Crypto Weekly: Energy-intense cryptos in headwind Crypto Weekly: Energy-intense cryptos in headwind Crypto Weekly: Energy-intense cryptos in headwind

Crypto Weekly: Energy-intense cryptos in headwind

Anders Nysteen

Senior Quantitative Analyst, Saxo Bank

Summary:  Crypto traders are still trying to pick up the pieces after a wild week with large drawdowns in the crypto market. The market turmoil has brought increased focus on "green" vs. energy-heavy cryptos, and crypto funds experienced a net outflow of Bitcoin investments, partly replaced by an inflow in altcoins.


Bad week for mining-intense cryptos

The last week has been dominated by the turmoil initiated by Tesla’s announcement of suspending payments in Bitcoin due to concerns about the use of fossil fuels for Bitcoin mining and transactions. Especially those crypto currencies which apply energy-intense mining schemes for transaction verification such as Bitcoin and Ethereum experienced large losses, whereas some of the “greener”, less energy-demanding cryptos experienced a boost over the past week. The global focus on the energy impact of crypto mining has been raising concerns around the world such as in Iran, where it is now illegal to use household electricity for mining. And in China where Beijing is conducting a survey to map out the crypto-related power consumption; a follow-up on the earlier statement from the Chinese region Inner Mongolia saying that they would shot down all crypto-mining operations to be able to meet energy efficiency targets.

Record Bitcoin outflow from digital asset funds

According to a report from CoinShares concerning the flows into and out of popular digital asset ETPs, mutual funds and OTC trusts, a record-high outflow from bitcoin products of close to USD 100m occurred over the past week. On the other hand, Ethereum and other altcoins reported a positive net inflow, with ETH accounting for approximately ½ of the inflow and Polkadot and Cardano also for a significant amount.

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/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. 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. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

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. Android is a trademark of Google Inc.

©   since 1992