Crypto Update: Investigation and speculation

Jacob Pouncey

Cryptocurrency analyst, Saxo Bank Group

Since the last update on May 10, the entire crypto market cap lost over $100 billion, falling to the $325bn level. The market is in a continuation of the bear market trend that started in the first week of 2018. However, each sell-off in the market is becoming less pronounced than the previous decline. Bitcoin is down about 20%, and Ethereum is down 25% since the last update. Bitcoin is testing key levels to the downside that could offer favourable prices for large funds looking to enter the space, but also offer serious downside risk if the support levels break.

DoJ launches probe

Last week the US Department of Justice launched a probe into whether market manipulation is happening in the cryptocurrency markets. They are working in conjunction with the Commodity Futures Trading Commission on the investigation. It is the latest efforts in the US to clean up the crypto space, which could be leading the way to further investments and institutionalization in the space. Also, a group of crypto enthusiasts have speculated that the recent bear market was, in fact, due to price manipulation.

Some analysts remain bullish

Analysts like Spencer Bogart and Tom Lee have a bullish outlook on the Bitcoin price by the end of the year. Both Bogart and Lee are calling for $10,000 by year-end. Tom Lee remains bullish even as he walked back his short-term price prediction. He predicted that the price would rise after one of the largest crypto conferences, as it has done historically. Lee stated it did not happen as predicted due to the continued regulatory uncertainty around cryptocurrencies in the US. Willy Woo, a notable crypto analyst, believes that prices could move lower. Consensus is that the sellers are slowing and buyers are ready to jump in. The issue is timing of the trend reversal. 

Coinbase acquires Paradex

Coinbase recently acquired decentralised exchange and ERC20 token specialists Paradex. This could be hinting at future infrastructure upgrades at Coinbase and new ERC20 token listings on the Coinbase platform. As ERC20 tokens trade on the Ethereum blockchain and require ether to move on the blockchain, the listing of new tokens on Coinbase could increase demand for ether as clients begin buying and moving ERC20 tokens.

Disclaimer

Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice or a personal recommendation and does not take into consideration your objectives, financial situation and needs. Saxo Capital Markets UK Limited will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information. We assume no liability for errors, inaccuracies or omissions contained within these materials.

It is important that you understand that with investments, your capital is at risk. We offer leveraged products which carry risk and can result in losses that exceed deposits. 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. 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 here.

Additional Key Information Documents are available in our trading platform.

Saxo Capital Markets UK 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

Please read our full disclaimer - https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer