Crypto Weekly: Back above 50,000

Crypto Weekly: Back above 50,000

Cryptocurrencies 8 minutes to read

Summary:  Bitcoin (BTCUSD) hits a five-month high of 57,000 amid several positive news the past week while Ethereum has experienced a more modest surge. Ethereum has also hit a milestone as over 500,000 Ether has been burned since the highly anticipated update was implemented in early August.


Throughout the last week, the largest cryptocurrency measured on market capitalization Bitcoin (BTCUSD) has been riding on top of positive market sentiment to exceed 50,000 once again. At present, it however seems like aged news since Bitcoin is currently trading at around 56,300 from being traded as high as 57,000 earlier today which we have not observed since mid-May. Bitcoin is yet far from its all-time high of around 64,500, which was set in April this year.

The second-largest cryptocurrency Ethereum (ETCUSD) has been following in the footsteps of Bitcoin, though more modest, to currently being traded around 3,600, up from 3,400 last week. Several other altcoins have seen similar modest price increases like Ethereum. In the past months, Ethereum and other altcoins have gained the most attention effectively reducing Bitcoin’s market capitalization dominance to as low as 41%. With the past week’s surge, Bitcoin’s dominance is currently up to around 45%. This can potentially indicate a renewed focus on Bitcoin in comparison to the rest of the crypto market.

The positive market sentiment the past week has been driven by various positive news. First, Bank of America published a report on the crypto market last week. The report mentioned that Bitcoin at 50,000 is “too large to ignore”. To top it off, the report was extraordinarily positive on decentralized finance and non-fungible tokens (NFTs). Second, the family office of famous hedge fund manager George Soros, Soros Fund Management, confirmed last week that they own Bitcoins: “some coins … but not a lot”. Lastly, according to JPMorgan, the surge has partly been due to institutional investors hedging against inflation with Bitcoin, even favoring Bitcoin to gold, which explains gold’s trouble to gain momentum despite accelerating inflation expectations due to a new all-time high in commodities. However, on Monday last week, JPMorgan’s CEO Jamie Dimon said he remains a skeptic of Bitcoin.

500,000 Ether has been burned

On 5 August 2021, Ethereum’s London update was implemented on the network, containing several improvements. The most anticipated improvement was EIP-1559. In short, EIP-1559 burns the majority of Ether paid in transaction fees instead of compensating them to miners, as the network did previously. Subsequently, this means the inflation has been immensely reduced. The network burns Ether according to the network usage due to it resulting in greater transaction fees, thus more to be burned. The burning mechanism hit somewhat of a milestone today as it has burned over 500,000 ETH to date, worth approximately $1.68bn. About a week after the update was implemented, we estimated between 1.6 – 1.7mn Ether would be burned next year. Though, having burned over 500,000 ETH in 66 days, it appears that the number will likely be closer to around 3mn ETH. This serves as beneficial for Ethereum investors since it further reduces the inflation by at least 1.3mn ETH compared to our initial estimate, in case the network manages to burn 3mn ETH the next year.

Source: Saxo Group
Source: Saxo Group

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Capital Markets UK Ltd. (Saxo) and the Saxo Bank Group provides execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation. Access and use of this website is subject to: (i) the Terms of Use; (ii) the full Disclaimer; (iii) the Risk Warning; and (iv) any other notice or terms applying to Saxo’s news and research.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer for more details.

Saxo
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 is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo 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 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