CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Cryptocurrency update: Bitcoin passes $50,000 in 3-month uptick
Bitcoin starts the week in fighting form as it reaches heights not seen since mid-May.
Bitcoin continues fightback after breaching $50,000
Bitcoin started the week strongly by building on weekend momentum to break above $50,000 for the first time in three months.
The world’s most popular cryptocurrency is currently trading at $50,345 and is up over 3.25% in a 24-hour period. According to Coindesk data, Bitcoin is now up 71.4% year-to-date.
A couple of new reports have helped push BTC towards new highs.
Firstly, Coinbase has announced it plans on adding a further $500 million worth of new crypto assets, including BTC, to its holdings. Institutional support tends to be a big support for Bitcoin. It’s no different here.
We’ve also seen PayPal announce it will offer crypto wallet services to UK customers. More on that later.
Price action remains above the 200-day moving average. That could mean we’re seeing a sustained rally, rather than a flash-in-the-pan trading moment. That said, trading volumes have remained relatively flat since the weekend, despite the uptick in price action.
Bitcoin is the crypto industry’s bellwether. With it back in the green, several other popular tokens are subsequently rallying. Cardano is up over 7%, XRP, is up over 3.75%, and Ether is showing a 2.31% rise.
Is Bitcoin back in business? We all know how quickly things can change in the world of digital finance and token trading. We’ll just have to wait and see, but the fundamentals suggest we could at least see the rally continue across the week.
PayPal offers crypto services to UK customers
As digital token trading gets more popular, an increasing number of platforms are starting to offer crypto buying, selling, and holding on their platforms.
The latest to throw its hat into the digital currency ring is PayPal. It is now offering crypto services to its UK customers. Users will be able to exchange or hold four cryptocurrencies: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.
Crypto derivatives, like CFDs, are banned for retail customers in the UK. However, retail clients can still buy and hold the physical coins themselves, circumventing this ban. That’s essentially what PayPal is offering here.
The same service was launched in the US fairly recently. Users there can also pay for transactions using their crypto holdings too.
For some, PayPal’s decision to accept digital currencies on its platform came as a bit of a shock. There have been questions around money laundering and potential fraud caused by cryptocurrency users’ anonymity. Such critics have thought maybe PayPal and other institutions may have been put off by this.
There’s also volatility to consider. While we’ve seen Bitcoin reach a new 3-month high this week, it fell away dramatically from its all-time highs in April to below $30,000 weeks later. This may have been seen as an impediment to adoption by the likes of PayPal in the past.
This is obviously not the case. PayPal is now happy to ride the crypto train until the wheels fall off.
Jose Fernandez da Ponte, vice president and general manager for blockchain, crypto and digital currencies at PayPal, said his company’s new service could help introduce more people to cryptocurrency.
“The pandemic has accelerated digital change and innovation across all aspects of our lives, including the digitisation of money and greater consumer adoption of digital financial services.
Global digital currency adoption soars over two years
The adoption of cryptocurrencies has grown 2,300% over the past two years Chainanalysis research has revealed.
Those stats represent the acceleration in crypto trading at the end of Q2 2021 against Q2 2019. Chainanalysis data also reveals it is up 881% across the last year.
The blockchain specialist said it rated activity in 154 countries against three criteria to establish its results:
- The amount of on-chain crypto received
- On-chain retail value transferred
- Peer-to-peer (P2P) exchange trade volume
The above metrics were weighted by purchasing power parity (PPP) per capita. P2P exchange trade volume was weighted by the number of internet users in a given country.
Institutional support, i.e., that from banks, businesses, and brokers, is what drove adoption in North America, Western Europe, and East Asia.
According to Chainanalysis’ report, digital tokens have been seen as “compelling” by such players, particularly as prices were reaching all-time highs at the start of the second quarter.
On the other hand, peer-to-peer activity pushed growth in emerging markets. Crypto users and investors in these areas see digital currencies as a to preserve savings in the face of currency devaluations. They also can use it for overseas remittance or carry out business transactions.
“Central and Southern Asia, Latin America, and Africa send more web traffic to P2P platforms than regions whose countries tend to have larger economies, such as Western Europe and Eastern Asia,” the report states.
Cryptocurrency update: BTC rally pushes crypto market above $2 trillion
Key tokens start the day with greens across the board, with Bitcoin and Ethereum leading the charge.
Global cryptocurrency market hits $2 trillion
With BTC and ETH reaching highs not seen for months, the total value of the global crypto market has exceeded $2 trillion for the first time since May.
Bitcoin crept above $48,000 on Monday morning, although it fell back towards $47,175 as the day progressed. Ether, which has strengthened on a successful network upgrade, is on a seven-day high after gaining 11% throughout the week. Cardano is up 53% across the last seven days.
It’s a good sign of market confidence in digital tokens. Bitcoin in particular had been experiencing a torrid couple of months recently. A strong sell-off in July, precipitated by falling token prices influenced heavily by China’s crypto crackdown, caused prices to dip below $30,000. Now, they’re rallying strongly and eyeing up the next resistance level.
