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

Crypto Update: Dominating narratives

Cryptocurrencies 5 minutes to read
Jacob Pouncey

Cryptocurrency analyst, Saxo Bank Group

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

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