Hello and welcome to this Week's edition of Overbit News.
According to a study released on Monday, the Bank of Korea completed the first phase of a central bank digital currency simulation exercise in December.
In a simulated environment, the first phase examined the core functions of a CBDC, including manufacturing, issuance, and distribution, according to the study. Under test conditions, the CBDC "Works normally," according to the report.
According to the article, the South Korean central bank aims to investigate adopting other features such as offline payments and adding personal information protection enhancing technologies based on the success of the first phase. These are two of the biggest complaints against a CBDC - offline reliability, as well as consumer privacy - so it's reassuring to see the South Korean central bank approach these problems head-on.
In a second statement, the bank stated that additional research is needed to determine whether the CBDC would operate as well in a real-world setting. The bank wants to evaluate the initiative and undertake usability studies in collaboration with financial institutions when June's second phase is finished.
The news comes only a week after Switzerland's central bank cleared a slew of CBDC-related transactions at five commercial banks, including Citi, Credit Suisse, and Goldman Sachs.
Even more stories on the CBDC front have surfaced recently, including that Israel is continuing to develop a digital shekel and that China's digital yuan had received $8.3 billion in payments in the last six months.
Last week also saw the issuance of a long-awaited study on CBDCs by the US Federal Reserve; however, it provided no clear indication of the bank's position on the matter.
The Fed said in its report that it doesn't want to take a position "without clear support from the executive branch and from Congress, ideally in the form of a specific authorising law."
Closing out this Week's edition of Overbit News, we take a look at the continued market downslide in the cryptocurrency markets and elsewhere.
Since July, Bitcoin and ether have been trading at their lowest levels, falling more than 50% from their all-time highs. Cryptocurrency market fluctuations have been linked to selling higher-risk assets such as technology stocks as investors brace for tighter monetary policy and rising interest rates from the US Federal Reserve.
Over the last 24 hours, the cryptocurrency market has lost over $130 billion in value as major digital coins have continued their multi-day sell-off.
Cryptocurrencies are trending in lockstep with equities, which have been falling since the start of the year and just saw their worst week since March 2020. The only performance worse by equities than now and the "Covid Crash" is the 2008 financial meltdown in October.
While some believe the worst is behind us in the markets, according to CNBC, analyst John Roque of 22V Research believes bitcoin might fall even more.
Bitcoin proponents have long claimed that the digital coin offers a hedge against inflation, but many newer investors are sceptical. With institutional interest in bitcoin surging last year, there are more short-term investors in the crypto market than ever before, valuing bitcoin more like a technology stock than a long-term commodity.
According to analysts, a more hawkish Federal Reserve might take the wind out of the crypto market's sails. Investors are also considering the impact of additional regulation on the cryptocurrency industry.
However, despite all the uncertainty, more information will likely be revealed in the coming week, as the US Federal Reserve is set to release their meeting minutes on the 25th and options expiry taking place on the 28th. We'll do our best to keep you updated on these developments, of course.
Thanks as always for reading Overbit News - take care until next time!