During the BTC sell-off with prices at their lowest in July, the overall crypto market cap was around $1.12 trillion. Its peak, recorded in May when Bitcoin was trading at all-time highs, totalled $2.5 trillion.
There is still ground to recover. Volatility, however, is never far away from the world’s cryptocurrency markets.
While the bulls are feeling pretty good, there is still time for prices to go south again. Analysts predict the current BTC surge could top out at around $55,000. After that, the token may begin to fall away below $30,000 again.
The impact of the upcoming US Infrastructure Bill’s crypto tax provisions has yet to be truly felt.
That said, some are still optimistic. Others are predicting BTC hold its place above $40,000 and possibly over $50,000, going forward.
Singaporeans prefer Ether
A joint survey by digital token exchange Gemini, crypto market data analysts CoinMarketCap, and finance platform Seedly has revealed Singapore’s favourite coin: Ether.
78% of those surveyed by the group stated they hold onto Ether, compared to 69% that hold Bitcoin. Cardano was the third most popular token with 40% of respondents saying they had invested in it.
4,000 adults were surveyed as part of this study. 67% of respondents said they included digital tokens in their portfolios, and two-thirds of that group said they had increased their crypto holdings during the pandemic.
A fifth of those surveyed said that half or more of their investments are in cryptocurrencies.
Ether has been tipped to overtake Bitcoin as the world’s most popular digital token in the future. Many decentralised finance (DeFi) apps run off the Ethereum blockchain network, for instance, and users wishing to use said blockchain must pay a small fee in ETH to do so.
The network’s recent London Fork upgrade has introduced more user-friendly features, which may explain why ETH is rallying right now.
Still, with Bitcoin accounting for up to 68% of the total worldwide crypto market, Ether has some way to go before it can challenge for the top spot. It does appear, however, to be moving in the right direction – particularly if one nation’s traders and investors are seeing high potential in Ether.
The top five crypto-investing banks revealed
Institutional support for cryptocurrencies has been steadily building throughout the year, even with Bitcoin’s erratic price behaviour. Banks have stepped up their digital finance services and offers and been keen to grab their slice of the $2 trillion market.
A report from Blockdata has put together the 13 banks investing the most capital into blockchain networks and cryptocurrency wallets. Together, they represented over $3bn in investments. This includes token purchases and acquisition, as well as investment into tech companies and others in the digital finance ecosystem.
Blockdata said it reviewed banks in terms of size of funding rounds as a proxy of investment into the crypto space, saying it used that measure as banks participated in funding rounds with multiple or many other investors.
The top five crypto-investing banks as identified by Blockdata are:
- Standard & Chartered – $380m in 6 investments
- BNY Mellon – $321m in 5 investments
- Citibank – $279m in 14 investments
- UBS – $266m in 5 investments
- BNP Paribas – $236m in 9 investments
While the above banks represent those betting the most on the crypto sector, it’s starting to pick up steam amongst other financial institutions.
55% of the world’s 100 biggest banks by assets under management are investing directly or indirectly in companies and projects related to digital currencies and blockchain, according to Blockdata research.
Cryptocurrency update: global crypto userbase soars
The first half of 2021 sees record numbers of people engaging with cryptocurrency markets.
Global cryptocurrency users skyrockets in H1
The number of people actively using and trading digital tokens exploded in the first half of 2021 according to data from Crypto.com.
Data was taken from 24 digital asset exchanges, including Binance, Bitfinex, and Gemini.
Up to June 30th, 220,000,000 people – more than the population of Brazil – have had some level of interaction with cryptocurrencies this year. In January, the figure was closer to 106 million.
Crypto.com states its Bitcoin that’s driven the largest number of new users.
“We can see that January, February, and April were exceptionally strong months, driven by Bitcoin’s stellar performance,” Crypto.com said in a statement. “However, May was also extraordinary, given Bitcoin and Ethereum’s price plunge.
“Notably, it only took four months to double the global crypto population from 100 million to 200 million. By comparison, it took nine months to reach 100 million from 65 million since we began tracking these numbers.”
Institutional support also drove up the numbers.
“Bitcoin led growth from January to April, as heavyweight institutions like PayPal, MicroStrategy, Visa, and Mastercard announced plans to support crypto,” said Crypto.com Similarly, Ethereum saw significant growth in May and June as institutional investors continued to favour the token.”
In terms of altcoins, i.e., not mainstream tokens like BTC or Ether, it was perennial meme favourites Dogecoin and spin-off Shiba that helped attract more retail clients.
Bitcoin drops off on US infrastructure bill uncertainty
If you’re a keen crypto market follower, you’ll probably know that Bitcoin has had a bit of a struggle recently.
Falling away from record highs seen earlier in the year, the token has struggled to gain meaningful momentum. It climbed above $42,000 on Saturday, but as of now has fallen back below the $40,000 mark.
One of the key reasons for this is uncertainty around the new proposed $1 trillion US infrastructure bill currently being debated.
Provisions within the bill call for about $28bn to be generated from taxing cryptocurrency transactions. Bitcoin, being the most popular crypto for US and global traders, hasn’t responded well to this proposed idea. In fact, traders have got cold feet regarding Biden’s plans.
