After Russian President Vladimir Putin declared war on Ukraine on February 24, 2022, a rapid sell-off occurred in the crypto market, resulting in over $500 million in losses. However, since then, the price of the flagship digital asset, Bitcoin, has climbed 35%, showing its strength under severe geopolitical market conditions.
Now, it seems the bulls are fully back in the driver’s seat. The crypto market is rallying as Bitcoin’s price is currently up 12.26% in the last 7 days and is trading at $47,461. Almost all major coins are in greens too, with Ethereum up 13.60% in the last one week and trading at $3,398. ADA, SOL and Dogecoin are up 29.55%, 22.57% and 19.25% respectively in the last 7 days.
Below are the top factors being cited as major contributors to the rally.
Terra’s Bitcoin Purchase
Terra (LUNA), whose UST stablecoin soared in popularity all throughout the ‘crypto winter’, has been on a bitcoin buying spree to ensure UST stays that way. Terra plans to amass $10 billion in “digital gold” as reserves backing up its stablecoin.
Terra’s latest purchase, reported by Blockworks yesterday, amounts to $133.6 million, and that is just a batch. Terra is rumoured to be buying around $125 million worth of BTC every day.
“These daily purchases could also last for months if [Terra] does in fact want to get to $10 billion of BTC reserves,” – George Kaloudis in yesterday’s Crypto Long & Short newsletter from CoinDesk.
Fomo of Ethereum Merge
There is a euphoria about Ethereum’s full launch of Eth 2.0 and traders do not want to miss out.
It has been years now that the Ethereum Foundation has promised to shift ETH from proof-of-work to a proof-of-stake consensus mechanism. And Ethereum’s Beacon Chain, where it has started implementing proof-of-stake, is expected to merge with the main Ethereum network in June. In view of that, FOMO (fear of missing out) is kicking for ETH pre-merge.
As the merge momentum mounts, a number of the biggest crypto breakouts have been ERC-20 tokens on Ethereum:
Gnosis (GNO-USD), which specialises in prediction markets: +60% in the past 7 days.
Holo (HOT-USD), which helps bridge blockchain apps to the rest of the internet: +50%
Convex Finance (CVX-USD), a staking platform with 6%+ yields: +50%
Loopring (LRC-USD), which will host GameStop’s NFT marketplace: +40%
Chiliz (CHZ-USD), which provides sports fan tokens: +38%
MiCA Bitcoin Bill
Crypto regulations have taken another step forward without banning proof-of-work being used by Bitcoin and other major coins. The EU debated its Markets in Crypto Assets (MiCA) bill last week and once again the talks around prohibiting proof-of-work entirely was struck down. The positive development was received with optimism in the European crypto community and it has contributed to the rally.
Outside of the EU, governments like Australia, Ukraine and even UAE are embracing crypto. It is a new dawn of the digital world, and even politicians want to live in it too.
Some analysts and observers wrote epitaphs for Bitcoin due to the difficult start it had to the year. The tensions in the last one month in Europe even compounded the misery and many thought Bitcoin was going to sink below the $32,000 levels.
But once again, Bitcoin and cryptocurrencies generally have shown their resilient nature by bouncing back within a very short period of time. This is due to the growing adoption of crypto by governments and corporate institutions.
Terra’s purchase of BTC in gigantic proportions have also contributed to this, more buyers than sellers in the market results in price rallying.
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!