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Market Trend｜Chinese CBDC Welcomed With Success, Bitcoin Pushed Below $19,000 As US Inflation Data Is Released
Market Trend｜Chinese CBDC Welcomed With Success, Bitcoin Pushed Below $19,000 As US Inflation Data Is Released
14 October 18:05
Despite the more bullish sentiment witnessed last week, the cryptocurrency market appears to have re-entered the decimating bearish cycle following the intensifying global macroeconomic climate. Forcing Bitcoin back below the $19,000 threshold, newly released US inflation data has rippled throughout the top 100, pushing Bitcoin down by 7.63% across the past week alone and forcing Ethereum to shed 9.6% in the same timeframe. In the week prior, Bitcoin broke through the $20,000 resistance zone and traded relatively horizontally, with minor upticks in value throughout the earlier portion of the week, however, the 8th marked the day in which Bitcoin began to sharply slide as it was revealed that US inflation had risen by 82% on a yearly basis.
Also on the institutional side, China’s recently launched CBDC, the e-CNY, has been revealed to be a ‘massive success’ according to the country’s central bank – The People’s Bank of China. With the official release marked last month through the release of a payment app, more than 4.6 million merchants have begun to accept the CBDC as a means of payment, with a further 261 million digital wallets having been generated to coincide with this change. However, on a more DeFi-focused note, the coveted NFT-driven play-to-earn (P2E) game, Axie Infinity, has revealed that it has lost 62% of its total players across the past year alone, with user numbers dropping substantially from the previous year, thus demonstrating the devastating impact that the crypto market bear cycle has had on the NFT and gaming markets respectively.
Across the coming week, it can be ascertained that the current downturn may continue providing that global inflation data continues to paint a dark and dismal picture for the international macroeconomic stage – yet if the bullish market sentiment lingers, the market may begin to demonstrate signs of gradual recovery. It is also likely that the success of the Chinese CBDC may begin to spark international discussion surrounding the legitimacy and utility of CBDCs on the international stage. Furthermore, having formerly been the most impactful and popular NFT-based P2E game and having suffered to such a degree, it is likely that Axie Infinity will not be the only game of this calibre to suffer degradation in user base.
Chinese CBDC Welcomed With Success
Following a testing launch in 2019 and an official unveiling last month through a newly released payment app, the Chinese CBDC, the e-CNY, has been privy to major mainstream success throughout China according to the People’s Bank of China. With 4.6 million merchants onboarding and embracing the technology, more than 261 million digital wallets have been created to facilitate the use of the currency throughout China.
The e-CNY has been criticised, however, as the central bank maintains a record of all transactions and user files providing the transaction is above a specific threshold in volume. In doing so, the central bank has maintained that this is an initiative to assure the Chinese public that the system has ‘managed anonymity’, whereby third parties cannot view the transactions, instead all information is held on a centralized digital ledger at the central bank.
Undeniably, China has pioneered the introduction of CBDCs and pushed for the continuous innovation of traditional finance, something with which the West is conflicted regarding. It is likely that the success witnessed in China will spark international debate regarding the possibility of CBDCs in the Western world and their application on an international stage.
Digital Yuan Artistic Interpretation. Source: Coindesk
Bitcoin Pushed Below $19,000 As US Inflation Data Is Released
Having paraded brief bullish momentum last week, pushing itself above the $20,000 resistance and seemingly establishing a new support zone, Bitcoin has since been forced beneath its 7-day SMA and back below $19,000 in light of US inflation data being released.
It was revealed in the data that US inflation rose by 8.2% this year alone and by 0.4% on a month-by-month basis, with core US inflation totalling 6.6% – the highest point seen since 1982. Typically, when inflation is above expectations, Bitcoin has a tendency to fall by an average of 4% in the following 30 minutes, according to QCP Capital. Bitcoin has fallen by almost 8% in the past week alone, with a total of 3.48% losses witnessed today alone.
However, this may not be the end of the bearish downturn for Bitcoin, as the cryptocurrency markets are now content with the reality that further interest rate hikes from the Federal Reserve may intensify following this news. A hotter-than-anticipated CPI reading could result in decimating 75bps interest rate hikes at the start of next month, further pushing global economic markets into the claws of a bear market.
Bitcoin is trading beneath its 7-day SMA. Source: Coinmarketcap
Axie Infinity Loses 62% Of Players In One Year
Axie Infinity. Source: WhaleJournal
However, as the wider cryptocurrency market has entered a bear market, the blockchain gaming space has suffered detrimentally, with many games shutting up shop and losing a vast majority of their user base – with Axie Infinity no exception. It was reported that Axie Infinity shed 62% of its players across the past year after seeing highs of 1.955 million unique monthly users in September 2021, falling to a dismal 739,000 this year.
It is likely that the bear market will continue to afflict the blockchain gaming space and potentially cause it to disintegrate until the next bull run sparks interest in upcoming technologies once again.
Author: Gate.io Researcher: Matthew Webster-Dowsing
* This article represents only the views of the researcher and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.
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