Category: crypto

KPMG reports surge in Singapore crypto investments

On By mehranmuslimiblogIn crypto, Economy, Fintech, GovernmentsLeave a comment

KPMG’s ‘Pulse of Fintech’ report highlights the strong growth in Singapore’s crypto markets. According to the latest report, “Singapore has seen a tenfold increase in crypto-related investments last year worth $1.48 billion, up from $110 million in 2020,” and this surge is expected to continue.

Government support

It is true that the city-state has for some time been recognised as a cryptocurrency hub, with over $1.48 billion in investment completed in 2021 alone. KPMG suggests that this growth is “in part due to government efforts to stimulate the capital market.” One of the actions it has taken is the establishment of a special-purpose acquisition company (SPAC) listing framework that positions Singapore as the best location for firms that are growing fast, as well as unicorns, wishing to go public.

Currently, regulators are making decisive efforts to regulate what they see as speculative digital assets. However, KPMG believes that that this will not hamper Singapore’s crypto investments, and that they will continue to grow this year.

Singapore crypto market changes from services to software

Whilst it is true that in January, Singapore’s central bank ordered cryptocurrency businesses to stop advertising their services to the public, and a significant number of firms have been refused the crypto licenses needed to operate a regulated cryptocurrency business in Singapore, KPMG forecasts that growth will continue because “the majority of cryptocurrency and blockchain investments last year were focused on software and underlying infrastructure rather than services.” Indeed, this sector now accounts for a third of the total fintech investment in Singapore, which rose to $3.94 billion last year , according to KPMG.

Asia-Pacific region going strong

Another highlight of the report is that the Asia-Pacific region is doing well in general. The region saw fintech investments hit a record high of $27.5 billion in 2021, with total funding surpassing $17.4 billion in the second half alone (compared to $11.5 billion in 2020). Furthermore, in 2021, venture capital funding rose to $19.6 billion from $11.5 billion in 2020.

KPMG’s trends to watch out for in 2022

Although KPMG reports cover all world regions, these are its predictions for 2022 in the Asia-Pacific region – ASPAC:

  • Singapore growing on the radar of companies looking for a base from which to expand outside of the Asia-Pacific region;
  • growing investment from Asia-Pacific based countries into developing regions, including the Middle East, Africa, and Southeast Asia;
  • continued growth of embedded finance, including banking and insurance.

The Case for Crypto Optimism

On By mehranmuslimiblogIn Bitcoin, Blockchain, cryptoLeave a comment

As the crypto markets experience a sharp sell-off, it is pleasing to note that not everyone is suffering from extreme pessimism. In an opinion piece for Coindesk, Michael J. Casey, a respected commentator on the market, argues that this is nothing like the events of 2018, despite the slump.

Certainly, 2021 was a boom year that “generated overblown prices” for tokens, whether fungible or non-fungible. However, Casey points out something very important: “In many ways the building and problem solving that followed the 2018 meltdown has served us well. It meant the speculation behind the most recent boom was built on a more established foundation than in 2017.” And while crypto is not yet anywhere near being mainstream, it’s an awful lot closer to that goal than it was in 2017-18. There is a feeling that it is here to stay, and “that’s why this crypto winter feels less brutal” Casey says.

He suggests there are six reasons to say, “this time is different,” which may also give cause for cautious optimism.

  1. Layer 2 scaling is a reality

From the Lightning Network to DeFi apps, cryptographic advances have over the past three years gone from concept to deployment. This means we’re closer than ever to seeing the scalability that will bring mainstream adoption.

  • The success of permissionless projects

Recent crypto success stories are concentrated among permissionless projects open to any participants. DeFi, non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs) are where money is being made. As Casey says, “Users are finding value in blockchain technology’s most disruptive, paradigm-changing promises rather than in incremental adjustments to existing business models.”

  • Institutions and corporates are in

Thousands of mainstream firms are experimenting with NFTs and social tokens, especially those in entertainment, fashion, media and gaming. Plus, the engagement in crypto among hedge funds, family offices and even pension funds has surged last year, and even if they have sold off some of their crypto holdings recently, “those investments now stand as a base of established infrastructure for handling future transactions.” In other words, institutions etc are not leaving crypto.

  • Regulations equal normalisation

Whilst regulations may hamper innovation, they are also a framework for normalizing the industry and for making the general public feel more comfortable with it.

  • Don’t blame crypto

In 2017, ICOs fuelled investor mania. This year it is quite different. Indeed, it is the extra fiat money available that prompted the 2021 boom. That surfeit of dollars, euros and yen flowed into risk assets: stocks, commodities, real estate, fine art and, significantly, cryptocurrencies. As Casey says, “Now we’re all paying the price for that as an inevitable inflation problem is prompting the U.S. Federal Reserve to remove the punch bowl.”

