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Weekly results: Macroeconomics pumps crypto, Doge on steroids, and Stranger Things with BTC

Igor Grigorchenko

News editor

May 30, 2023 at 09:00

In this brief digest, we briefly recap the important events in the crypto world that have occurred in recent days, including this weekend.

Macroeconomics pushes the price up

  • The White House and Republicans reached a tentative agreement to raise the national debt ceiling. The deal is expected to be formalized in the coming days. According to unofficial information, this agreement also blocks some new taxes proposed by the Biden administration, including a 30% tax on mining. With the U.S. now the world leader in mining, this is additional good news for the crypto industry.
  • The market took the potential agreement with enthusiasm, with Bitcoin’s price rising to around $28k on the news. Not only has Bitcoin reacted positively to the government debt deal, but stock indices are making new highs on the back of the news. The S&P 500 closed yesterday above 4200, a level not seen since August 2022.

  • Despite the positive news on the government debt, the odds of another June 14 interest rate hike in the past week rose from 10% at the beginning of the week. According to the PCE Price index, inflation remains quite high, forcing experts to expect another round of rate hikes by the Fed.
  • Beijing released a government white paper on Web3 innovation and development. According to this document, China will invest at least 100 million yuan a year to support the construction of this industry. This initiative partly confirms similar recent news, which shows a trend of softening attitudes toward cryptocurrencies, which were previously categorically banned in China.

Dogecoin grows like on steroids

  • Dogecoin broke all previous records this weekend — more than 2 million transactions in 24 hours were made on the network. For comparison, Bitcoin and Etherium have 400,000 and 532,000 transactions, respectively. 
  • The Dogecoin network’s hash rate also increased by more than 38%. As of May 9, Dogecoin’s hash rate was 638 TH/s, and just three weeks later it had grown to 885 TH/s, showing the growing influence and stability of the network. It also shows the rapid growth of the profitability of mining on this network and the influx of new calculating power.

The reason for this growth is the launch of the new DRC-20 token standard, which led to an immediate increase in network activity. DRC-20 is modeled after BRC-20 and allows the creation of tokens “on top of” the blockchain.

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JPMorgan found a fair price for BTC

Analysts at JPMorgan have taken a pretty original method of calculating the fair price of Bitcoin through the value of gold. Due to the fact that these two assets often move in tandem and are seen as alternative complements to each other, Bitcoin has the same weight in the portfolios of private investors (with adjustments for risk) as the precious metal. Because of this recalculation of the value of the current $2,000 troy ounce of gold, analysts have deemed the equivalent of $45,000 to be the fair price of Bitcoin.

The $45,000 estimate is the upper limit of a possible upward move this year. In addition, JPMorgan also noted that the upcoming halving in 2024 will lead to a rise in the price of BTC to at least $40,000. So the model from JPMorgan defined a corridor of the maximum price for 2023 as well as the minimum price for 2024.

Stranger things

The Stably Company has announced the launch of the first $USD stablecoin based on BRC-20 on the Bitcoin blockchain.

The stablecoin will be fully collateralized and redeemable 1:1 with $USD held by Prime Trust in FDIC-insured banks. Generally speaking, this whole Ordianls/BRC20 thing is getting weirder and weirder as it progresses. Following the release of NFT, a real stablecoin is being released, and as we wrote last week, exotic protocols are being developed to deploy DeFi services.

Despite all these strange things, hashrate Bitcoin has once again set a new historical record — all indicative of the record investment in mining and the profits that are constantly boosting the industry. Something very interesting is clearly looming ahead.

God bless Bitcoin.

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