The definition of the word “broker” for tax purposes is what’s riling up BTC traders. In the amended bipartisan bill, people who provide digital asset transfers would be treated as a broker, thus be susceptible to greater information reporting and taxation requirements.
“Any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person” is now included in the definition, according to the bill.
This has caused a lot of doubt, fear, and uncertainty around the whole US BTC sector.
Other factors at play include China’s central bank aping the CCP’s tough crypto stance. The People’s Bank of China has said it will continue to crack down on digital asset trading throughout China, citing financial risks to the Chinese economy.
Bitcoin has now slumped 5.5% from its Saturday high.
Ether whales move over $500m in hours
Whales holding onto large Ether caches moved over half a billion dollars’ worth into new wallets last week.
Research from blockchain tracker Whale Alert revealed multiple transactions had taken place on Friday. 236,419 ETH tokens, worth approximately $$557,777,068, was moved in one ten-hour window.
Here’s the breakdown of key transactions:
- 36,168 ETH worth $89.1 million transferred from unknown wallet to unknown wallet.
- 36,168 ETH worth $88.4 million transferred from unknown wallet to unknown wallet.
- 33,000 ETH worth $79.8 million transferred from unknown wallet to unknown wallet.
- 25,119 ETH worth $59 million transferred from unknown wallet to unknown wallet.
- 5,891 ETH worth $13.9 million transferred from unknown wallet to Gemini.
- 33,000 ETH worth $77.5 million transferred from unknown wallet to unknown wallet.
- 6,487 ETH worth $15.1 million transferred from OKEx wallet to unknown wallet.
- 6,309 ETH worth $14.7 million transferred from unknown wallet to Binance.
Interestingly, ETH is trading down. Bitcoin falling tends to bring all of the other key tokens down with it, and Ether is no exception. The above tells us that there’s significant behind-the-scenes interest in ETH, as well as the scale of coins held by moneyed investors. Could these be institutional? It’s hard to say.
Cryptocurrency update: Bitcoin tipped for global finance shakeup
Bold predictions for Bitcoin this week, despite its recent woes. Could we be on the cusp of a worldwide financial revolution?
BTC to overtake USD by 2050?
A panel of 42 cryptocurrency experts believe Bitcoin will replace fiat currency as the dominant form of finance by 2050.
The survey, undertaken by personal finance site Finder.com, showed 54% of respondents thought hyperbitcoinisation, i.e. the shift from fiat to BTC tokens, will occur by then. A further 29% believe this will happen by 2035.
Developing and emerging economies may be the driving force behind this global change. We’ve already seen El Salvador commit to using Bitcoin as legal tender. Other countries, such as Venezuela, may pursue similar options to extract themselves from the dollar in the long term.
Survey respondents were also feeling bullish regarding BTC prices. The consensus seems to be a price of $66,000 will be reached by 2021’s end. This was only slightly higher than the all-time high seen in April this year, prior to the BTC crash.
The most bullish price prediction comes from Morpher CEO Martin Fröhler, who suggests BTC token prices could climb as high as $160,000 by the end of the year.
This seems wildly optimistic. BTC has struggled to clear $32,000 and its predicted it may fall below $30,000 again soon.
Another thing to remember when looking at this survey’s results is participants’ vested interest in high crypto prices. At cryptocurrency experts, traders, and investors, they want to see high prices as it will pay off for them in the long-term. Take this survey with a grain of salt.
Indeed, not all respondents are bullish. University of Canberra senior lecturer John Hawkins is among the most bearish survey respondents. He gave an EOY prediction of US$20,000, stating that countries adopting Bitcoin may actually have negative impact on its price:
“I’m assuming El Salvador adopting it as legal tender puts a floor for a while. But after the price has dropped a lot, they may remove the legal tender status.”
Ethereum co-founder walks away
Anthony Di Iorio, one of Ethereum’s eight co-founders, has announced he is leaving the world of cryptocurrencies.
It’s a leftfield move from a man who has done a fair amount to promote decentralised finance and digital currencies through his work on the Ethereum blockchain and token.
Di Iorio has cited fears around his personal safety as one of the key reasons for pulling out.
Speaking to Bloomberg, Di Iorio said he doesn’t “feel necessarily safe in this space”. He also and warned that cryptocurrency is not what the world needs.
“[Crypto is] really a small percentage of what the world needs,” Di Iorio said, adding he wants to “to diversify to not being a crypto guy, but being a guy tackling complex problems. I will incorporate crypto when needed, but a lot of times, it’s not.”
According to Di Iorio, he has hired security teams to safeguard himself while attending meetings and travelling since 2017.
The world of decentralised finance is all built around personal freedom. But, because it is decentralised, it has also attracted a large following from the world’s criminal element. Money laundering and fraud is a big problem in the DeFi sector. Thieves and criminals have been particularly attentive to cryptocurrencies recently thanks to the staggering price increases we’ve seen across the past year.
Di Iorio will instead be focussing his attention and resources on more entrepreneurial endeavours.
ETH has struggled to find its footing again after Bitcoin’s collapse sent nearly the whole crypto market into the red.
