Welcome to our monthly newsletter. Every month we create an overview of the performance of our Hodl funds, the developments within Hodl, and the latest cryptocurrency news.
Despite the return of positive sentiment within financial markets last month, we have now returned to levels of the end of February. The market has been moving within a sideways channel for quite some time now, with gains being wiped out in a matter of days.
This latest downward movement appears to be largely driven by the Fed’s tightened policy. If it wants to get a hold of inflation it is forced to take action. Their announcement of multiple interest rate hikes of 0.50%-0.75% has caused some uncertainty in the market. This was clearly visible in the decreasing prices of various stock indices and cryptocurrencies. The Dollar on the other hand rose to its 2017 highs.
With the latest movement, the market has prepared and priced in the upcoming rate hike. Therefore the market may be relieved if the Fed maintains its current position or shows signs of a milder policy. The first effects of their current tightened policy are also becoming visible in the slowdown of economic growth. If this continues, the need for further tightening of their policies might not be needed. The expectation is that the Fed will adjust its position throughout the year in order to create an opportunity for the economy to recover.
On-chain, we can clearly see this sideways trend as well. The market is currently showing clear signs that are in line with previous bear markets. The share of the regular retail investor is on the lower bound and the direction is being determined by the seasoned and larger institutional investors. More than 40% of April’s volume consisted of transactions over $10 Million Dollars.
Despite the downward trend, the development of the market continued at full speed. Earlier this month, in our market update, we already discussed the integration of webshop provider Shopify with Bitcoin payment provider Strike, UK’s ambition to be a leader in blockchain technology and the visible growth of the industry through a leading position for cryptocurrency investor A16z on Forbes’ Midas List. The interesting developments were not limited to the first half of the month.
The biggest developments in the second half of the month came from investment giant Fidelity. They announced its intention to offer U.S. retirement savers the opportunity to convert up to 20% of their funds into Bitcoin. Fidelity serves about 23.000 companies with their retirement plans and manages over $4 trillion in assets. Just days before the announcement, Fidelity also launched multiple crypto-focused ETFs. These ETFs offer investors exposure to companies active in the industry but are not directly an investment in cryptocurrency itself.
At the end of April competitor Blackrock, the world’s largest asset manager, also followed with an ETF announcement. The interest from such large asset managers shows the potential of the market. In addition, it strengthens the position of cryptocurrency, which will accelerate further adoption and regulation.
In the last days of April, developments followed each other quickly. Last month, Wall Street bank Goldman Sachs announced that it had made its first over-the-counter crypto transaction. This month, it continued this path towards cryptocurrency adoption by creating its first lending product in which Bitcoin can be used as collateral.
On the same day, Panama approved a bill that will make the use and trading of cryptocurrencies legal. This creates an opportunity for private and professional investors, and for the further development of technology within the country. However, crypto has not yet been acknowledged as legal tender, something that happened days before in the Central African Republic. They became the second country after El Salvador to embrace Bitcoin as a legal tender.
The downward move of April has also led to a decline of the Hodl funds. The Hodl.nl Consensus Fund, the Hodl.nl Genesis Fund and the Hodl.nl Oracle Fund ended respectively at a NAV of €4.68, €4.76 and €0.64.
Results April 2022:
Each month we highlight a cryptocurrency, this month it is Anchor Protocol (ANC).
Until recently, a savings account was one of the safest ways to store money and build wealth. However, interest rates have decreased significantly over the past two decades. In combination with the rising inflation, this has led to a situation in which holding onto savings leads to a decrease in wealth. Anchor offers a money market where lenders and borrowers facilitate each other, luring lenders in with a fixed interest rate on their stablecoins. The current interest rate of 19.5% draws a lot of attention from savers looking to protect and build their wealth.
Our rapid growth also comes with more administrative challenges, so we are very happy to welcome Sandra Stoffels to the team. With her extensive experience within this field, we are able to do more work and we can further focus on optimizing these processes.
Sandra: “Full of enthusiasm, I started my work as a back-office employee at Hodl. As someone who does really well in a dynamic environment, I am happy to take the opportunity to think along and help bring additional structure within the administration of this beautiful and fast-growing organization!”
We warmly welcome Sandra!
After a long period of lockdowns, travel restrictions and digital events, it was finally possible to attend physical events again. The team was therefore eager to participate in trade shows, lectures and networking events. For example, in the past two months, we have attended events such as ETHDubai and the World Blockchain Summit in Dubai, the Avalanche Summit in Barcelona and the Devconnect and Amsterdot event in Amsterdam.
After a long period without physical meetings, it was very nice to meet several participants at these events, catch up with well-known people from the industry and further expand our network with interesting cryptocurrency projects and specialists.
As announced in our market update, we have started a new blog series on investing in cryptocurrency. We dive deeper into topics such as the evolution of our money, the origins of cryptocurrencies, the various applications and the underlying differences.
Where we discussed the decline of traditional currencies in the first chapter, it is now time to dive deeper into the rise of Bitcoin. The declining confidence in modern currency provided a perfect opportunity for Bitcoin. Over the years, Bitcoin has grown rapidly. But, how does Bitcoin work? And why was it able to develop at this pace? We take you through this in the second part of our cryptocurrency investors guide.
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