Crypto Weekly: 50% dominance, 10% selling

Cryptocurrencies 5 minutes to read

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

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 (Schweiz) AG
Beethovenstrasse 33
CH-8002
Zürich
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. 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. The KIDs can be accessed here or within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.