Whales snap up more XRP tokens
XRP, the token for the Ripple network, has seen an upswing in whale transactions in the past week.
For context, whales are single-address entities that own 1,000 or more tokens in a single wallet.
In this case, the number of XRP coins involved has scaled into the hundreds of millions. Research from Whale Alert, a leading blockchain tracker, has revealed 124 million in XRP transfers, sourced from two transactions, took place in the past couple of days.
On 19 July 2021, a leading XRP address moved 84.3 million coins to an unknown wallet. The total value of the mentioned transaction, recorded by Bithomp.com, stands at around $50 million.
In a separate transfer, around 40 million XRP coins worth over $23 million were moved from a crypto wallet to the digital exchange Binance on Saturday 17th July.
We’ve recently seen a high level of growth in the number of Bitcoin tokens sitting in whale wallets. Because of the price collapse, canny investors are buying the dip, in the hopes of another BTC price rally.
This may be the same here. It’s been reported that the XRP 50-day moving average is about to fall below the 200-day moving average. This so called “death cross” could spell disaster for XRP token prices – but it does present an acquisition opportunity. The trouble is with crypto is that prices are so volatile that death crosses such as the one mentioned could become more frequent.
Right now, the market is in a depression – but if enough whales hoover up enough tokens, the principles of supply and demand could kick in, and thus support prices again.
Thematic investing: cryptocurrencies
Cryptocurrencies are the focus of our latest thematic investing guide. Should you be putting your money in cryptocurrencies? What are your options? Have a read to find out.
A look at cryptocurrencies
What is a cryptocurrency?
Cryptocurrencies are digital currencies that can be exchanged online for goods and services. Another name for a crypto coin is a token. Cryptos are bought using real currency via exchanges or are tradeable via contracts for difference (CFDs).
Blockchain technology powers cryptocurrencies. Think of this a bit like a digital ledger. It manages and records crypto transactions. A blockchain is decentralised and is spread across many different computers. New tokens are generated using a process called mining. It’s essentially a complex computational algorithm that, when solved, creates a new token.
Over 10,000 different digital currencies are traded. The current total market cap, as of June 3rd, 2021, is above $1.5 trillion. While there is no such thing as the best cryptocurrency, some tokens are much more popular than other. Bitcoin is the world’s most popular and acts as a market bellwether. When its price rise, so too do other important tokens. The opposite is also true, as we’ve recently seen a big crash in Bitcoin prices.
As of June 3rd, 2021, the top five cryptocurrencies by market cap are:
- Bitcoin – $706.1bn
- Ether – $317.5bn
- Binance Coin – $62.1bn
- Tether – $61.7bn
- Cardano – $56.4bn
Cryptocurrency prices & volatility
Cryptocurrency prices are some of the most volatile of any tradeable asset. This cannot be stressed enough. Just recently, the price of Bitcoin collapsed following outside influence. Elon Musk and Tesla’s decision to U-turn on accepting Bitcoin as payment, plus a crackdown on crypto mining in China set prices spiralling.
Bitcoin reached an all-time high in April when it broke above $64,000. Just a couple of weeks later, the world’s most popular cryptocurrency was trading below $31,000 for the first time since 2020. Its total market cap went from April’s $1.2 trillion reading to the $706bn figure mentioned above.
This kind of volatility is inherent to cryptos. There is a lot of supply and demand at play here, but digital currencies are certainly less stable than say gold or equities. Potential profits can be very high, but the losses can be huge.
Always do your research before you commit any capital. Trading and investing is inherently risky, but more so with cryptocurrencies. Only invest or trade if you are comfortable taking any potential loss.
Investing or trading cryptocurrency
A couple of options are available to you.
Firstly, there is physically buying the tokens to store in a digital wallet in the hope they grow in value. Many investors are turning to cryptocurrency as a store of value, turning away from traditional assets like gold.
You must be very careful with this approach. Crypto investing can be a rollercoaster ride. One minute prices are nudging all time highs; the next billions have been wiped off open crypto positions.
If you do not wish to own any coins, but still want to trade cryptocurrencies, you may wish to look at contracts for difference. CFDs allow you to trade cryptocurrencies without owning any underlying assets. You instead trade on margin. This can allow you to open a position for a fraction of its total value – but you would be susceptible to higher losses.
You may also want to look at stocks based around the crypto industry as well. For instance, Coinbase went live with its initial public offering in April. Coinbase is the largest US cryptocurrency exchange, where users buy and sell bitcoins in a similar fashion to stocks listed on various global exchanges.
Volatility has struck again here, though. Because Coinbase is so tied in with the performance of cryptos, and especially Bitcoin, its share price rises and falls in line with the wider cryptocurrency market.
For example, when it went public, Coinbase’s initial share price was above $400. It’s currently trading at around $235. Despite this, according to Marketsx’s in-platform sanalyst tool, Coinbase is still considered a “buy”. It has a lot of potential to gain value alongside a recovery in cryptocurrency prices.
There is no best cryptocurrency. There are no best cryptocurrency stocks. What is a good or bad choice for your portfolio depends on your individual capital and your attitude to risk.
