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Despite the many investments and acquisitions taking place in the Ethereum space, the ETH token followed Bitcoin’s lead into losing more than 10% of its value between March 7 and March 8.
Over the weekend, the crypto markets suffered colossal losses that left many of the top tokens losing over 10% of their value. Bitcoin led this massive meltdown with nearly $30 billion erased from the crypto markets. On its part, Bitcoin lost almost 18% over the past two days resulting in a dismal performance for the rest of the crypt markets. Some of the hardest-hit losers include XRP, Ethereum, Litecoin, and Bitcoin Cash.
The cause of this rapid sell-off was not immediately known, although some commentators blamed a wider spread stock market and commodity havoc in the wake of the spreading coronavirus. On March 8, Bitcoin was trading at $7,684 on the Luxembourg-based Bitstamp exchange. A day earlier, BTC seemed to be gearing up for a major rally surging to $9,192 before starting its massive drop.
On the other hand, oil prices plummeted by almost 30% on March 8 after the OPEC members led by Russia and Saudi Arabia failed to come into a conclusion about the deeper production cuts meant to offset weaker demand resulting from the coronavirus outbreak. That effectively sparked a significant price war.
The major US index futures, the Dow, S&P 500, and the Nasdaq all dropped by almost 5% after the oil cartel’s decision was announced. The latest drop in the crypto market seems to destroy the remaining expectation that BTC has started acting as a perceived safe-haven asset. In a typical scenario, it would be expected to gain in times of greater uncertainty and risks.
Nouriel Roubini, a Nobel prize-winning economist, and outspoken bitcoin critic, published via Twitter:
“Bitcoin is down 8% on the last day, much more than global equities. Another proof that bitcoin is not a good hedge versus risky assets in risk-off episodes. It falls more than risky assets during risk-off.”
Some of the crypto and bitcoin watchers attempted to downplay the latest market meltdown encouraging the bitcoin investors to take a long-term strategy. The co-founder of blockchain startup investor Kenetic Capital, Jehan Chu, told CNBC:
“For those who have long term investment horizons, bitcoin is absolutely a buy during these dips. We can expect more of this volatility sparked by macro health and financial shocks; but ultimately long term investments in the digital future, and its key asset bitcoin, will be a winning strategy.”
In recent months, Bitcoin has been contending with reducing trading volumes and stalled adoption. However, all that has never stopped some investors from betting big on the flagship cryptocurrency.
But, the chief executive of the Coinbase crypto exchange recently said that it might not be Bitcoin that will push the adoption of the crypto ecosystem from 50 million to 5 billion. He said that something else is bound to come up in the next few years.
Morningstar Ranks Maiden Ethereum Security in the $39 Million Fatburger Deal
A historic $39.7 million capital investment involved securities issued on the Ethereum blockchain marking the first time that the rating behemoth DBRS Morningstar rated securities issued on a blockchain platform.
The actual rating was done on a traditional paper debt security that closed on March 6. But, Morning star acknowledged that there was easier and faster access to data. This improvement happened due to the enhanced transparency achieved from using Ethereum in its rating document. This move paves the way for a chaste category of crypto-assets powered by the blockchain.
While the Fat Brands (Nasdaq: FAT) is not huge in terms of total dollars, the firm that set up this investment has many other projects of the same nature coming up in its pipeline. It aims to gather up to $500 million by the end of 2020. But, the total debt securities market is estimated to be $117 trillion.
Andrew Wiederhorn, the president and CEO of the company, said:
“It’ll be a transformative event for Fat Brands. And I’m certain that there will be many smaller franchise companies or restaurant companies that want to access the whole business securitization market to access capital rather than term loans from lenders.”
Generally, $20 million worth of Class A notes were rated BB by Morningstar and a further $19.7 million in Class B notes were rated B. The fixed-rate notes come at an annual average of 7.75%. They are supported by the royalties and initial upfront fees charged to all Fat Brands franchisees. Some of the notable franchisees include Ponderosa Steakhouse and Fatburger, Buffalo’s wings.
Around 400 stores are contracted to pay all these fees according to this rating with another 200 scheduled to open. According to Wiederhorn, $25 million of the debt security will cater to refinancing the existing debts. That will be done at a rate aimed to save the company up to $2 million every year.
The remaining funds will be used to acquire more restaurant brands in the second quarter of this year. Wiederhorn added:
“We’re buying a couple of brands a year that are primarily franchise brands; adding them to our portfolio and combining the back offices.”
Blockchain plays an integral role in the investment process and distribution. On March 6, the trustee distributed a “waterfall” of payments to most of the investor wallets on the Ethereum blockchain. Also, quarterly payments are expected to come, as explained by Cadence founder and CEO Nelson Chu.
The waterfall includes three unique ERC-20 tokens issued on the Ethereum blockchain. One set of these tokens represent every one of the tranches. The other, called a stablecoin, is pegged to the U.S. dollar.
Despite all these developments, Ethereum is still languishing in heavy losses currently erasing over 10% in the past 24 hours, trading at around $204.63.