softened his stance on Bitcoin. He shared that Bitcoin could 10x in a matter of five years, but he still won’t buy any.

It’s in contrast to fellow billionaires Ray Dalio and Bill Miller, who suggest anything from 1% to 50% is a reasonable BTC allocation.

Amidst growing institutional adoption and calls for $200,000 in 2022 from other funds such as Fundstrat Global Advisors, it begs the question. Are JPMorgan Chase clients on the money, or are the Wall Street execs and other wealthy individuals decidedly bearish?