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Weekly crypto news: 91% of crypto users plan to buy more

Weekly crypto news: 91% of crypto users plan to buy more

At the beginning of the week, Bitcoin (BTC) was at €28,500 and on Wednesday the price even briefly shot below €20,000. Celsius (CEL), however, drew the most eyes this week. The major crypto lending platform froze its users' funds this week, prompting immediate speculation that the company could collapse. More on that later, however. Below you can read all the most important crypto news from the past week!

91% of crypto users plan to buy more in the next 6 months according to Bank of America survey

Despite the current negative sentiment in the market, a survey by the Bank of America found that 91% of U.S. crypto users and prospective users plan to buy more crypto in the next 6 months. The same percentage of respondents also said they had purchased cryptocurrencies and other digital assets in the past 6 months.

The survey contains answers from 1,013 participants and was conducted by the BofA in the first week of June, just before the hard declines in the crypto market in recent days.

Most respondents were new to the space and reported small balances. Almost half of users said they did not own any crypto but planned to buy crypto in the near future, and the most commonly reported transaction size for both purchases and sales was less than €25.

Those who reported owning cryptocurrencies cited price appreciation, portfolio diversification, interest in technology and being part of a community as the main reasons for their ownership.

Bitcoin responds to Fed interest rate hikes

America's Federal Open Markets Committee (FOMC) on Wednesday raised its target interest rate by 75 basis points (0.75%), the largest rate hike since 1994.

FOMC Chairman Jerome Powell, who is also chairman of the Federal Reserve, had said in early May that the committee would implement a 50 basis point increase in June if market data such as the consumer price index (CPI) came out as expected.

Powell explained the reasoning behind the change in course in a press conference following the announcement of the FOMC's monetary policy decision on Wednesday by leaning toward inflation - which he said had "once again surprised to the upside."

"Over the next few months, we will be looking for evidence that inflation has fallen," Powell said. "Increases will continue to depend on incoming data, but a 50 basis point or 75 basis point increase seems more likely before the next meeting."

Higher interest rates are generally bad for investments. So we already saw the anticipation of these rate hikes in the crypto and equity markets recently, due to sharp declines. However, it was interesting that Bitcoin actually shot up again by 7.42% to €21,750 upon the actual announcement of the news. It is possible that the market had initially overreacted and that this rise compensated for that again.

Media Park in Hilversum gets metaverse workplace

In the coming years, the Media Park in Hilversum will be working hard to develop virtual experiences in the metaverse. Six MBO vocational schools may place their students at this new metaverse workplace.

The term metaverse has become very familiar in the past year, but what exactly it is is still difficult for many to understand. The metaverse as we know it today is still in its infancy. For example, you have the Sandbox and Decentraland both creating their own metaverse, and Facebook (now Meta) has also started to focus on a metaverse.

The ideal metaverse is a virtual world without boundaries. One where the different metaverses (virtual worlds) that are now being created blend seamlessly. The goal is also to make this virtual world as real as possible through virtual reality technology.

At the Media Park, the students will work on metaverse applications for the media sector, urban development, assistance and education.

The future of lending platform Celsius seems uncertain

The crypto lending platform Celsius has come under heavy fire in the past week after it froze the funds of its users. Users were unable to withdraw their funds, causing panic and misunderstanding.

The short-term cause of Celsius' problems appears to be caused by Lido's Staked Ether (stETH), a token linked to Ethereum's ETH. stETH represents ETH locked on the Ethereum 2.0 beacon chain - a blockchain that runs in parallel with the main Ethereum blockchain and which will eventually combine with the main blockchain in an event known as the Merge.

On DeFi platforms, stETH is often used as collateral to borrow ETH. The problem is that stETH recently lost its 1:1 pairing with ETH, threatening those positions. With holders selling and the date of the Merge in uncertainty, there is now heavy selling pressure on stETH.

So what does that have to do with Celsius? The DeFi platform had customer funds tied up in stETH. So the value of customer funds no longer matched the value deposited, creating a liquidity crisis.

Currently, the company has nothing to report other than that they are working around the clock to get out of the trouble. It is not yet certain how this will end.

This was again the most important crypto news of the week! As with private crypto users, hedge funds are also still very interested in crypto. Earlier this week we wrote an article about that. You can read the article "Hedge funds are increasingly investing in crypto, PwC research shows" here.

Luc Smits van Oyen
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