Remember: cryptocurrency prices are subject to high volatility, so only invest or trade if you can afford any potential losses.
Cryptocurrency update: Bitcoin tracks big loss
Bitcoin switches to sideways trading as it sustains one of its worst-ever month-to-month dips.
Bitcoin still struggling
The recent Bitcoin plunge has caused a crisis of confidence for traders.
Prices slumped to $31,000 on May 19th following two hefty market body blows. The first was Tesla’s decision to backtrack on accepting BTC for payment. China’s clampdown on crypto mining was the other knockout punch, sending Bitcoin reeling.
The above triggered a panic-induced sell-off amidst newer traders unfamiliar cryptocurrency markets volatility.
As of Monday, May 31st, BTC was on track for its second-largest ever monthly percentage decline. Bitcoin was trading down 37.5% month-on-month in May. September 2011’s 40% monthly drop remains the largest so far.
Prices fell as low as $34,195 on Monday but had climbed back above $36,360 by midday UK time on Tuesday 1st June.
So, what can Bitcoin do to sustain a prolonged rally? Restoring market confidence is key here. Hope may lie in the whales.
Whales are clusters of blockchain addresses controlled by a single participant with at least 1,000. Sustained BTC accumulation by such entities may be the catalyst the market needs to feel confident about Bitcoin investment once again.
The last time whales scooped up more tokens, October 2020-February 2021, prices rose in tandem. Correlation does not equal causation, but this could be a good metric to follow.
For context, the supply of BTC held by such whales has increased to over 4.4m since the May 19th price collapse as wallet-owners buy the dip.
But as it stands, BTC looks like it’s trading sideways. It will probably be some time before whales can really make a visible splash on price action.
Tighter crypto regulations on their way around the world?
A tougher regulatory environment may also negatively impact cryptocurrency prices going forward.
We’ve already seen the effects of the Chinese government moving against miners. The UK has flat out banned sales of crypto derivatives to retail customers. Now, other countries are starting to develop stronger regulations regarding crypto production and trading.
New US OCC Michael Hsu has said he hopes different agencies will be able to form a “regulatory perimeter” for digital currency legislation and regulation. According to Hsu, while the will is there to go harder on crypto to protect traders, it’s more a case of establishing which agency is responsible for handling crypto regulation.
“It really comes down to coordinating across the agencies,” Hsu told the financial times. “Just in talking to some of my peers, there is interest in co-ordinating a lot more of these things.”
Sweden’s Riksbank Governor Stefan Ingves has he believes further regulation is on the way – not just in Sweden, but around the globe. His thoughts have been matched by Swedish Finance Minister Asa Lindhagen.
Sweden’s government is in the process of tightening standards for cryptocurrency exchanges, Lindhagen said, but labelled this “a work in progress at the international level.”
Thailand’s Securities and Exchange Commission may move to regulate decentralized finance (DeFi) projects in the country, including the issuance of digital tokens.
In a statement released on Sunday, May 30th, Thailand’s SEC said DeFi activity involving digital tokens such as liquidity provider tokens, governance tokens or tokens issued to those transacting in DeFi projects “must be licensed and abide by the specified rules.”
Essentially, the worldwide environment for trading cryptocurrencies is potentially going to enter a new phase of regulatory oversight and control.
For retail investors, the everyday folk who aren’t necessarily up to speed on the minutiae of crypto token trading, this can only be a good thing.
We’ve seen hundreds of billions wiped off crypto markets in the blink of an eye many times. Bitcoin’s latest crash removed $750m from the token’s total market capitalisation for instance. Perhaps new regulations will be able to finally tame cryptocurrency’s volatility? Maybe, but because the potential heights caused by rapid swings may turn off potential investors.
Ether makes big search engine noise
Traders are googling up an Ether-shaped frenzy.
Interest in ETH, the token for the Ethereum blockchain DeFi platform, is up in the wider crypto market dip.
When BTC drops, so too do the other major tokens. Ether, which recently broke $4,000 for the first time, has fallen. At the time of writing, ETH was trading for around $2,600.
But like whales snapping up Bitcoin supplies during this downturn, Ether is getting plenty of attention too.
Average monthly Ether internet searches in the US total over 1.1 million. In Germany, over 750,000 searches for the crypto are made annually. Turkey, Brazil and France combined to just over 915,000. In the UK, 230,000 active internet users are searching for Ether each month too.
Ether has exploded in value over the past year. Why? Ether actually holds practical value. The Ethereum blockchain network uses ETH as currency to process transactions. Ethereum is quickly establishing itself as the DeFi platform of choice, thus end-users are snapping up ETH tokens to pay for network transactions.
Because of this, the coin has been in high demand. The knock-on effect is higher investor attention because prices are increasing due to basic supply and demand principles.
Cryptocurrency update: China’s hard-line crypto stance gets harder
Crypto took a battering over the weekend as China stepped up its anti-mining squeeze. With Bitcoin gains wiped out, how will the market react?
China crypto crackdown continues
Chinese authorities continue to hammer domestic Bitcoin miners.
