Summary: Ethereum hit a new all-time high three years after the previous all-time high, although it is experiencing increasing competition from the now fourth-biggest cryptocurrency, Polkadot, which overtook XRP this weekend. Bitcoin is consolidating in the level between $37,000 and $38,000.
Ethereum surpassed its previous all-time high
Ethereum has had tremendous growth in 2021 so far, with a price increase of close to 100% year-to-date. It culminated today with Ethereum surpassing its previous all-time high of $1,396, and it is currently trading slightly above $1,400. The surge is most likely caused by the ETH 2.0 launch, the upcoming CME Group ETH future launch in February, and the decentralized applications mainly running on the Ethereum-network. Additionally, Ethereum has surpassed Bitcoin when measuring the volume of transactions on the two networks. According to Cointelegraph, the volume settled on the Ethereum-network is now 28% greater than Bitcoin. However, the Google searches for Ethereum are still only a fraction of Bitcoin searches at 14%.
Polkadot, a growing competitor to Ethereum
Another cryptocurrency that has had a great year so far is Polkadot. The weekend, the cryptocurrency overtook XRP as the fourth-biggest cryptocurrency measured on market capitalization, and Polkadot now has a market capitalization of over $15B according to CoinMarketCap. In August last year, Polkadot was launched after its initial coin offering almost three years earlier. At the launch, the cryptocurrency traded at $3 while now having surged to $17. Polkadot enables interoperability between different blockchains. Furthermore, it enables smart contracts through parachains. Thereby, it is, to some extent competing with Ethereum. Currently, DOT is though significantly more scalable than ETH. Talking about Ethereum, the co-founder of Polkadot, Dr. Gavin Wood, was also co-founder of ETH and served as their CTO in the early days. Polkadot is only tradable on a couple of the biggest cryptocurrency exchanges, not Bitstamp, Coinbase and Gemini.
A week in the land of cryptocurrency regulations
In December, the US Treasury Department proposed a new know-your-customer rule for cryptocurrency exchanges. The rule concerns transactions greater than $3,000. On such transactions, the exchange would be obliged to ask for personal information from the client. Furthermore, the exchange would have to report the individual to Financial Crimes Enforcement Network (FinCEN) if the transaction exceeds $10,000. However, after extensive critics from especially cryptocurrency exchanges, FinCEN decided last week to extend the proposed rulemaking period for respectively 15 and 45 days. The main argument against the rule is that it would be extraordinarily time-consuming for the exchanges and the individuals. Coinbase expects that they alone will need to file around 7,000 reports a day. Yesterday, Joe Biden announced that Gary Gensler would lead the SEC for the next couple of years. The industry speculates that this might be good for the crypto regulation under the SEC as he understands crypto and blockchain. Whether he will contribute to changing the FinSEC proposal is not clear yet.
The market is trying to get back to the pre-Covid and pre-war times, but that model is broken. A new dawn is here and the financial world needs to adapt.
Steen Jakobsen,
Chief Investment Officer
A political switch in China towards less tough control of its people and companies may kick things back into gear.
Redmond Wong,
Market Strategist
While the economic situation in Europe may not be as bad as feared, there's still a plethora of things to fix.
Chris Dembik,
Head of Macroeconomic Research
As the world turns increasingly bipolar, equity markets face harsh times as they transition into the new reality.
Peter Garnry,
Head of Equity Strategy
New alliances and collaborations outside of China may lead to prosperous times in Asia.
Charu Chanana,
Market Strategist
For years, it was thought that the balanced portfolio was a thing of the past. But recent developments may have changed that.
Peter Siks,
Investment Coach
Following a dramatic and volatile 2022 with good returns, a lot of this year's commodity performance may be driven by Chinese politics.
Ole S. Hansen,
Head of Commodity Strategy
2023 could be a tough year for currencies but EUR and JPY may have some upside.
John J. Hardy,
Head of FX Strategy
The commodity-heavy Australian market may have a good start to 2023, as the Chinese focus on growth signals demand for Aussie resources.
Jessica Amir,
Market Strategist
From a near-perfect environment for speculative assets before 2022 to the opposite, crypto faces fundamental challenges.
Mads Eberhardt,
Cryptocurrency Analyst
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)
