Global markets hit new heights last week, mirroring the beginnings of Biden’s reign as the 46thth The US president was inaugurated on Wednesday. The S&P 500 was the main beneficiary, while the FTSE 100 also climbed the ‘Biden bounce’.
Conversely, bitcoin struggled and spent much of the week on a slow but steady decline, but has recovered somewhat over the weekend and is currently at $ 33,400. Ethereum went against the trend of bitcoin, hitting a new all-time high of $ 1,456 this morning.
Simon Peters, analyst, eToro: Bitcoin bearish movement, not a bursting bubble
Bitcoin, which broke $ 40,000 just two weeks ago, is now retreating. With the cryptoasset falling steadily last week, some investors will no doubt be wondering, “Is this it?”
In my opinion no. Despite the decline, demand from large institutional investors remains impressive. Institutional investment trust Grayscale continues to fetch all the bitcoin it can, CoinTelegraph reported on Tuesday that it had bought about $ 600 million worth of bitcoin in just 24 hours. Demand is not slowing down and I think many investors will see a significant dip not as a bubble burst, but as an opportunity that presents itself. Investors of all sizes will see a price close to $ 28,000 as an excellent opportunity to supplement their positions.
Given the run we’ve seen over the past few weeks, I’ve mentioned it before and still believe a correction is on the way. That, I would say, is what we are seeing now – as opposed to something much more serious, like the fall we saw at the end of the 2017/2018 bull market. Despite all the very short-term moves, the fundamental background for bitcoin remains positive and my minimum price target of $ 70,000 by the end of 2021 remains in effect.
David Derhy, analyst, eToro: Ethereum record high despite fierce competition
Ethereum went against the trend of bitcoin. Rather than sinking, the smart contract platform’s token hit one highest point ever at a number of fairs. These remain exciting times for the Ethereum Foundation and its platform, despite increasing competition from the likes of Polkadot and Cardano, both of which have also performed well this week. The Polkadot Interoperability Protocol saw an exceptional increase in 2021, from $ 8.80 at the turn of the year to a record high of $ 19.32 earlier this month.
Given bitcoin’s dip and Ethereum’s stability, we could see investors moving capital to the latter as they searched for the next cryptoasset to perform in the current bull run. With bitcoin down to $ 30,000, some may think now is the time to spin alts.
Simon Peters, analyst, eToro: Insti investors can set their sights on upcoming crypto indices
A large number of institutional investors have clearly noticed the bug for bitcoin, as has been shown a number of times in both this newsletter and in the wider media. Our own report, Identifying the formula for institutional adoption of crypto tradinglaunched last week with Aite Group, shows that while institutional investment is on the rise, there are still barriers to entry into cryptocurrency that need to be addressed. The perceived insufficient market capitalization was the most frequently cited obstacle for the institutional market participants interviewed. More details can be found in the report, here.
Should these barriers to entry fade, then where can these investors look beyond bitcoin if they are interested in the wider benefits of investing in the crypto sector?
There are two main routes they would probably try to take. First, institutional investors can try to invest in companies that are part of the crypto ecosystem: companies that have gone public and generate a significant portion of their income from cryptoasset-related activities, such as being an exchange or offering third-party safekeeping or related services.
The second option, and this is the most likely in my view, would be to invest in an index of cryptoassets. S&P Dow Jones Indices is already getting ready to launch ‘cryptocurrency indices’ this year. If a trustee or other institutional investor recognizes and wants to be a part of the growth in the cryptoasset industry, then an index of assets would be very beneficial to them from both a research and logistics perspective. They shouldn’t have to do research on every individual mint in the hive (though it wouldn’t go wrong), and they could easily invest capital without the hassle of dividing up a new asset class in their portfolio.
Just as 2020 was the year of institutional investment in bitcoin, 2021 could become the year of the cryptoasset index.
Simon Peters, analyst, eToro: ECB and EC closely consult and ‘examine’ the digital euro
After the European Central Bank closed its recent consultation on a digital euro, it announced that it would investigate, together with the European Commission, the ‘policy, legal and technicalaspects of a CBDC.
Granted, it feels like we’ve been here before. But it is always positive to see new steps being taken towards a digital currency, which would ultimately benefit the wider crypto space as more and more consumers are introduced to (and familiarized with) using digital money. The world is being digitized and the financial system has to keep up.
David Derhy, analyst, eToro: Binance burn follows new peak for CZ’s crypto
Binance Mint ethereum joined the all-time high club as investors piled into the cryptoasset in anticipation of last week’s token burn. The 14th burn of CZ’s token saw 100 meters burned, representing about half of its stock. CZ also announced that the company has unlocked $ 750 million worth of BNB, which would be moved to a team token address. These were unlocked during the most recent combustion. Not a bad amount of crypto to have around – if you can remember. In different circumstances, different crypto owners have not so lucky.
This is a marketing communication and should not be construed as investment advice, personal recommendation, or an offer or solicitation to buy or sell financial instruments. This material has been prepared without regard to particular investment objectives or financial situation and is not prepared in accordance with legal and regulatory requirements to promote independent research. All references to past performance of a financial instrument, index or package investment product are not and should not be considered a reliable indicator of future performance.
All content in this report is for informational purposes only and does not constitute financial advice. eToro makes no representations and assumes no liability for the accuracy or completeness of the content of this publication, which has been prepared using publicly available information.
Cryptoassets are volatile instruments that can fluctuate widely in a very short period of time and are therefore not suitable for all investors. Other than through CFDs, trading in crypto assets is not regulated and therefore not supervised by any EU regulatory framework. Your capital is at risk.
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