Digital Assets Monthly Report | May

17 May 2022

Cryptocurrency Monthly Report: Key Takeaways

  • Short-term holders nurse losses as recession fears bite
  • Two down: CAR makes Bitcoin legal tender
  • Brazil, Uzbekistan, Panama, Slovenia rush ahead with pro-crypto legislation

Macro Outlook

Short-term holders nurse losses as recession, growth fears bite

As we enter May 2022 markets have hit their lowest point of the year, with the total cryptoasset market cap sliding to $1.5trn.

Highly levered speculators, along with short-term crypto holders who bought at the peak of the bull market in November 2021, were behind the recent sell-off, the data show. [1]

Few asset classes have escaped generally bearish price action: the Nasdaq 100 has dropped 23% of its value in the year to date, while the S&P 500 witnessed its worst April in 52 years. On 5 May the Dow Jones Industrial Average shed over 1,000 points, marking the worst single trading day for equities investors since 2020.

Three major macro incidents are weighing on markets: fears of a US recession, the withdrawal of global liquidity through quantitative tightening and the ongoing war between Russia and Ukraine.

On 28 April the States recorded its first quarter of negative GDP growth since before the coronavirus pandemic. At the same time, consumer prices are skyrocketing with inflation across the world at four-decade highs. Central banks now have an unappetising choice: raise interest rates to combat raging inflation, or hold rates where they are and risk stagflation.

The IMF recently downgraded the prospects for global growth, just as it did in 2014. Global economic prospects had “worsened significantly” since the last forecast in January 2022, researchers wrote, with continuing and wider-ranging lockdowns in China — including in key manufacturing centres — having slowed activity, causing new bottlenecks in global supply chains.

The most recent World Economic Outlook reads: “Since [January] the outlook has deteriorated, largely because of Russia’s invasion of Ukraine — causing a tragic humanitarian crisis in Eastern Europe…This crisis unfolds while the global economy was on a mending path but had not yet fully recovered from the COVID-19 pandemic.”

At the same time, ETC Group analysis shows Bitcoin adoption and usage continues to grow, marking a wide and growing disconnect between fundamentals and current price action.

The number of Bitcoin holders who have never sold since buying is near record highs. Coins accumulated in Q1 2021 also remain generally unspent in investor wallets, signifying that Bitcoin investors retain a strong conviction in the long-term potential of the asset, despite the many macro and geopolitical headwinds.

Please note that all performance figures are showing net data. Past performance is not a guarantee of future performance.


Two down: CAR makes Bitcoin legal tender

The Central African Republic (CAR) has become the second sovereign nation after El Salvador to adopt Bitcoin as legal tender. On 22 April 2022 President Faustin-Archange Touadéra signed legislation making the world’s first cryptocurrency legal tender alongside the CFA franc.

Legislators had earlier voted unanimously to move ahead with the law.

Touadéra’s chief of staff Obed Namiso called the decision “a decisive step toward opening up new opportunities for our country,” Reuters reported.

Despite significant natural resource wealth in uranium, gold and diamonds, in GDP terms CAR remains one of the world’s poorest countries. The landlocked 5 million population country produces around $2bn in gross domestic product each year, making it the 180th largest globally.

The text of the bill, translated from French, notes: ”The purpose of this law is to govern all transactions related to cryptocurrencies in the Central African Republic, without restriction, with unlimited purview in all transactions and for any purpose, carried out by individuals or institutions, whether public or private. Bitcoin will legitimately be considered as a reserve currency.

It is particularly interesting to note that, just as with El Salvador, CAR’s law guarantees that citizens will be able to convert bitcoin into CFA Francs and back again, with the country setting up a fund held in trust to carry out those exchanges.

“The state shall provide alternatives enabling the user to carry out transactions in cryptocurrency and to have automatic and instantaneous convertibility of cryptocurrencies into the currency used in the Central African Republic,” the law says.

The International Monetary Fund has to date shown little appetite to support Bitcoin’s use as reserve currency and indeed has actively campaigned against El Salvador’s use of a Bitcoin-backed bond to support the country’s growth. As an institution it has moved excruciatingly slowly in the face of the biggest infrastructural money revolution of the past 100 years.

