background image

Stability in a volatile market

Cryptocurrencies 4 minutes to read
Jacob Pouncey

Cryptocurrency analyst, Saxo Bank Group

Summary:  Sharp declines in the crypto market this week mirrored steep falls in equity markets. Meanwhile, the release of new 'stable coins' backed by hard currencies continues apace despite warnings of a possible crypto implosion.


On Wednesday of this week the entire crypto market experienced a steep sell-off on a day that traditional markets experienced similar selling pressure. The crypto market cap fell 10% over the week. Ethereum fell similarly by 8%, with Bitcoin moving downwards by 5%. Bitcoin is still within it 1-month trading range despite the 5% decline yesterday.

Crypto hedge fund is under water

News leaked earlier this week that well know blockchain investment fund Pantera Capital is down 40% since the launch in December. However, considering that the market is down over 70% from the peak, the fund’s performance still beat the market’s performance. During bear markets after such euphoric rallies it is difficult for investors to shift their mindset towards a bearish bias, as at every rally they cling to the hope that it could be the next bull run. Any fund that has turned a profit in this bear market deserves their fair share of accolades from the community. 

Stable coins galore

Several governments and firms announced new batches of stable coins. In a previous weekly update, we published a story on two new USD backed stable coins coming to the market. This week Dubai Department of Economic Development announced that it will roll out its state-developed blockchain-based digital currency across the country via new point-of-sale devices. This is the first national rollout of a blockchain-based digital currency. Additionally, GMO Internet announced that it will roll out a yen-backed stable coin in fiscal year 2019. A yen-backed stable coin could disrupt one of the largest remittance corridors in the world, Southeast Asia. The dominance of USD backed stable coins will continue to be challenged going forward.

Research suggests coming crypto implosion

Juniper Research released a report this week citing the declining transaction value among other metrics as reason for a possible implosion in the cryptocurrency markets. Conversely, crypto fund managers have been calling for a rally before the end of 2018. The truth is somewhere in the middle; we have been witnessing the implosion of the market since its all-time high in January. The expected crypto rally will come when there is substantial capital entering the space or a significant supply shortage in the market, of which neither option seems to be in sight for the short term. However, maybe the Bakkt futures exchange will provide some relief to the market.

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