Crypto Update: Dominating narratives
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.
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.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)