HashCow and BTC.TOP are the two latest miners to suspend or scale back operations after Beijing stepped up its anti-mining sentiment. Exchange Huobi said on Monday it will no longer be accepting new users from mainland China. The exchange will now be focussing on overseas customers.
This is seismic for the world of crypto mining as China accounts for 70% of global token supply.
It’s thought part of the reason for the move against miners is partly driven by environmental concerns. The two provinces where the bulk of Chinese mining takes place – Inner Mongolia Autonomous Region (IMAR) and the Xinjiang Uygur Autonomous Region (XUAR) – draw energy from coal-fired power stations. With China pledging to slash greenhouse gas emissions by 2060, it’s doing what it can to clean up its act. At least, that’s how it appears on the surface.
The reality is likely Beijing wanting to exert more control over cryptocurrencies. A statement made on Friday by the State Council said the move would “crackdown on Bitcoin mining and trading behaviour, and resolutely prevent the transmission of individual risks to the social field.” This latest move is a way for China’s government to exert its considerable influence over a new, rapidly evolving economic sector.
As you can expect, the consequences for crypto markets have been massive to say the least. Token prices have plummeted.
Miners, who typically don’t hedge all their minted digital tokens into fiat straight away, are thought to be divesting themselves of their stakes. A broader sell-off is underway, which has caused a freefall in crypto asset prices.
May has not been kind to digital currencies. Rumours of tighter crypto exchange regulations and capital gains tax hike proposals in the US gave investors jitters at the start of the month. Tesla turning its back on BTC payments caused further wobbles. China’s hard-line stance was enough to trigger the freefall.
BTC & ETH start on the long road to recovery
Crypto market bellwether crypto BTC took the heaviest body blows following the China news. BTC is trading just shy of 50% lower than April’s $64,000 all-time high at around $36,500.
At the bottom of the trough, prices had slumped to $31,107. Essentially, all gains made since February have been wiped out. Volatility in digital currency markets is nothing new, but BTC will have a long way to go before it reaches new all-time highs. Recovery, as we can see from the price action above, has started but it remains to be seen just how quickly it can regain traction.
Ether, which had only 17-days ago broken the $4,000 barrier for the first time, fell 17.4%, with its lowest level registered at $1,868.79. Since then, the token, used on the Ethereum blockchain, has climbed back to $2252.50. Even with the price hit, ETH is up over 159% year-to-date.
Musk defends the doge
Dogecoin, the memecoin beloved of Elon Musk and thousands of internet traders, gets support from the enigmatic billionaire.
Musk reiterated his position in response to an investor implying the Tesla CEO has an impressive Dogecoin holding.
Yeah, I haven’t & won’t sell any Doge
— Elon Musk (@elonmusk) May 20, 2021
Elon and his Twitter escapades are very familiar for crypto market investors and observers. Seemingly his every tweet has the power to create major price movements. And, despite all the volatility at hand, and Tesla u-turning on BTC acceptance, Musk is doubling down on crypto, although framing himself as some sort of crypto martyr.
The true battle is between fiat & crypto. On balance, I support the latter.
— Elon Musk (@elonmusk) May 22, 2021
Dogecoin has gained 3.4% as of Monday 24th May following the weekend’s bloodbath.
Cryptocurrency update: all aboard the Bitcoin rollercoaster
Strap yourself in and keep all hands and feet inside the ride at all times: Bitcoin is on another wild journey.
Bitcoin spins on Musk’s whims
Alton Towers’ Smiler rollercoaster features 14 inversions making it the ride with the most ups and downs in the world. If Alton Towers needs inspiration for a new ride to rival Smiler’s steely twists and turns it might consider the Elon Musk Bitcoin rollercoaster.
The tweet-happy mogul has been at it again. Last week, he sent BTC for a spin after revealing Tesla will no longer accept payment in Bitcoin. Musk and co. cited concerns over crypto mining’s harmful environmental impact as the reason for the U-turn.
Musk sent BTC prices whipsawing at the end of last week after seemingly agreeing with a tweet advising him a to sell Tesla’s Bitcoin holdings – valued between $1-2.5bn.
Bitcoin subsequently slid below $45,000 for the first time in three months.
Musk has since clarified Tesla’s position.
“To clarify speculation, Tesla has not sold any Bitcoin,” he wrote in reply to a Twitter user pointing out the considerable impact his posts have on Bitcoin prices.
Bitcoin jumped 5% after Musk’s clarification, but at the time of writing, it is still trying to break through $45,000 convincingly.
There’s not really much more to say about Bitcoin. It’s volatile, speculative, and apparently easy to manipulate, as our Chief Markets Analyst Neil Wilson points out.
As Bitcoin falls, so do other tokens. Such are the perils of following the cryptocurrency’s bellwether. ETH, recently soaring to all-time highs, as dropped 9%. Dogecoin, another Musk favourite, is down 5%.
Bitcoin is actually most volatile on the weekends, so maybe this whole situation should not have come as a surprise. On Saturdays and Sundays in 2021, the token’s average price movement is 4.95%.
Crypto liquidations surge in 24 hours
The fallout from the above has caused a surge of liquidations.
