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As investors liquidate their digital assets, the cryptocurrency market remains in the grip of the bears. However, in the last twenty-four hours, the total value locked (TVL) of the crypto industry has increased by 0.96%, bringing it closer to the $1 trillion mark.
Impressively, the current bullish wave is not led by industry giants, such as Bitcoin and Ethereum, but by other alternative currencies (altcoins). What is driving the crypto resurgence, and is now a good time to buy and hold in anticipation of a bull run?
The escalation of the war in Ukraine supports the diversification of refuges
Following recent remarks by President Vladimir Putin, the seven-month-old war in Ukraine is taking on a new dimension. According to the Russian leader, he will mobilize his military reserves after several setbacks in the campaign to take control of Ukrainian territory.
Putin also declares that a series of referendums would be organized in the four strategic Ukrainian regions that he controls. The referendums, which started today and are expected to run until Tuesday September 27, would lead to the annexation of Lugansk, Donetsk, Kherson and Zaporizhzhia to Russia. Any attempt at recovery and any intervention by Ukrainian military forces and Western authorities would be considered a threat to Russian territory.
Ukrainian President Oleksandrovych Zelensky and Western bodies have called the so-called referendum a deception and a desperate attempt to hide their failures on the battlefield.
The financial market reacts to this news; the S&P 500 closed in negative with a decline of 3.67% over the past day. Investors are currently considering the best vehicles to store their wealth and hedge against the possible economic implications of Russia’s continued aggression in Ukraine. Given that commodities like gold bear the brunt of a US Federal Reserve rate hike and the ongoing economic implications of the war, cryptocurrencies would likely be a stopgap for investors in the short term.
Institutional smart money is moving to crypto
Despite their current bearish outlook, cryptocurrencies like Bitcoin are still attractive wealth protection vehicles for institutional investors. One such deep-pocketed investor is US software company MicroStrategy, which recently purchased an additional 301 Bitcoin for $6 million. This currently brings its total bitcoin holdings to 130,000 bands, and the company says it is still looking to raise more funds to increase its bitcoin position.
According to a Securities and Exchange Commission (SEC) depositMicroStrategy is seeking $500 million from Cowen & Co. following its sales of Class A common stock.
MicroStrategy’s aggressive bitcoin buying spree is expected to catalyze what many would consider an institutional surge in investment in the coming weeks.
Recession will hurt the “real” economy more than crypto
The Fed recently announced a new benchmark interest rate. According Fed Chairman Jerome Powell, the rise in interest rates was delayed by three-quarters of a percentage. And Fed officials believe that rate hikes will continue through 2023 as the U.S. economy tries to recover from post-pandemic economic trauma.
Higher interest rates on loans might be good for savings, but bad for investments since the loans are too high. This could lead to a global recession. With lower spending and lending, economic rotation vehicles would come to a halt.
Although cryptocurrencies are not completely exempt from the likely implications of this, the odds of survival for the crypto industry are much more attractive. In unstable economic climates, assets like Bitcoin could be an attractive option, given its deflationary tendencies. Bitcoin and others could fill the void almost immediately if the greenback becomes unstable as the world’s reserve currency.
Crypto is the next frontier
Many sectors and industries are experiencing disruption with the world going fully digital. One of the major disruptors of the past decade has been blockchain technology, an online digital ledger system. This system has a transparent, accountable, immutable and decentralized framework. The blockchain is the bedrock on which all decentralized networks and cryptocurrencies operate.
With faster transfer of value and lower fee systems, cryptocurrencies are becoming more attractive for companies and businesses day by day. As a result, experts are warming to the idea that cryptocurrencies will see more common use cases over the next decade.
A valuable digital asset is TAMA, one of best meme parts at present. tamadoge, a battle-focused blockchain protocol, allows users to raise digital pets as non-fungible tokens and interact with each other in its TamaVerse space. The project’s strong potential is reflected in its recently concluded pre-sale window, which brought in $19 million. That’s way more than Ethereum’s $16 million ICO in 2015.
TAMA will launch on OKX on September 27, allowing investors to start trading.