The Wolf Den #633 - CBDC Adoption? Coming Soon.
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In This Issue:
CBDC Adoption? Coming Soon.
Axie Infinity’s AXS Resurrecting?
Legacy Markets
Nigeria Limits Cash Withdrawals
Binance Completes Proof-of-Reserves
What’s Next For Crypto After The FTX Scam?
My Recommended Platforms And Tools
CBDC Adoption? Coming Soon.
Central Bank Digital Currencies are taking the world by storm. Countries quickly went from casually exploring the technology to implementation and full-scale launches. The trajectory has been mind melting and any country that has not begun exploring a CBDC is already “behind the times.”
It is difficult to gauge how far CBDCs are from reaching mass adoption, because the progress is sporadic and country dependent. Is the normalization of CBDCs 1 year, 5 years, or 10 years away? To answer this question, we need a tool designed to track global progress.
Lucky for us, there is one. It was created by the Atlantic Council, which is an American think tank focused on international affairs. Their free-to-use CBDC tracker tool offers real-time global updates on the world’s adoption of this technology.
Let’s see what they found.
The tracker breaks down adoption into 6 main categories. I included the number of countries in each category.
Launched - 11
Pilot - 15
Development - 26
Research - 46
Inactive - 10
Canceled - 2
In the “launched” category, the countries include Jamaica, The Bahamas, Nigeria and 8 countries in the Eastern Caribbean.
Yah Mon.
Combined, these countries make up an insignificant and practically incalculable percentage of global GDP. That will change when the countries in the “pilot” phase launch. Notable countries in the “pilot” phase include Russia, China, UAE, Singapore, South Africa, Ukraine and South Korea.
The “development” and “research” phases account for almost every major country in the world. Some of the countries with a CBDC in development are Canada, Brazil, Japan, Indonesia, France, and Spain. The research phase includes almost everyone else - the United States, Mexico, the United Kingdom, New Zealand, the Philippines and others.
By turning every filter on, excluding the “canceled” and “inactive,” nearly the entire globe lights up, except for Central Africa and some of the Middle East.
CBDC technology isn’t a question of “if." It is a question of “when.”
By accounting for every country on the planet, you can start to extrapolate some interesting data and facts.
The findings below are from the tracker.
105 countries, representing over 95 percent of global GDP, are exploring a CBDC.
19 of the G20 countries are exploring a CBDC, with 16 already in development or pilot stage.
Of the G7 economies, the US and UK are the furthest behind on CBDC development.
To expand upon the numbers, roughly 25% of countries involved in CBDCs are either in the “launch” or “pilot” phase, with over half still in “research” and “development.”Compared to this time last year, the total number of countries involved has nearly doubled and the CBDCs launched went from 0 to 11. There is clearly a race to successfully implement this new form of money and everyone is participating.
When will CBDCs become the norm?
Let me throw on my tin foil hat and pull out my crystal ball.
My best guess is that 2023 will be the 0 to 1 moment. China is set to fully launch their CBDC in 2023, which will likely set off a chain reaction of countries moving on to the next stage.
I know. We had the same hope for countries adopting a Bitcoin standard, but the difference here is that we can see tangible evidence of progress. This is fact, not speculation.
If every country shifts forward one stage next year, then 20-30 countries will have launched, 20-30 will be in the pilot, and 50 will be in development. Maybe CBDCs won't be fully implemented next year, but at this rate, within 5 years digital currencies are very likely to be the norm.
Many believe that this is bearish for cryptocurrencies and stablecoins.
I think the opposite.
The mass adoption of CBDCs will teach the entire planet how to use a digital wallet and transact digitally. Further, the lack of privacy will drive people to decentralized currencies. Stablecoins and Bitcoin already have a stronger foothold, which is why they will continue to pick up speed as the masses awake.
I’m incredibly bullish on the future of digital money. CBDCs can kick rocks.
Superior digital assets are bound to flourish.
Axie Infinity’s AXS Resurrecting?
In this report, we bring to you the latest in on-chain cryptocurrency analysis. We look at the blockchain directly and analyze balances, transactions, and the overall activity of market participants. This gives us a unique insight into the future of the market.
This section is written in conjunction with IntoTheBlock (ITB). ITB is an intelligence company that leverages machine learning and advanced statistics to extract intelligent signals tailored to crypto-assets. IntoTheBlock tackles one of the hardest problems in crypto: to provide investors with a view of a crypto asset that goes beyond price and volume data.
The Wolf Den research team uses IntoTheBlock to dig deeper and get the most important insights about the crypto market.
Axie Infinity’s AXS Resurrecting?
The token in the top gaining position within the top 50 ranking by market cap for this week goes to AXS, from the crypto game Axie Infinity. The price of AXS rose by more than 25%, probably motivated by its latest update. They are moving forward with their strategic plans to further decentralize the game and announced their Contributor Initiative Kickoff. These plans would empower the community contributors to be decision makers in the next steps that the game might take. Although price action has been quite brutal for AXS during this last year with more than a 90% drop, there are hopes among the community that these announced changes might bring back more players and move the development of the game in the proper direction.
