What happened?

Meituan’s share price dropped as much as 9.8% on Monday after its CEO’s social media post over the weekend sparked concerns that Meituan may face more regulatory crackdown.

Meituan CEO cited a poem about burning books during the Qin dynasty in a social media post which sparked speculation that he was complaining about the regulatory crackdown.

Wang has subsequently deleted the post and denied that the post is about the crackdown.

In his re-post, he clarified that the post was about the Qin dynasty being wary of scholars, but the ultimate downfall of the Qin Dynasty came down to someone who did not was from Liu Bang who did not read any books. This ancient poem reminded him that the most dangerous competitors are usually not the expected ones- likening the case to Alibaba vs JD.com vs Pingduoduo.

However, the damage has already been done as Meituan closed 7% down on Monday, closing below HK$274, its recent support, which may suggest further downside from a technical perspective. Meituan is down more than 40% from its 52 weeks high and 10% year to date. 

Source: AAstocks

What others are saying?

The post was a very famous anti-establishment poem, which suggests that Meituan may be under huge pressure from the government. It also does not reflect well of Meituan during this period of a crackdown. Sentiments for the China tech sector remain poor as concerns over the government’s regulations continue to linger, and catalysts for market leaders such as Meituan in the near term remain weak.

In terms of valuation, Meituan is attractive as it trades at 7.8x EV/sales- near a 1 year low, after its significant re-rating which started in Mar 2020. 

Meituan remains one of the key technology powerhouses, with its dominance in food delivery and online travel booking. However, as price action continues to struggle with ongoing regulatory concerns, are you a bull or a bear for Meituan? Let us know in the comments section below. 

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What happened?

Ethereum, the second-largest cryptocurrency after Bitcoin, has been stealing the limelight of late. Prices broke above $3,000 to set a new record high, after rising more than 300% year to date.

Year to date market capitalization of Ethereum (USD)

Source: Coinmarketcap

Why did it happen?

According to some crypto experts, they believe this is a catch-up rally by Ethereum (ETH)  to the gains of Bitcoin which rallied late last year, with the rise in interest from institutions. However, with ETH’s recent rise, it is now Bitcoin that is now lagging behind. ETH has gained more than 1,400% over the last 1 year vs Bitcoin which has gained more than 500% over the past year. (Still decent gains for both)

Other reasons attributed to the rise of ETH includes 
1) The issuance of European Investment Bank’s (EIB) first ever digital bond (EUR 100m 2 year bond) on the ETH blockchain. This sparked a “bullish institutional use case for Ethereum”, following the support by EIB who believed “the digitalization of capital markets may bring benefits to market participants in the coming years, including a reduction of intermediaries and fixed costs, better market transparency through an increased capacity to see trading flows and identity asset owners, as well as a much faster settlement speed.” Click here to see how ETH transactions work. 

2) Rising popularity of non-fungible token (NFT), which boosted the demand for ETH as most NFTs are part of the ETH blockchain. NFT are “tokens that we can use to represent ownership of unique items.” and it can be anything that is digital including drawings, songs, etc, where you buy the ownership of the digital asset. The most well-known NFT so far will probably be the sale of the first tweet by Twitter’s founder and CEO, Jack Dorsey, who sold it as an NFT for $2.9 million.

NFTs’ popularity surged in recent years as more people buy and sell digital artwork. Most of the NFT tokens are built on the ETH network which  enable NFT to work due to the reasons below (as quoted from ethereum.org)

  • Transaction history and token metadata is publicly verifiable – it’s simple to prove ownership history.
  • Once a transaction is confirmed, it’s nearly impossible to manipulate that data to “steal” ownership.
  • Trading NFTs can happen peer-to-peer without needing platforms that can take large cuts as compensation.
  • All Ethereum products share the same “backend”. Put another way, all Ethereum products can easily understand each other – this makes NFTs portable across products. You can buy an NFT on one product and sell it on another easily. As a creator you can list your NFTs on multiple products at the same time – every product will have the most up-to-date ownership information.
  • Ethereum never goes down, meaning your tokens will always be available to sell.

So will Ethereum continue to rise? We are in the bull camp for ETH as in addition to being a cryptocurrency, ETH actually offers functionalities such as smart contracts which are starting to gain the traction and support from major institutions and sectors. Hopefully as the number of use cases increase, so will the price. Go ETH Go Go Go!

Are you a ETH bull or bear? Let us know in the comments section below!

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What happened?

Bitcoin saw a massive sell-down over the weekend, plunging more than 12% – the biggest intraday drop since February 2021. While Bitcoin crawled back part of its losses, the cryptocurrency was still down more than 10% from its high of nearly US$65,000, at about US$57,000 as at time of writing. At one point, according to crypto-data website, coinmarketcap.com, Bitcoin and the global crypto market lost more than US$200 billion and US$350 billion in market cap respectively.

1 month market capitalization of Bitcoin (USD)

Source: Coinmarketcap

1 month market capitalization of global cryptocurrencies

Source: Coinmarketcap

Why did it happened?

The fall came on the back of news citing that the US treasury intends to investigate financial institutions conducting money laundering through digital assets. The crash was also attributed to a blackout at China’s Xinjiang which powers a huge number of Bitcoin miners, resulting in about half of the Bitcoin network to go offline in 48 hours according to Coinmarketcap.com.

As the frenzy in cryptocurrency rises, it has also unnerved some investors and authorities. According to a Bank of America survey, nearly 3 in 4 professional investors see bitcoin as a bubble, with fund managers rating bitcoin second on the list of being the most crowded trades. Turkey’s central bank had also ban cryptocurrency payments last week citing excessing volatility and a lack of regulation. This echoes similar concerns from other central governments including US Fed Chairperson Jerome Powell who has cautioned over Bitcoin investments, pointing out that it may not serve as an effective store of value as these so-called currencies are not “backed by anything”.

Nonetheless the global cryptocurrency market and bitcoin has continued to trend higher this year, with their market cap doubling year to date, as more investors pour into the market and companies starting to lend their support for the cryptocurrency market helping to bring it mainstream.

What do you think about the Cryptocurrency market now? Let us know in the comments section below!

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