But with publicly-traded companies like KPMG putting Bitcoin on their balance sheets, and investment banks like Goldman Sachs now using Bitcoin as collateral for cash loans, those decisions have to a degree been taken out of the IMF’s hands.

Writing on Twitter, the CAR President said: “We are delighted to be among the pioneers of the most innovative tech in the world, the one that creates added value for all: blockchain.”

Bitcoin will now be legal tender alongside the French-backed CFA franc, the country’s main currency. The CFA franc is also the currency of five other independent states in the region: Chad, Republic of the Congo, Gabon, Equatorial Guinea and Cameroon.

And while the CAR’s decision is unlikely to have a seismic impact on markets in 2022, the move does represent something much larger than itself. It shows that those once verboten conversations between secretaries of state, central bankers and crypto advocates in the halls of power are being taken much more seriously, and likely at a rapidly advancing speed.


Brazil, Uzbekistan, Panama, Slovenia rush ahead with pro-crypto legislation

On 26 April, the Brazilian Senate approved a bill regulating crypto transactions. The bill folds cryptoassets into the same regulatory regime as other financial assets and adds reporting requirements for “virtual service providers”.

Panama’s legislature has passed a new law legalising and regulating cryptoassets. As reported by Reuters on 29 April, the National Assembly approved a bill to regulate and commercialise the use of crypto in the South American nation. Citizens in Panama can now use cryptoassets as a means of payment for any civil or commercial operation. What is particularly interesting in this case is that lawmakers extended the terminology to include not just cryptoassets and currencies like Bitcoin, Ethereum, Litecoin or Bitcoin Cash; this also includes crypto derivatives and NFTs.

Uzbekistan is a mid-tier country in terms of GDP, sitting alongside Croatia and Panama in terms of economic output. It has vast mineral and material reserves: of oil, gas, gold and uranium; now the country wants to add Bitcoin to that mix.

Recent declines in the price of Bitcoin have not stemmed the flow of capital into crypto VC. In March 2022 Electric Capital raised $400m to invest in Web3 startups and $600m to buy crypto directly [16]. In the same month, the 1994-founded VC firm Bain Capital Ventures raised $560m for its first crypto-dedicated fund. [17] Bain has been pouring money into DeFi since around 2015 and is an early investor in lending platform BlockFi and conglomerate Digital Currency Group. 

The Central Asian nation has legalised solar-powered Bitcoin mining and exempted all domestic and foreign companies from paying any income tax on crypto operations, announcing the move in a presidential decree. President Shavkat Mirziyoyev said he wants miners to power their farms by setting up solar panels. Intriguingly enough, Bitcoin miners who instead connect to the national power grid will pay double the standard energy price. The region is a hotspot for Bitcoin miners more broadly: characterised by generally low energy prices and large swathes of commercial land free for setting up mining farms. Kazakhstan, its neighbour to the north, is currently responsible for around 11% of Bitcoin hashrate, making it the third-largest in the world behind the US and Russia.

More crypto-friendly rules announced this month speak to the drive by countries setting out their stalls to attract cryptoasset businesses to their shores. Global leaders have in recent months pledged to bring forward comprehensive legislation to take advantage of cryptocurrency markets, with both the UK Chancellor Rishi Sunak and the US Treasury Secretary Janet Yellen separately pledging to make their nation a “global cryptoasset hub”.

More regulatory certainty is usually a net benefit to the crypto industry at large. Companies often have to contend with grey areas so vast and murky that it can be difficult even to set up bank accounts in various nations, while some have to contend with permanent threat of unfavourable legislation. So, it has been heartening to see far more countries advancing their own legal structures to grow their burgeoning industries to support digital assets. Certainly, the aperture between Bitcoin adoption, fundamental network usage and current market prices appears to be growing wider by the day.



Crypto Performance (As of 30.04.2022)








BTCetc - Bitcoin Exchange Traded Crypto














ETHetc - ETC Group Physical Ethereum







Ether (Ethereum)







LTCetc - ETC Group Physical Litecoin














BCHetc – ETC Group Physical Bitcoin Cash







Bitcoin Cash







Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/04/2022 Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product.


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