Crypto Weekly: Fatigue in the crypto-market
Summary: Several cryptocurrencies hit a new all-time high last week, including Bitcoin and Ethereum. However, this week has so far been colored in red as the crypto-market tumbled. Speculative investors are getting nervous across markets, and Elon Musk is tweeting that the Bitcoin and Ethereum prices seem high.
Multiple events are causing the negative market sentiment
Bitcoin was trading at an intra-day high of 57,500 BTC/USD on Saturday before surging to an all-time high of $58,350 on Sunday. Afterwards, it tumbled through Monday and it is currently trading at $47,500, and multiple events may have contributed to this decline. Speculative investors have been riding the uptrend in both the crypto and stocks markets, but may now be frightened by the recent drawdowns – as e.g. seen by the recent decline in the Tesla stock. Speaking about Tesla, Tesla’s $1.5 billion Bitcoin purchase two weeks ago, did not prevent Elon Musk from saying in a public tweet on Saturday that he thinks the Bitcoin and Ethereum prices seem too high. The tweet was in response to a tweet from Peter Schiff, a financial commentator, who has been extremely outspoken for years on Bitcoin in a negative manner. This is not the first time Elon Musk has talked negatively about positions he directly or indirectly holds. Back in May 2020, Musk wrote in a tweet that he thought the Tesla stock was priced too high: “Tesla stock price is too high imo (in my opinion)”. Though it is unclear whether Musk holds any position in Ethereum, he holds directly in Tesla and at least indirectly in Bitcoin through his Tesla holdings. Another element contributing negatively to the market was when Treasury Secretary Janet Yellen published a statement yesterday warning investors of Bitcoin. In the statement, she added that the questions about legitimacy and stability remain unanswered.
Is Ethereum losing its first-mover advantage?
Notably, Ethereum has tumbled over the past days. After hitting an all-time high on Saturday at 2,033 ETH/USD, marking the first time it has been trading above $2,000, the cryptocurrency declined to a current price of $1,450 just days after hitting a new all-time high. The main reasons behind the price decline are the three factors mentioned above combined with the scalability issues that Ethereum faces. The cryptocurrency influencer Lark Davis was stressing Ethereum developers yesterday that they need to hurry up to solve the scalability issues, warning that rival chains will take over if the issues are not solved quickly enough. Lark Davis has previously been exceedingly talking well about Ethereum and this bull-run contributing to hitting several new all-time highs. Last week, we wrote that the decentralized exchange PancakeSwap on Binance Smart Chain (BSC) would most likely become the most used decentralized exchange measured on daily volume in the foreseeable future. Thereby, it would overtake the most popular decentralized exchange on Ethereum called Uniswap. Surprisingly, this happened already the other day sending a shock wave through the community as it signals the major scalability issues Ethereum has. Many are simply worried whether Ethereum will lose its first-mover advantage in the smart contract crypto-space. However, for the past 24 hours Uniswap has been handling slightly more volume compared to PancakeSwap.
Are CFOs about to put Bitcoin on their balance sheet?
Before the tumbling of Bitcoin, Ethereum and other cryptocurrencies the past days, a survey conducted by Gartner published last week concluded that 5% of CFOs or other executives plan to buy Bitcoins in 2021 for their balance sheet. Thereby, other companies might join Tesla and MicroStrategy shortly. Furthermore, 11% stated that potentially they will execute a Bitcoin purchase by 2024. Especially the technology sector was keener on the idea compared to other industries. On the other hand, 84% of the total respondents stated that their main concern by putting Bitcoin on their balance sheet correlates to the volatility of the cryptocurrency. Most likely this percentage is higher after the volatility throughout the past days. The survey was only conducted on 77 respondents making the survey fairly small and less reliable.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.