  • Let it settle

The market will eventually settle. Anyone who has been in crypto for a few years knows this will happen. Casey says, “I think the excessive part of the crypto price rally – the part that took Bitcoin from $30,000 to $65,000 but not that which drove it from $10,000 to $30,000 – was perhaps due to external factors. Once we get to the other side, we will be able to see if future price advances are driven by legitimate crypto-only factors rather than “the risk-on/risk-off whims of a global financial system addicted to central bank largesse.”

How to Survive a Bear Market

On By mehranmuslimiblogIn Altcoins, Bitcoin, crypto, Economy, Stablecoins, TipsLeave a comment

The year has not started well for crypto investors. Many of you will be trapped in the falling market and unable to cash out without incurring heavy losses. According to data from Intotheblock, 28% of Bitcoin investors and over 31% of Ethereum investors are in a situation where the assets are worth less than they paid for them.

The question most would like an answer to, is how can I survive this? Here are a few suggestions.

  1. Use dollar-cost averaging

If  you have stablecoins or fiat, you can buy the dip. But when you do, the most recommended strategy is to implement something called “dollar-cost averaging (DCA).” For example, let’s say you have $1,000 in reserve funds. A good DCA strategy would be to break up the amount into five tranches of $200 or even 10 tranches of $100 and place trades using those smaller amounts. So, instead of spending all your money in one go, it usually works out better to buy a small amount and wait to see if the asset falls in price further. If it does, buy a little more, and so on.

  • Diversify your investments

One way to hedge your bets is to use DCA for a range of different crypto assets. To choose your assets, look at the following: 1. Previous all-time-high; 2. Past performance and 3. Future roadmap announcements.

You should also look at whether an asset is considered to be ‘overbought’ or ‘oversold’. If an asset is deemed to be ‘overbought’, it means that its price is considered to be too high and that it will fall soon. If it is oversold, its price is considered to be undervalued, and that is usually a sign that prices will rise soon.

  • Don’t panic

In a bear market, you really need to manage your emotions as much as your money. Fear and greed can lead to investors making foolish, snap decisions that result in losses. Greed, for example, often leads to investors staying in a a trade beyond your take profit level in the hope the asset will rise even higher in price. What you need to do is set a stop for losses. Basically, take profits when you can and don’t panic when the bears arrive!

Thinking about crypto as money

On By mehranmuslimiblogIn Bitcoin, Blockchain, crypto, EconomyLeave a comment

There are a number of people in the financial world who make derisory remarks about cryptocurrencies ever becoming accepted as ‘real money’. Their arguments point to its volatility, which they say makes it impossible “for cryptocurrencies to serve what traditional economics describes as the three functions of money: 1) a medium of exchange, 2) a store of value, and 3) a unit of account,” as Michael J. Casey writes at Coindesk.

Casey suggests that this argument doesn’t work if “the three functions framework is based on a flawed, or overly narrow, definition of money.” He points us towards a book by Felix Martin ‘Money: The Unauthorized Biography’, in which the author says that historically people have had a flawed view of money as a “thing”, i.e. a banknote, but he says that it is really “a socially invented governance system for tracking transfers of property and clearing debt in a commonly trusted manner.” Martin believes we have “fetishized” money as something to be owned and accumulated, rather than seeing it as a means to an end.

In Martin’s view a nationally accepted currency, such as the dollar, is merely a tool that makes it easier to carry out transactions “across a community of otherwise untrusting strangers.” Casey says this makes cash similar to a decentralized, peer-to-peer record-keeping device. Still, it is difficult to challenge the dominant thinking about national currencies, which are effectively a system of social organization and control in sovereign states. But is this the only way to think about money?

Cryptocurrrencies do challenge the sovereign state narrative about money, simply because they are “censorship-resistant, geography-agnostic value transfer systems.” They provide rules and a framework of trust for users without needing to draw their authority from governments, although as Casey mentions, crypto users still have to follow the laws of their governments around cryptocurrencies.

Casey also argues that while some see Bitcoin as a replacement for the dollar, there is a bigger picture to consider, and that is the potential of digital assets to dispense with the need for universal common currencies altogether. As he correctly says, we are a long way from that happening. However, if interoperability protocols and transaction processing can be scaled in a properly decentralized manner, allowing cross-chain atomic swaps in mass numbers without having to trust intermediaries, something like a global system of fractionalized digital value exchange could be realised.

According to Casey, central banks in Singapore and the United Arab Emirates are already exploring interoperability solutions for their central bank digital currencies (CBDCs). This is a move that threatens the status of the dollar as the world’s reserve currency. If this happens, crypto could become a universal unit of account. Casey concludes by pointing out that if the dollar’s role is diminished then “the role of bitcoin, ether, NFTs and other digital assets could increase.” And how we think about money will have changed as well.