Back-Office Dapps (Dapps for Business)

Welcome back, everybody. It’s been another exciting week in crypto and we’re pleased to bring you the next edition of The Blockchain Review. Bitcoin and crypto continues to show high correlation with the traditional markets and they’ve continued to rally this week. With the US FED announcing the second consecutive 0.75% hike in the base interest rate, and by some measurements confirmation that their economy has gone into recession, then the positive market reaction might seem contrary to expectations.

For months the fear of a global slowdown or recession spurned selling in traditional markets. Crypto suffered further in the ensuing spiral of liquidations of individuals and entities who were overleveraged or poorly managed. This can be seen as a symptom of an unregulated and still maturing market with few checks and balances on how much leverage can be taken on positions.  

The impact has been devastating for some, and anybody adversely affected will do well to learn from their mistakes and remember how important good risk management is for the future. Over the long term this ‘clear out’ will be seen as a natural consequence of the gradual maturation of the crypto markets, as well as a reaction to the macro conditions. And the macro cycles will continue.

By most economists’ definitions a recession is dictated by 2 consecutive quarters of negative growth in GDP and we finally got confirmation that the US has had this negative growth, yet markets have rallied. Firstly this is a lagging indicator which shows results of what has already happened. Secondly, this is a very crude indicator and doesn’t give a detailed view of how the economy is faring. 

Rather than follow the textbook definition of a recession some economists prefer not to rely only on GDP, but also rate the strength of an economy by other metrics such as jobs available, and employment rate. The US Treasury Secretary Janet Yellen came out with the opinion that the US isn’t in recession and that the economy is exceptionally strong. Let’s remember that no government would want the economy to be seen as weak, especially heading into mid-term elections which take place at the end of the year.

But let’s also keep all of this in perspective. It’s been an exceptional two and a half years. It was never easy to predict how the macro conditions would play out. We’ve always taken the position that it’s long term progress of the blockchain industry that’s most important, so what definition we use to determine a recession matters less. However, the markets care a lot, and it doesn’t take much to shift the sentiment!

We’ll always provide you with our research to help with your education. We’ll keep close track of the main developments and evolution of the niches in blockchain so that you get the best of the new knowledge. 

It’s likely the markets have rallied at this opportunity as a predictor that inflation has already peaked and even with reduction in GDP the economy is strong enough for a so-called soft landing following several months of interest rate rises. The ever so slightly more dovish tone from the Federal Reserve was enough to get things going. 

Dovish in this context means lighter control from the FED, like the slowing of interest rate rises and reduction or cessation of quantitative tightening measures. The market is trying to get a head start for what then happens next in the control cycle- a return to quantitative easing aka. money printing. As we’ve seen in the past when there’s excess capital available it provides the fuel for continued growth and a return to all time highs becomes feasible once again.  

We’ll always provide you with our research to help with your education. We’ll keep close track of the main developments and evolution of the niches in blockchain so that you get the best of the new knowledge. When you’ve finished reading your report then please remember to fill out the feedback form, your research is valued and we’re always open to suggestions.

With Great Respect,
Ivan Liljeqvist