Crypto Update: Dominating narratives Crypto Update: Dominating narratives Crypto Update: Dominating narratives

Crypto Update: Dominating narratives

Cryptocurrencies 5 minutes to read
Picture of Jacob Pouncy
Jacob Pouncey

Cryptocurrency analyst, Saxo Bank

Summary:  Three key themes that could move the market over the coming months include continued legal action against projects and companies, adoption and development growth, and new global projects entering production.


This week the entire crypto market cap fell by 10% to around $135 billion. Additionally, Ethereum fell 15% and Bitcoin fell in line with the market with a decline of 10%. The selling pressure appears to be slowing down as the cryptocurrency market has tested the $120 bn level several times over the last week.

Miners continue to shut down

The founder of one of the largest bitcoin mining operations estimates that over 600,000 bitcoin miners have shut down since mid-November. This reduction in miners is seen through the reduction of the bitcoin hash rate. As reported last week, Bitcoin saw its largest drop in mining difficulty due to the exodus of miners, and within the next week the Bitcoin network is destined to see its largest drop in difficulty again. If the price of bitcoin continues to fall, expect more miners to leave the network. It is estimated that the coming dry season will put further margin pressure on miners connected to hydroelectric dams in China.

ICOs continue to sell ETH

Last week, ICO treasuries are said to have moved 100,000 ether from their treasuries. One of the narratives surrounding the industry, whether it is true or not, is that ICOs have been relentlessly selling ETH as the price declines. This selling would put pressure on the exchange rate. However, ICOs have moved 20% of their holdings since the beginning of January. This selling is providing some pressure to price but is not a major cause of ETH’s decline, but belief in the narrative may be to blame. 

Additional look at prominent narratives

HASH CIB, a crypto investment firm, released an analysis of the dominant narratives in the crypto industry. They cite two large short positions in ether for the recent fall in crypto prices. The firm looks at the probability of individuals frontrunning the negative SEC decisions or the earnings report of NVidia as reasons for the decline. Whatever the main cause may be, they highlight three key themes for the coming months that could move the market: 1) continued legal action against projects and companies, 2) continued growth in adoption and development, and 3) new global projects entering production. The last point could include the much-anticipated launch of Telegram’s blockchain initiative which raised over $2 bn.
XBTUSD

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.