Circulating supply indicator via IntoTheBlock AXS indicators.
The price has stayed n the $10-$6 dollar band for the past 3 months, despite the growth in circulating supply, from 90M to 112M of AXS - more than a 20% increase.
Increases in circulating supply are often negative for the price, since this is part of the supply that is unlocked by investors that might sell the token.
In this case, the last increase of supply that happened in November did not have a negative effect on the price. Might this be a sign of recovery?
East vs West indicator via IntoTheBlock AXS indicators.
The indicator above shows where the transactions that interact with the AXS token initiated during the last few days. East for countries in the East, West for countries in the West.
AXS historically has been dominated by east countries, but this has been changing for the past 3 days.
There has been an increase in the amount of daily transactions that use AXS: from around 300 to more than 2200. This is more than 7 times more.
In this case, transactions are equally distributed from east to west. Might this be west investors or speculators catching up?
Netflows indicator via IntoTheBlock AXS indicators.
Buying pressure: There have been coins consistently leaving exchanges for the past 2 days. More than $6M each day.
This means that the balance of AXS that is being kept in exchanges has been reduced by more than $12M. Accumulation?
This is a pattern that has not been seen often in AXS in the last 3 months. We will see if the trend continues.
Legacy Markets
"US equity futures swung higher, pointing to a reversal after a five-day rout sparked by concerns that the Federal Reserve will remain hawkish in the face of economic headwinds.
Treasuries halted a rally that had sent the 10-year yield to an almost three-month low as investors braced for an economic downturn. The benchmark added three basis points to yield 3.45%, while a gauge of the dollar fell.
Traders now await Friday’s US producer price report and the Consumer Price Index print to get a read on how effective Fed policy has been to quell inflation, and whether the central bank will be able to notch down its aggressive campaign.
Strategists from Morgan Stanley to JPMorgan Chase & Co. have warned investors against piling back into risk on hopes the Fed is getting close to pivoting to easier policy. Belief in a dovish turn, reinforced in part by Fed officials themselves, sparked a 14% surge in the S&P 500 over seven weeks.
“Presumably if the Fed is pivoting this time around, it’s not for a good reason. It’s a deteriorating fundamental picture,” Joyce Chang, chair of global research at JPMorgan, said in an interview with Bloomberg TV Thursday. “I mean, is that really a reason to be buying risk? I think it’s premature to say that there is a Fed pivot.”
Key events this week:
ECB President Christine Lagarde speaks, Thursday
US initial jobless claims, Thursday
China PPI, aggregate financing, money supply, new yuan loans, Friday
US PPI, wholesale inventories, University of Michigan consumer sentiment, Friday
Stocks
Futures on the S&P 500 rose 0.7% as of 8:37 a.m. New York time
Futures on the Nasdaq 100 rose 0.7%
Futures on the Dow Jones Industrial Average rose 0.5%
The Stoxx Europe 600 was little changed
The MSCI World index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.2% to $1.0528
The British pound rose 0.2% to $1.2228
The Japanese yen rose 0.2% to 136.37 per dollar
Cryptocurrencies
Bitcoin rose 0.2% to $16,856.81
Ether rose 0.8% to $1,241.75
Bonds
The yield on 10-year Treasuries advanced three basis points to 3.45%
Germany’s 10-year yield advanced one basis point to 1.79%
Britain’s 10-year yield advanced one basis point to 3.05%
Commodities
West Texas Intermediate crude rose 4.6% to $75.32 a barrel
Gold futures rose 0.2% to $1,801.10 an ounce"
Nigeria Limits Cash Withdrawals
The Central Bank of Nigeria has ruled that individuals can no longer withdraw more than $45 (20,000 Nigerian nairas) and businesses cannot withdraw more than $225 (100,000 nairas) per week from ATMs. On top of the ATM limit, banks will now only allow withdraws of $225 (100,000 nairas) and $1,125 (500,000 nairas) for individuals and businesses.
Absolutely absurd.
The reason behind the limits is to push the country's new “cash-less Nigeria” policy and encourage the eNaira — Nigeria’s central bank digital currency (CBDC). Despite the harsh cash limits, the citizens aren’t adopting the technology. Less than 0.5% of the population has used the eNaira as of Oct. 25 of last year (the launch date).
This CBDC experiment is currently failing, but this may force more people to use it.
Binance Completes Proof-of-Reserves
Bazars (not to be confused with Brazzers), an independent auditing firm, has reached the same conclusion as Binance, which is that the exchange has a fully collateralized Bitcoin position to back up reserves. That said, there is no 3rd party verification on any other assets besides Bitcoin. Binance claims that all of its assets are backed, but we only have evidence of Bitcoin. According to the Binance site, third-party authentication is, “coming soon” and users can already produce a self-verified Merkle leaf by following the steps HERE. There are still questions left to be answered, but we are progressing in the right direction. Lying about customer funds will hopefully become a thing of the past.
What’s Next For Crypto After The FTX Scam?
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.
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