Crypto Weekly: 50% dominance, 10% selling

Cryptocurrencies 5 minutes to read
Mads Eberhardt

Cryptocurrency Analyst

Summary:  Bitcoin's dominance in the total crypto market has fallen below 50% for the first time in over 3 years. Tesla announced in its quarterly earnings report that they have sold 10% of its initial Bitcoin purchase to allegedly prove the liquidity of the market. From backing an Ethereum-focused software company this month, JPMorgan is supposedly working on offering an actively managed Bitcoin fund.


Bitcoin dominance below 50%

Bitcoin’s dominance compared to the whole crypto-market fell below 50% last week for the first time in over 3 years. We need to go back to January 2018 before experiencing this again, and January 2018 also was the month where Ethereum surged to its previous all-time high. Bitcoin started the year at a dominance of 70.7% before hitting a low of 49.4% on Thursday. Even though Bitcoin is significantly up this year so far, it has been outpaced by altcoins, mainly Ethereum, Binance Coin, XRP, and Cardano. For instance, Ethereum began the year trading at a dominance of slightly more than 11% to a current dominance of 14.3%. In line with other bull runs, altcoins tend to surge more in markets with positive market sentiment.

Tesla sells 10% of its initial Bitcoin purchase

Tesla published yesterday its Q1 result. The earnings report disclosed that Tesla sold Bitcoin worth $272mn last month. According to the filing, Tesla made approximately $101mn from the sale, and the sale accounted for roughly 10% of its original Bitcoin purchase made at the beginning of February. After the earnings report was released, Dave Portnoy pointed out on Twitter that Tesla was basically just pumping Bitcoin, and afterward dumping it. Elon Musk replied that Tesla essentially sold to prove the liquidity of Bitcoin as inspiration to other companies. We find this argument rather mysterious as it should be no surprise that you can sell Bitcoin worth $272mn effortlessly. The question which should be raised is whether the selling was executed to beat the earnings estimate set by Wall Street. Surprisingly, the crypto-community was rather positive by the selling as the community seems to have bought the argument that it was to illustrate sufficient liquidity. Elon Musk confirmed in his tweet that he personally owns Bitcoin and that he has not sold any of his Bitcoins.

JPMorgan to tap into the crypto-market

For the past months, we have reported that several leading banks and financial institutions are working on respective cryptocurrency offerings, including Goldman Sachs, BNY Mellon, Deutsche Bank, and Citi. Goldman Sachs launched its cryptocurrency trading desk a month ago and was later joined by Morgan Stanly, which started to offer wealthy clients access to Bitcoin funds in late March. JPMorgan has also been rumoured to be working on a cryptocurrency custody solution. Yesterday, rumours started circulating that the bank is preparing to launch an actively managed Bitcoin fund, and according to CoinDesk, the fund can launch as soon as this summer. The fund will allegedly be targeted private wealth clients. If the rumour turns out to be true, JPMorgan must be doubling down on cryptocurrencies. The news of the actively managed Bitcoin fund comes only two weeks after the bank backed the Ethereum-focused software company ConsenSys along with companies like MasterCard and UBS, raising a total of $65mn. We briefly touched upon JPMorgan and its 6 stages of crypto acceptance in today’s Saxo Market Call.

BTC against USD. Source: CoinMarketCap.
ETH against USD. Source: CoinMarketCap.
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.

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 and Product Disclosure Statement 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.

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.