According to ByBit data, approximately $2.34bn in total liquidations has taken place over the past 24 hours. Over half of that, $1.26bn, has come from Bitcoin alone.
Cryptocurrency’s total market cap has dropped by $300bn.
While this is still significant, it is not the largest long-position liquidation to hit crypto markets recently. $9bn disappeared shortly after Bitcoin reached its current all-time high on April 17th, 2021.
What the above shows, however, is just how volatile the sector is. While billions have been wiped out, the resulting upswing in price will add more back on to Bitcoin and crypto’s total market valuation. But the short-term losses for Bitcoin holders are proving rather dramatic.
It also goes to show how reactive crypto sellers are to single tweets. It’s probably best to not buy and sell on the whims of a single celebrity investor, but yet Musk’s itchy tweeting finger continues to play havoc with Bitcoin markets.
Asset managers take cautious crypto stance
Institutional fund managers, triggered by the Tesla BTC fiasco, have expressed reservations around cryptocurrencies reports the Financial Times.
Amongst those investment firms advising caution are UBS Wealth Management, Pimco, T Rowe Price, and Glenmede Investment Management.
“Our stance with clients is the 10-foot pole rule: stay away from it,” said Jason Pride, chief investment officer of private wealth at Glenmede. “I don’t think the Fed and other regulators are fans of the current market structure for cryptocurrencies.”
Rob Sharps of T Rowe Price flagged the high level of speculation within the cryptocurrency sector as unsuitable for his clients’ investment strategies. The other major cause for concern is the sheer volatility of cryptocurrency.
This latest wave of cautionary sentiment comes after Bank of England Governor Andrew Bailey last week reaffirmed his stance that cryptocurrencies have no inherent value. Bailey advised investors to buy crypto “only if you’re prepared to lose all your money”.
Cryptocurrency update: ETH soars while Dogecoin spins
Ether starts the week strongly, breaching all-time highs, while Dogecoin chases its tail.
Ether soars to all-time high
It makes for refreshing reading when a cryptocurrency that isn’t Bitcoin makes its own stellar gains.
This week, it’s Ether (ETH), the digital token for the Ethereum blockchain. The token has reached a new all-time high, breaking above $4,000.
While Bitcoin steals the headlines, ETH has actually made more substantial gains across 2021 so far. As of May 10th, 2021, Ether’s year-to-date return was a cool 435% against Bitcoin’s 104%.
Ether’s total market cap is now valued at around $470bn. For context, the stock market valuation of JPMorgan Chase, the US’ largest bank, floats around $488bn.
Behind the ETH drive is intensified worldwide interest in Decentralised Finance (DeFi). DeFi is functions around trading, lending, and other financial processes, that seek to match those of traditional banking and financial firms, executed via blockchain technology.
The Ethereum blockchain serves as the foundation for the DeFi world, as well as being a basis for non-fungible tokens, one of cryptocurrencies hottest trends. Transactions undertaken on the Ethereum blockchain are charged in a small amount of Ether, giving the token a practical use.
The more use the Ethereum blockchain gets from DeFi developers then the higher ETH prices will climb, in theory, and that’s what we’re currently seeing.
Elon Musk sets Dogecoin’s tail wagging
Shiba Inus are known to be bold, strong-willed, quirky, and confident. It’s a dog breed likes to do things differently; one that doesn’t always do what its owners want.
While very cute, and with massive meme-potential as the internet has clearly shown, there’s no telling what a Shiba will do from one minute to the next.
Those characteristics that make fuzzy, feisty Shibas a bit of a handful apply neatly to Dogecoin, the once joke currency that runs to the beat of its own drum. Choosing the Shiba Inu as the token’s mascot is looking more appropriate every day.
Dogecoin had an exceptionally eventful weekend after notorious tweeter and Dogecoin meme supporter Elon musk sent the token spinning.
Firstly, on Saturday 8th May when hosting Saturday Night Live, Musk triggered a Dogecoin sell off after calling the currency a “hustle” during his opening monologue. The currency’s value subsequently tumbled.
But come Monday 10th, Musk was giving Dogecoin a bone again. This time, the billionaire meme machine said his SpaceX firm would be accepting payment via Dogecoin from a Canadian firm Geometric Energy Corp, to send a satellite to the moon.
Yes, Musk and Co. are planning to literally send Dogecoin to the moon. The DOGE-1 satellite mission is said to be launching in Q1 2022.
“This mission will demonstrate the application of cryptocurrency beyond Earth orbit and set the foundation for interplanetary commerce,” SpaceX Vice President of Commercial Sales Tom Ochinero said in a press release. “We’re excited to launch DOGE-1 to the Moon!”
According to GSC, the rocket’s payload will “obtain lunar-spatial intelligence from sensors and cameras on-board using communications and computational systems”.
Does anyone else think this is getting out of hand now? Thanks to the power of Musk’s tweets, Dogecoin has gained an almost unbelievable 11,000% year-to-date. Perhaps it’s not the Shiba Inus that need putting on a leash but Musk himself.
