NY Fed Report: Bitcoin Is Not Affected by Macroeconomics

Last week, bitcoin jumped back above $24, which has not happened since August 000. The cryptocurrency had a strong week of gains.

BTC started the week around $21 and surged above $500 on Thursday. Despite falling the next day, it has stayed above that level ever since.

Ethereum meanwhile, it had a similarly strong week, starting around $1 and then rising briefly above $500 on the eToro platform - its highest level since September 1. It is currently trading around $700.

The cryptocurrency market has been under tension in recent days due to accelerating US regulatory action. However, when it comes to the two major cryptocurrencies by market capitalization, it seems that investors are still holding up well to these developments and the market is benefiting as a result.

Bitcoin is not affected by macroeconomics

Bitcoin largely unaffected by news and macroeconomic issues report New York Federal Reserve. The report has significant potential implications for cryptocurrencies, which the authors describe as "puzzling."

The correlation of the cryptocurrency market with traditional markets became one of the hot topics last year as investors around the world reacted to rising inflation and subsequent rate hikes. However, according to the report, all this is making noise around bitcoin, which is moving perpendicular to the development of monetary and macro news.

The report goes against the current mainstream thinking about bitcoin. Indeed, the markets seemed more correlated last year, this correlation was less pronounced. However, if bitcoin does indeed move differently from macroeconomic events, it could provide significant support for using it as a hedge against other markets – similar to gold.

Bank of Japan launches CBDC pilot

BoJ has joined a number of other central banks in planning a potential CBDC and is exploring the technical feasibility of a digital yen. CBDCs are gaining ground at a time when questions are being raised about the cryptocurrency markets, but they are fundamentally in contrast to the decentralized nature of sectors such as DeFi.

With this lack of decentralization, these CBDCs raise some troubling questions. How anonymous is the data? Can the central bank track our spending? What are the limitations? The recently announced CBDC project Bank of England may have a limit of £20 per holder, which seems like an arbitrarily low limit for the balance.

The problem with CBDCs ultimately is that they are the vague answer of political technology to what has already become a thriving cryptocurrency and stablecoin environment. Central banks that want to regain control of digital assets will push for these ideas, but you may find that some of the facilitating factors are missing.

The NFT market is heating up

Market NFT, which experienced near meteoric rises in 2021 as well as a sad episode in 2022, is getting interesting again. A new player on the market, Blur.io, has just surpassed OpenSea in daily ethereum trading volume, suggesting that the control over the market that the latter held until recently is waning. In response, OpenSea introduced 0% user transaction fees for a limited time.

Contrary to the notion that this is a sign of desperation or struggle by a once-dominant player, this suggests that the NFT market is very much alive and well, thanks to innovation and competition. OpenSea, for its part, also criticized Blur for forcing NFT creators to choose between platforms and forcing earnings.

Ultimately, users in the space - be they creators or collectors - will vote on the best solution for them. This is how open and healthy markets work, and it's good for the end user to have that choice. The problem arises when one player dominates and dictates the rules of the market to everyone else.