Crypto Crypto Crypto

Crypto Weekly: Rebounding from a setback

Mads Eberhardt

Cryptocurrency Analyst

Summary:  The crypto market has been on a two-week-long rebound with Bitcoin now trading at its year open and Ethereum nearing its open. The surge has likely been caused by an increased risk appetite and positive regulatory development. However, the global unrest, particularly the invasion of Ukraine, can quickly turn things around. Speaking of Ukraine, the country is about to launch a non-fungible tokens (NFTs) series.


Rebounding to this year’s open

Since December last year, the crypto market has to a large degree been driven by the same events as the equity market, particularly technology and growth stocks. In our view, there has been a general altered sentiment on notably more risky assets, such as technology stocks and cryptocurrencies, where investors have substituted a part of their high-risk assets with less risky assets, leading to a tumbling crypto market from its all-time high total market capitalization back in November. Further, upon the increased global unrest - particularly fueled by the invasion of Ukraine - cryptocurrencies do not seem to be the safe haven as hoped by those in the crypto community who called Bitcoin a digital analogy to gold. Instead, the crypto market has performed poorly in times of increased global unrest.

Because the broader market risk sentiment and the global uncertainties have arguably firmly impacted the crypto market lately, these topics should reasonably be top of mind for investors looking at short-term moves in the crypto market. Since mid-March, many growth stocks have partially recovered from their setbacks. Ark Innovation ETF is, for instance, up from a low of $52.5 in mid-March to a present price of $64.50. This emphasizes that the former risk appetite of the market is somewhat returning. For now, the crypto market seems to benefit, with Bitcoin having returned to its year open price, while Ethereum is still closing in. However, whether this rising risk appetite is sustainable more long-term largely depends on the global unrest namely the invasion of Ukraine, and which consequences it will have long-term.

With respect to uncertainties but this time exclusive to the crypto market, particularly over the past month, the market has been gifted with positive progress within the regulatory arena. With the latter being one of the greatest uncertainties within crypto, regulatory clarity is essential for the space to evolve further. Earlier in March, US President Biden signed an executive order to explore the regulation of cryptocurrencies. The order was, however, rather positive, as it focused a lot on supporting innovation. Some days after, the European Union parliament voted on a proposed rule that would fundamentally ban cryptocurrencies using the proof-of-work consensus protocol used in Bitcoin and for now, Ethereum due to environmental concerns. The EU parliament voted 30-23 in favor of rejecting the rule. US Treasury Secretary and former Chair of the Federal Reserve Janet Yellen commented last week on crypto: "I have a little bit of skepticism because I think there are valid concerns about it. Some have to do with financial stability, consumer/investor protection, use for illicit transactions, and other things. On the other hand, there are benefits from crypto, and we recognize that innovation in the payment system can be a healthy thing." The latter is truly interesting, as Yellen has been vastly skeptical about crypto. It may call for a more positive future view on crypto by Yellen.

The government of Ukraine to launch non-fungible tokens (NFTs)

Shortly after the invasion of Ukraine in late February, the Ukrainian government publicly asked for donations in Bitcoin, Ether, and other Ethereum-based tokens such as the stablecoin USDT to fund its defense. Disclosed last week, on the 30th of March, the Ukrainian government will launch a non-fungible tokens (NFTs) series. On the face of it, the series will consist of 54 NFTs, individually portraying key moments in the early days of the invasion between the 24th to the 26th of February. The Ukrainian government states in the NFT series; “We will never let any single day of this period disappear from the ledger of world history.” The funds in full raised from the NFT sale will go to the official crypto account of the Ministry of Digital Transformation of Ukraine to financially support the country.

Bitcoin/USD - Source: Saxo Group
Ethereum/USD - Source: Saxo Group
Ark Innovation ETF - Source: Saxo Group
Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, 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. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such 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.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

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

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.