Friday, 17th of February. As the week comes to an end, we can focus on the highlights of the crypto industry over the past few days.
U.S. inflation beat all expectations. Bitcoin responded by falling
In January, U.S. consumer prices climbed 0.5% month-over-month and 6.4% year-over-year, with the core figure gaining 0.4% and 5.6%, respectively. The trend over the last 12 months was in line with December values and even outperformed all the estimates. The price of BTC after such a pause began to decline.
The published statistics caused its increased volatility. Investors are eagerly awaiting the opening of trading session in the U.S. for further guidance.
The released data confirmed the thesis voiced by Fed Chairman Jerome Powell on February 8 that the formation of disinflation in the service sector will be a matter of time.
Investors made sure that the monetary authorities do not yet have sufficient reason to “pause” in tightening policy.
In March, the Federal Reserve is likely to hike its key rate by 25 bps, to 4.75%-5% per annum. In March, the Federal Reserve is likely to hike its key rate by 25 bps, to 4.75%-5% per annum. At the same time, the option of a 50 bp step cannot be ruled out. The chance of such a development stands at 6.3%, according to the options market.
At the February meeting, the rate committee pointed out that it is prepared to adjust plans for further policy tightening if risks emerge that “could interfere with the department’s goals.”
The sharp rise in jobs during the January was a surprise to economists. In addition, he pointed to the lack of cooling of the labor market, which is fraught with a potential increase in inflationary risks.
On February 15, U.S. retail sales data are set to be released. The consensus forecast assumes a 1.2% growth.
El Salvador to open bitcoin embassy in U.S.
Milena Mayorga, El Salvador’s ambassador to the United States, announced the opening of a second bitcoin embassy in a meeting with Texas Undersecretary of Government Joe Esparza.
She wrote that the countries also discussed the expansion of trade and economic exchange-related projects.
The first bitcoin embassy opened in the Swiss city of Lugano in October 2022.
As of September 2021, the Salvadoran authorities recognized bitcoin as a legal tender. IMF slammed the decision and recommended that the cryptocurrency be stripped of this status.
Back in July 2022, the country’s finance minister, Alejandro Zelaya, revealed that the introduction of digital gold had increased access to financial services for a largely unbanked population, attracting tourists and investment.
As you may remember, the government of El Salvador opened a National Bitcoin Office in November. It will supervise all local BTC-related projects.
Changpeng Zhao predicted the expansion of non-dollar stablecoins
Stepped-up regulatory oversight in the U.S. underscores the growing need for “stablecoins” without a peg to the U.S. dollar, said Binance CEO Changpeng Zhao (CZ).
According to the top manager, the industry may start looking for “other options” regarding stablecoins. More tokens oriented toward the euro, yen, Singapore dollar and other currencies are “likely” to increase in importance in the future.
“I think given the current pressure and current stances taken by the regulators on the U.S. dollar-based stablecoins […] so it’s actually prompted us to look for more options in different places,” CZ explained.
He also agreed with the statement that it “makes sense” to utilize stablecoins backed by gold. Zhao noted that “most people’s expenditures are still in fiat currencies.”
He projected an increase in the importance of algostablecoins, which will retain “risk.” The latter do not exist in fiat-backed tokens.
According to CZ, both the vulnerabilities of algorithmic stablecoins and collateral based on reserve currencies must be disclosed. This is crucial for users to “clearly understand what’s going on” and make their own decision on what to prioritize.
Binance CEO listed most favorable countries for bitcoin business
Crypto entrepreneurs should consider moving to a country with bitcoin-friendly regulation. This was announced by Binance CEO Changpeng Zhao during a speech on Twitter Spaces.
He considers Dubai (UAE), Bahrain and France to be such territories.
“If you’re serious about your project, moving to a new country may not be a bad thing,” Zhao said.
Binance CEO’s advice came amid tightening regulation of the crypto industry by the U.S. authorities. More specifically, we are talking about the investigation launched by the New York State Department of Financial Services into the infrastructure company called Paxos. Later, the regulator demanded that the firm stop issuing Binance USD (BUSD) stablecoin. The SEC also said it was ready to sue Paxos.
What Changpeng Zhao pointed out was the prevailing uncertainty and “grayness” in the industry, suggesting active engagement with regulators.