After all, real currency from real pepole is being pumped into Dogecoin at the whims of a figure who clearly sees it all as a bit of a joke. Of course, the token did start life as a novelty, but its huge gains, and the spotlight afforded by Musk and his ilk, is turning it into something serious. Let’s hope no one gets bitten.
BoE’s Bailey gives stark crypto warning
“I’m going to say this very bluntly again: buy crypto only if you’re prepared to lose all your money.”
Harsh words from Bank of England Governor Andrew Bailey, speaking at the Bank’s Thursday May 6th press conference.
When asked for his opinion on crypto, Bailey said: “They have no intrinsic value. That doesn’t mean to say people don’t put value on them, because they can have extrinsic value. But they have no intrinsic value.”
Bailey’s words echo those of the UK’s Financial Conduct Authority. In January, the FCA said: “Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money.”
Cryptocurrency trading is currently not available in the UK for retail customers.
It will be interesting to see if Bailey’s thoughts have any actual effect on token prices.
Institutional support for cryptos as a whole as been up this year, mirroring crypto gains. Visa and Mastercard are upping their crypto offering; Tesla is dabbling with crypto trading alongside its core EV business; Banks like Deutsche Bank are exploring more crypto services.
Bailey’s comments do represent the fact that full support amongst financial circles for digital currencies has yet to be realised. They also reinforce the fact that volatility is never far away from cryptos. Massive price increases have been paired against violent crashes. Losses are a very real possibility – something all crypto traders should keep in mind.
Cryptocurrency update: ETH hits new record high
It seems like every couple of weeks a crypto token smashes a new record high. This week, it’s the turn of Ether. Supporting the ETH push is a new Mastercard survey suggesting a bright future for cryptocurrencies is coming, alongside S&P’s launch of three new crypto indexes.
ETH smashes new record high
Ether, the token for the Ethereum blockchain, broke new record highs in early trading on Tuesday 4th May. Extending its rally, ETH peaked at $3,456.57, before dropping back down to around the $3,340 level. At the time of writing, Ether is currently trading at roughly $4,414.
ETH has gained 360% in 2021 so far. That makes it one of the big crypto winners for the year to date so far.
What’s behind the Ether drive? There are a couple of big factors at play.
First is the fact interest in cryptocurrency in general has soared across the year so far. Bitcoin has made major gains, as has ETH, Ripple, and other in-demand tokens. It’s partly driven by consumer interest, but also by major institutional support. Companies like Tesla, for instance, have started to dabble in crypto acquisition to add to their balance sheets, focussing on BTC and ETH in particular.
For Ether’s rise though, there is a functionality aspect. Ethereum itself is a platform that developers working in the decentralised finance (DeFi) space are latching onto in increasing numbers. Ether is used to power smart contracts, i.e. transactions, on the Ethereum blockchain. Developers using the blockchain basically have to use Ether.
Increasing interested in DeFi applications is rising. These are blockchain-based financial services, such as lending, which could in theory bypass banks and brokerages.
Last month, the European Investment Bank said it issued its first ever digital bond on a public blockchain using Ethereum.
S&P launches crypto indexes
S&P Dow Jones has launched three cryptocurrency indexes.
The indexes are now live under the following ticker symbols:
- SPBTC – Bitcoin
- SPETH – Ether
- SPCMC – “Mega cap” combo of both BTC & ETH
S&P hopes its crypto indexes will help Wall Street traders further understand and make moves on digital tokens’ performance. It’s also a big step in helping further legitimise cryptocurrency trading with institutions, individual traders, and the wider market.
Each index relies on data supplied by Lukka. It also uses Lukka’s fair pricing methodology, which lists asset prices in points instead of dollars. Monday 3rd May’s initial afternoon readings were:
- 7,611 – BTC
- 24,811 – ETH
- 5,617 – Mega cap
The indexes will measure “price appreciation”, and not price action, according to S&P’s Ray McConville.
“So, comparing the two indices, we can see that Bitcoin YTD has grown 95.67% in value vs. ETH, which has grown 273.72% in value YTD,” McConville said. “The actual index value isn’t so much as important as the change in that index value over time.”
These are not the only crypto-tracking indexes available. Bloomberg and partners Galaxy launched a cryptocurrency index in April 2018.
MasterCard poll finds bright future for crypto
Tentative but encouraging market research from MasterCard suggests higher global cryptocurrency adoption is coming.
Results from an online survey published on May 4th, 2021 reveals 40% of respondents plan on using or purchasing cryptocurrency in 2022.
The poll was conducted in 18 countries by Mastercard and Harris Insight and Analytics, surveying 15,586 people.
With probably no surprise, the group with the most enthusiasm for digital currencies was Millennials:
- 67% said they were more open to using the technology than they were a year ago
- 77% said they were interested in learning more about it
- 75% said they would use crypto if they understood it better
“Work is still required to ensure consumer choice, protection, and regulatory compliance,” Mastercard said in a press release.
Mastercard, like rival Visa, is keen to capitalise on the crypto boom. The company announced in February 2021 it was providing more options for customers who wanted to settle transactions with digital currencies. It is also powering the new Gemini crypto credit card.