Crypto Weekly: 50% dominance, 10% selling
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.
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.
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)