Both bitcoin and ether have slid below key support levels as crypto markets continue to feel significant adversity in the face of rising inflation and interest rates.

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Bitcoin (BITCOMP) plummeted last week, falling below $20,000 by the weekend, while ETH (ETH-X) saw its price dip below $1,000 on Saturday. Bitcoin is trading just under $20,000 this morning on the eToro platform while ether is moving just above $1,000.

The current market conditions don’t provide much room for optimism. Valuations are severely depressed after a buoyant performance in the past 18 months. We’re now back in the region of valuations as they were in 2020, but prices are still moving above levels we saw just 18 months ago.

In terms of pullback, crypto has been here before in relative terms. Bitcoin saw a pull back of around 84% from its highs in December 2017 to low in December 2018. As things stand currently, from an ATH of around $69,000 to now trading around $20,000 is a 71% drawdown.

While pointing out the long-term perspective on any asset isn’t always easy reading for investors who bought in at higher levels, what is critical here is that any long-term investment case made for the cryptoasset should remain when the underlying ideas are considered and historic price trends are factored in. 

Cardano updates coming

The founder of Cardano, Charles Hoskinson, has announced several updates to the Cardano (ADA-X) blockchain which will take effect before the end of June. Dubbed the ‘Vasil’ hard fork, the updates will improve network capacity, transaction speeds and theoretically lower fees. The blockchain will also get new smart contract functionalities and other upgrades. 

The updates come at a difficult moment for markets, but are encouraging for investors looking beyond the short-term noise of price adversity toward future-proofing and network possibilities to shore up investment cases. 

In the past few years Cardano has emerged as a major competitor to the likes of Ethereum. Prices don’t always reflect the underlying work going into such projects - network usage of Cardano has soared since September last year despite the token price struggling against competitors and the wider market. 

BIS launching crypto intelligence platform

The Bank for International Settlements (BIS) is launching a new intelligence platform for crypto. The international institution’s Innovation Hub is launching the platform to provide carefully vetted data on crypto projects.

The launch is a welcome innovation at a tough time for crypto markets. Transparency is a critical element for creating trust in the sector, so providing users and investors with thoroughly assessed information is a great step. 

The BIS project will also look at CBDC issuance via intermediaries. Crypto is a broad spectrum of innovations, ideas and projects so it's really important for institutions such as BIS to provide oversight and essentially keep an eye on how various areas are developing. This provides greater scrutiny and protects users from key risks. 

Israel and Hong Kong testing digital currency

The Bank of Israel (BoI) and Hong Kong Monetary Authority (HKMA) are working together to test a central bank digital currency (CBDC). Per the BoI, the test will look at key cyber security risks for the CBDC.

The project is set to begin testing in Q3 with the BoI issuing the CBDC to financial institutions such as banks. Many regions are actively exploring what is possible with CBDCs so this test could provide us with some invaluable insights into how institutions such as banks interact with digital assets. 

Israel initially backed out of CBDCs back in 2018, so it is clear that the technological potential cannot be ignored. But international competition in the sphere is a big driver too. China, for instance, is already conducting CBDC tests involving millions of participants, and countries such as the UK are actively exploring what’s possible too.