Currency
The Turkish lira’s dramatic slump has added fuel to a surge in cryptocurrency trading in the country, data showed, with investors hoping to both gain from bitcoin’s rally and shelter against inflation.
Turkey’s currency has lost over 13% since President Tayyip Erdogan fired central bank Governor Naci Agbal earlier this month, stoking fears of looser policy and rising price pressures that could erode the lira’s value.
The aftermath of the Agbal’s sacking accelerated an already growing boom in Turkey’s crypto market.
Trading volumes between the start of February and March 24 hit 218 billion lira ($26 billion) with a spike on the weekend of Agbal’s ouster, data from US researcher Chainalysis shared with Reuters showed, surging from a little over 7 billion lira in the same period a year earlier.
The jump echoes soaring global interest in crypto, driven by bitcoin’s rally to a record of just under $62,000 as major investors and companies embraced the emerging asset.
Yet investors in Turkey said a weaker lira and inflation pressures, as well as hopes of quick gains, have driven demand.
In October 2018, Visa Inc. CEO Aflred Kelly told CNBC’s Jim Cramer that cryptocurrencies are not a big threat but “if we have to go there, we will go there.”
At the time, Visa was a $300B+ company and the combined market cap of all cryptocurrencies was $200B+. Today, things are looking different:
- Visa = $450B+
- Crypto (primarily Bitcoin/Ethereum) = $1.8T+
Well, earlier this week… Visa went there. Per Reuters, the payments giant will roll out a pilot program with crypto platform Crypto.com.
How it works
Crypto.com already offers its users a Visa card. However, any payments used by the cryptocurrency card have to be converted to fiat, which adds costs and complexities for merchants.
Here’s the new process:
- A Crypto.com Visa card purchase is made
- Instead of converting to fiat, Visa will settle the transaction using Crypto.com’s USDC stablecoin, which is pegged to the US dollar (to limit volatility)
- It will all be done on the Ethereum blockchain
This should reduce the friction in using crypto for payments
Ethereum has its own fee — called gas costs — to operate on the blockchain.
According to Protocol, a single transaction could rack up a fee of $10 to $20. Visa’s solution: to bundle payments as it does on its existing network to reduce costs and increase speed.
Such an improved process will go a long way to mainstreaming crypto for everyday payments.
The cryptocurrency momentum is undeniable
As Bitcoin continues to rise, other big finance names are jumping aboard the crypto train. Among the moves:
- PayPal will offer a checkout service that turns crypto assets into fiat to pay for goods across 29m merchants on its network
- Fidelity plans to launch a bitcoin exchange-traded fund (ETF)
- Goldman Sachs is on the verge of offering bitcoin and crypto services to its wealth management clients
JPMorgan Chase, BNY Mellon, BlackRock, and Mastercard are all making their own moves in tandem.
It’s safe to expect more finance players to “go there” in the very near future.
If we looked at most investment bank outlook reports for 2021, one of the main consensus themes was a strong conviction on a rapid and robust eurozone recovery. They were wrong.
This week, Capital Economics joined other analysts and downgraded the eurozone growth, highlighting “We now think that the euro-zone economy will recover more slowly than we previously anticipated, growing by about 3% this year and 4.5% in 2022. Meanwhile, euro-zone government bond yields seem unlikely to fall much further, and with Treasury yields set to increase significantly, we expect the widening yield gap to cause the euro to weaken against the US dollar”.
This wave of downgrades, which includes the OECD and European Central Bank estimates, comes with the same-old and tired upgrade of next year’s expectations, which will likely be downgraded again further down the line.
Most politicians blame the eurozone weakness on the pandemic and the slow vaccine roll out. It is partially true. None of those two factors are detached from one of the main traits that makes the eurozone consistently disappoint in growth and crisis periods: massive bureaucracy.
The slow vaccine roll-out of the eurozone is evident in Bloomberg Economics’ Covid-19 resilience ranking and Our World In Data vaccines administered per 100 people falling significantly below Israel, Chile, the United States or the United Kingdom, despite the eurozone economies having the highest levels of public healthcare spending in the world. The reason why the eurozone lags in vaccinations comes from a bureaucratic and slow process in the approval and purchase of vaccines.
Today, Hong Kong-based payment and cryptocurrency platform Crypto.com announced a global partnership with Visa that also includes principal membership in Visa’s network in Australia. The company also plans to roll out fiat lending against bitcoin and other cryptocurrencies as collateral via the Crypto.com Visa Card V -2.9%.
Launched in Singapore in November 2018, the Crypto.com pre-paid Visa Card was one of the first cards tied to bitcoin on the market and is currently the largest Visa program of its kind, with 31 markets covered in Europe, as well as the U.K., Canada, and the U.S., where it launched in July 2019. Users can convert their crypto into one of the supported fiat currencies, such as the U.S. dollar, euro, British pound, and others, pay with their card and make cash withdrawals anywhere Visa is accepted.
With Visa principal membership, Crypto.com will begin direct issuance of the Crypto.com Visa Card in Australia and scale the program to new markets. The company is in the process of shipping cards in Japan and Korea, Latin America, the Middle East, Africa, and Turkey. Its ultimate objective is to make the services available everywhere outside of China. The card program offers up to 8% cashback on purchases with no upper limits, a full rebate on Spotify, Netflix NFLX +1%, and Amazon Prime, and no annual or monthly fees.
Morgan Stanley becomes the first big U.S. bank to offer its wealthy clients access to bitcoin funds
- The investment bank told its financial advisors Wednesday in an internal memo that it is launching access to three funds that enable ownership of bitcoin, according to people with direct knowledge of the matter.
- Two of the funds on offer are from Galaxy Digital, a crypto firm founded by Mike Novogratz, while the third is a joint effort from asset manager FS Investments and bitcoin company NYDIG.
- Morgan Stanley is only allowing its wealthier clients access to the volatile asset: The bank considers it suitable for people with “an aggressive risk tolerance” who have at least $2 million in assets held by the firm. Investment firms need at least $5 million at the bank to qualify for the new stakes.
-
I know Mike is a very solid investor and respect his opinions very much. So if he says pay attention to this or that - I will.
~ Dale G.
-
I've started managing my own investments so view Michael's site as a one-stop shop from which to get information and perspectives.
~ Dave E.
-
Michael offers easy reading, honest, common sense information that anyone can use in a practical manner.
~ der_al.
-
A sane voice in a scrambled investment world.
~ Ed R.
Inside Edge Pro Contributors
Greg Weldon
Josef Schachter
Tyler Bollhorn
Ryan Irvine
Paul Beattie
Martin Straith
Patrick Ceresna
Mark Leibovit
James Thorne
Victor Adair