Crypto Update: Sell-offs and subpoenas

Jacob Pouncey

Cryptocurrency analyst, Saxo Bank Group

This week the entire crypto market cap fell 18% to $280 billion. The market cap is well within reach of its 2018 low of $250bn. Similarly, Ethereum fell by 20% against the USD. Meanwhile, Bitcoin traded 14% lower, with its market cap sitting at $110bn. Bitcoin's percentage of the total market cap and its performance is indicative of a downturn, as Bitcoin tends to outperform the market due to investors selling alternative coins to buy bitcoin in the downturns. 

Chainanalysis offers insights to the great sell-off of 2018

Cryptocurrency forensics firm Chainanalysis published a blog post detailing a great distribution of wealth at the beginning of this year. The firm purports that from December 2017 to April 2018, the number of bitcoins used for speculation increased by over 50% as long-term investors exited their holdings. They suggest that this change of bitcoin from the hands of investors to the hands of speculators increased the liquid supply of bitcoin while the change in demand was immaterial, therefore aiding the price decline. 

Crypto exchanges subpoenaed

Over the weekend, the US Commodity Futures Trading Commission requested trading data from the exchanges that compose the Bitcoin futures index as part of its price manipulation investigation in the bitcoin markets. Some exchanges refused at first before being subpoenaed as they claimed the request was invasive because of the amount of data and the fact that they would have to share it to a third-party that also runs a crypto-trading platform. Some cited this increased oversight from the CFTC as the reason for the recent market downturn.

Bitmain eyeing IPO

The largest cryptocurrency miner and chip manufacturer Bitmain raised $400m with a valuation of $12bn in a pre-IPO round of financing led by Sequoia Capital China. Bitmain is looking to go public by September at a valuation of $30-40bn. The bitcoin miner uses and sells complex hardware designed to mine cryptocurrency and made $3-4bn in revenues last year. Bitmain’s IPO highlights the maturation of the space and could encourage other large crypto-focused firms to go public. 

Access both platforms from your single Saxo account.


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 -