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It was a week that took strong nerves. If you had that, you could buy Bitcoin as cheaply as it did last in January - at least if you weren't let down by your own trading app. In addition to the massive crash in the crypto market on Wednesday, it also fell significantly on Monday and Friday.
Nevertheless: The annual performances of all major cryptocurrencies are still clearly positive. Also in this Crypto Weekly: An on-chain analysis by Glassnode (mostly beginners sold?) And news from Erste Bank and Bitwala, that - spoiler! - now called Nuri.
The course board:
- Bitcoin (BTC): ~ $ 36,800 / -28% from Friday the previous week
- Ethereum (ETH): ~ $ 2,500 / -40%
- Binance Coin (BNB): ~ $ 340 / -44%
- Cardano (ADA) / ~ $ 1.60 / -18%
- XRP: ~ $ 1.1 / -27%
- Dogecoin (DOGE) / ~ $ 0.36 / -33%
- Polkadot (DOT) / ~ $ 24 / -45%
- Internet Computer (ICP): ~ $ 150 / -52%
- Uniswap (UNI) / ~ $ 23 / -42%
All data comes from Coinmarketcap and is as of early Friday evening.
Bitcoin fell as low as $ 30,681
Very clear: The crypto market did not start this week under the best conditions. Last week, Tesla CEO Elon Musk's announcement that he would no longer accept Bitcoin payments had depressed the market. The background to this was already discussed in detail in last week's Crypto Weekly. Over the weekend, the discussion on Musk's Twitter account escalated a bit and the market continued to decline.
After stabilizing on Tuesday, things turned out to be sticky on Wednesday: the prices fell in the double-digit percentage range in the morning. In the afternoon, however, it degenerated completely - Bitcoin temporarily collapsed by around 30 percent to around 30,681 dollars, while the percentage of the largest Altcoins fell even more significantly. Mind you: We are only talking about the minus compared to the previous day. Practically all relevant crypto exchanges and brokers recorded intermittent trading failures - which also annoyed those who wanted to buy more. Over the course of the day, the market stabilized to some extent, and the Bitcoin price temporarily rose again above $ 40,000.
Another downward movement on Friday afternoon
A slight recovery on Thursday was followed by the next downward movement on Friday afternoon, with Bitcoin falling by almost 10 percent and the largest altcoins between 10 and 20 percent. The Chinese Vice Prime Minister Lui He had previously expressed himself critical of Bitcoin mining and trading in an official statement.
As early as Wednesday, a report from China was often cited as the reason for the massive sell-off. Three Chinese payment and financial associations had warned Chinese financial institutions against doing crypto deals. However, this had been the official line since 2017, when the Chinese central bank issued a corresponding requirement. Be that as it may: If markets are hot, there are always reasons that are used for a sale - even if these might have less influence on the price action in a different market phase.
Annual performance continues to be positive
After we had already struggled with the 7-day performances at the beginning, the sale should perhaps be put into a larger context. Because if you look at the performance since the beginning of the year, all top 10 coins are still clearly in the plus. The price gains of the largest Altcoins in the year to date are all well in the three-digit percentage range - with Bitcoin the plus for 2021 is currently “only” 26 percent.
- Bitcoin: + 26%
- Ethereum: + 230%
- Binance Coin: + 760%
- ADA (Cardano): + 770%
- XRP: + 330%
- Polkadot: + 179%
- Uniswap: + 360%
Did mostly newbies sell?
Already at the beginning of the week - and thus before the big crash on Wednesday - Glassnode published an analysis of the sharp price declines of the previous week. The company analyzes movements directly on the blockchain - and has once again observed interesting patterns: According to this, new market participants in particular have recently panicked and sold their coins at a loss - those who have already been invested for a longer time are comparatively relaxed, according to Glassnode remained. It is important to note that the crash on Wednesday is not taken into account in this analysis - only the sales on the days before.
The pattern of panic selling is reminiscent of the peak of the previous Bitcoin cycle in 2017, write the Glassnode analysts in the report published on Monday. At the peaks of a market cycle, new entrants would hold a comparatively high proportion of all bitcoins in circulation. However, at the time of the analysis, this proportion was still significantly lower than at the peak in 2017: it was around 28 percent, in 2017 it had risen to 37 percent.
The Glassnode analysts also refer to data from the crypto exchanges: Accordingly, the net capital inflows have risen to the highest level since March 2020, when the Bitcoin price slumped in the wake of the corona crisis. According to the data from Glassnode, 27,500 more Bitcoin were transferred to exchanges than withdrawn. This is an indication of selling pressure - since investors probably send coins from their wallets to the exchanges in order to sell them there.
Particularly interesting: While there were strong inflows at Binance, according to analysts, Coinbase has mainly seen net outflows since it exceeded the $ 20,000 mark towards the end of the previous year. The explanation: While many small investors are active at Binance, Coinbase is the preferred platform in the USA for institutional investors, which is also reflected in the amount of the withdrawn amounts. According to Glassnode, the data also shows that these investors continued to buy. It should be emphasized again, however, that the study was carried out before the further price declines this week and it cannot be said with certainty whether the pattern is still upright.
Bitcoin at Erste Bank
In Austria, meanwhile, Erste Bank surprised this week with the news that it is now offering customers a Bitcoin financial product on a test basis in private banking. Specifically, this is an Exchange Traded Product (ETP) of 21 shares that replicates the Bitcoin price and has also been available on the Vienna Stock Exchange since 2019. The demand has risen, you can't look the other way, said a spokeswoman for the bank to the incubator.
However, the product is only offered to those customers who actively ask for it. In private banking, these are mainly customers who would invest sums of EUR 500,000 or more and want to add the Bitcoin product as an "addition" to their portfolios. By the way: Since the specific ETP is listed on the Vienna Stock Exchange, normal small investors can also buy it through their bank or broker.
Bitwala becomes Nuri
In Germany, on the other hand, the crypto fintech Bitwala has taken a radical step - and renamed itself without further ado. The company is now called Nuri. Kristina Walcker-Mayer, who has been in office since April, aims to address a broader audience - beyond the classic crypto target groups. Nuri offers a normal bank account with a Visa debit card - but customers can also open a so-called Bitcoin income account with which they can earn money by lending their coins. More on this in our article.
Disclaimer:This text as well as the notes and information do not constitute tax advice, investment advice or a recommendation to buy or sell securities. They are for personal information only and only reflect the opinion of the author. No recommendation is made for a specific investment strategy. The contents of derbrutkasten.com are aimed exclusively at natural persons.
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