Global markets hit new heights last week, reflecting the beginning of the Biden administration when the 46th 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 in a slow but steady decline, but rebounded somewhat over the weekend and is currently at $ 33,400. Ethereum bucked the Bitcoin trend, hitting a new all-time high of $ 1,456 this morning.
Simon Peters, analyst at eToro: Bitcoin bearish movement not a bursting bubble
Bitcoin, which cracked $ 40,000 two weeks ago, is now on the decline. With the Cryptoasset steadily declining last week, some of its investors will no doubt be asking, “Is that it?”
In my opinion no. Despite the decline, demand from large institutional investors remains impressive. Institutional Investment Trust Grayscale continues to collect as much bitcoin as possible. CoinTelegraph reported Tuesday that it bought around $ 600 million in Bitcoin in just 24 hours. Demand is not slowing and I believe that many investors will see a significant decline not as a bubble burst, but as an opportunity that presents itself. Investors of all sizes will find a price on the order of $ 28,000 a great opportunity to add to their positions.
Given the run we’ve seen over the past few weeks, I mentioned and still believe that a fix is planned. I’d say that’s what we’re seeing now – as opposed to something much more serious like the slump we saw at the end of the 2017/2018 bull market. Despite very short-term movements, the fundamental environment for Bitcoin remains positive and my minimum price target of $ 70,000 for the end of 2021 remains.
David Derhy, Analyst, eToro: Ethereum all-time high despite tough competition
Ethereum bucked the trend set by Bitcoin. Instead of falling, the Smart Contract Platform’s token hit all-time highs on a number of exchanges. These are still exciting times for the Ethereum Foundation and its platform, although competition has intensified from Polkadot and Cardano, both of which have also performed well this week. The Polkadot interoperability protocol saw an exceptional surge from $ 8.80 at the turn of the year in 2021 to an all-time high of $ 19.32 earlier this month.
Given the decline in Bitcoin and the persistence of Ethereum, we have been able to see investors investing capital in the latter as they look for the next cryptoasset to run in the current bull run. With bitcoin falling towards $ 30,000, some might think now is the time to turn into alts.
Simon Peters, analyst at eToro: Insti investors can check out upcoming crypto indices
A large number of institutional investors have clearly recognized the error with Bitcoin, as has been shown several times both in this newsletter and in the broader media. Our own report identifying the formula for institutional adoption of crypto trading, released last week with Aite Group, shows that while institutional investments have been on the rise, there are still barriers to accessing crypto that need to be addressed . Market capitalization, perceived as inadequate, was the most frequently cited obstacle for the institutional market participants surveyed. More details can be found in the report here.
Should these barriers to entry begin to wear off, where else can these investors look beyond Bitcoin when they are interested in the wider benefits of investing in the crypto sector?
There are two main routes that would likely drop off. First, institutional investors may want to invest in companies that are part of the crypto ecosystem: companies that have gone public and generate a significant portion of their revenue from activities related to crypto assets, e.g. B. as a stock exchange or as a provider of custody or related third-party services.
The second option, and the most likely in my opinion, would be to invest in an index of cryptoassets. S&P Dow Jones Indices is already preparing for the launch of cryptocurrency indices this year. If a trustee or other institutional investor sees the growth of the cryptoasset sector and wants to participate in it, an index of the assets would be of great use to them from both a research and a logistical perspective. You wouldn’t have to do research for every single coin in the shopping cart (although that wouldn’t hurt), and you could easily invest capital without having to split a new asset class allocation into your portfolio.
Just as 2020 was the year of institutional investments in Bitcoin, 2021 could be the year of the Cryptoasset Index.
Simon Peters, analyst at eToro: ECB and EC conclude close consultation and examine the digital euro
After completing its recent consultation on a digital euro, the European Central Bank announced that it would team up with the European Commission to examine the “political, legal and technical” aspects of a CBDC.
Granted, it feels like we’ve been here before. However, it is always positive to see new steps being taken towards a digital currency, which would ultimately benefit the larger crypto space as more and more consumers become familiar with (and become familiar with) digital money. The world is going digital and the financial system has to keep up.
David Derhy, Analyst, eToro: Binance Burn follows a new high for CZ’s crypto
Binance Coin joined the all-time-high club’s Ethereum when investors piled into the Cryptoasset in anticipation of last week’s token burn. The 14th incineration of CZ’s tokens burned 100m, which is about half of the supply. CZ also announced that the company has unlocked BNB worth $ 750 million to be moved to a team token address. These were unlocked the last time they were burned. Not a bad amount of crypto if you can remember it. In other circumstances, other crypto owners have not been 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 has not been prepared in accordance with legal or regulatory requirements to promote independent research. References to past performance of any financial instrument, index or packaged investment product are not and should not be viewed as reliable indicators of future results.
All content in this report is for informational purposes only and does not constitute financial advice. EToro does not accept any liability for the accuracy or completeness of the content of this publication, which was created using publicly available information.
Cryptoassets are volatile instruments that can fluctuate greatly in a very short time and are therefore not suitable for all investors. Unlike CFDs, trading in crypto assets is not regulated and is therefore not monitored by any EU legal framework. Your capital is at risk.
Image by “Merry Christmas” from Pixabay