Olliv the Above: Let there be Litecoin
This week, Olliv the Above takes a look at the world's largest stablecoin by market capitalization. We're also checking in on Litecoin, the lighter and more agile cousin to the behemoth that is Bitcoin. Finally, we examine how the U.S. Federal Reserve's strategy of raising interest rates is going.
Tether, the company behind USDT (the world’s largest stablecoin), is going shopping for bitcoin. Tether announced plans last week to stock up on the OG cryptocurrency as a means to shore up its reserves. After high-profile bank collapses in the previous couple of months -- like the folding of Silicon Valley Bank and First Republic Bank -- the move by Tether to pour more profits into bitcoin could be viewed as a vote of confidence in crypto over traditional banks. Stablecoins are under the microscope, however, as crypto markets recently marked the 1-year anniversary of the TerraUSD stablecoin’s implosion. Some critics say that stablecoin’s failure contributed to a snowball effect of very bad news for crypto markets that would follow in 2022.
Tether's total market cap was just under $83 billion at the end of last week.
More reading: Stablecoin stats
OK, Litecoin. We see you. Despite being characterized as the “silver to bitcoin’s gold,” the nimble offshoot of the bitcoin source code called Litecoin (LTC) put together a really respectable week, with prices gains of more than 16% from May 12 – 19, 2023. Part of the reason LTC was lighting up the price charts? More transaction volume shifted to the lighter, speedier Litecoin blockchain after memecoin mania caused a spike in wait times and network fees on the beefier Bitcoin network.
Next up: Learn about Litecoin
U.S. Federal Reserve Chairman Jerome Powell made remarks on May 19 that might just indicate what the central bank plans to do in June vis à vis another round of interest rate hikes. After parsing Powell’s comments, market watchers have reason to think June’s Fed meeting might result in lower rate hikes – or possibly no hikes at all.
Some background: Powell has taken the Fed on an aggressive course over the past year, hiking interest rates at a steady pace (between 25 and 75 basis points each meeting period) to combat stubborn price inflation that’s hitting Americans where it counts: their pocketbooks. Food prices rose about 11% from 2021 to 2022 according to the U.S. Government Accountability Office. For comparison, food prices usually don’t rise more than 2% annually.
Fighting inflation? Desperately needed. But banks have had a rocky spring so far in 2023. Limiting the amount of easy cash (aka low-interest loans) could be cooling off red-hot inflation numbers (the highest Americans have seen in about 40 years), but a couple of major banks have folded along the way. First Republic Bank’s closure at the beginning of May was the second-largest bank failure in U.S. history.
Learn more: Banking struggles, blockchain & the environment
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