Fatigue in the Cryptocurrency Market [Market Comment]

During Saturday's session, bitcoin hit a high of 57 BTC / USD, then hit a record price of $ 58 on Sunday. There was chaos on Monday, and the price of this cryptocurrency was $ 350, which could be due to a number of factors. Speculative investors took advantage of the uptrend in both the crypto market and the stock market, but now they may have scared the recent declines - e.g. in the case of prices Tesla shares. 

About the Author

Mads Eberhardt, Cryptocurrency Market Analyst, Sax Banks. Cryptocurrency Market Analyst at Saxo Bank. He gained experience as a trader at Bitcoin Suisse AG and founder http://BetterCoins.dk (website taken over by Coinify).

Regarding Tesla, purchase of $ 1,5 billion of bitcoin two weeks ago did not stop Elon Musk from announcing on Saturday on Twitter that he thought bitcoin and ethereum prices seemed too high. This tweet was in response to another post by Peter Schiff, a financial commentator who has been a staunch critic of bitcoin for years. 

This is not the first time that Elon Musk has spoken negatively about his own direct or indirect positions. In May 2020, Musk shared a reflection on Twitter that he believes Tesla shares are priced too high. While it is unclear whether Musk holds any positions in ethereum, he directly holds positions in Tesla shares, and through them, at least indirectly, in bitcoin. 

Another factor that negatively affected the market was the publication of a statement by Treasury Secretary Janet Yellen, warning investors against bitcoin. She also added that doubts about the legality and stability of this cryptocurrency are still pending.

Is ethereum losing the pioneering benefits?

It has been behaving particularly chaotically in recent days Ethereum. After hitting a record high of 2 033 ETH / USD on Saturday, surpassing USD 2 for the first time, the price of this cryptocurrency dropped to USD 000 just a few days later. The three factors mentioned above, combined with the scalability problem faced by ethereum, contributed to the decline. 

Cryptocurrency influencer Lark Davis has recently pushed ethereum developers to accelerate the pace of resolving scalability issues, warning that the cryptocurrency will be overtaken by competing solutions if it doesn't. Lark Davis has so far spoken extremely positively about ethereum and the recent bull market, thanks to which the cryptocurrency has achieved a number of records. 

Last week, we insisted that the PancakeSwap decentralized exchange on the web Binance Smart Chain (BSC) in the foreseeable future, it may become the most popular decentralized exchange in terms of daily volume. Thus, it would overtake Uniswap - the most popular decentralized exchange in the Ethereum network. Surprisingly, this has already happened and has shocked the entire community as it signaled significant problems with ethereum's scalability. Many investors worry that ethereum will lose the benefits of pioneering cryptocurrency smart contracts. However, over the past several dozen hours, Uniswap has been handling a slightly larger volume compared to PancakeSwap.

Will CFOs Include Bitcoin in Their Balance Sheets?

Before the collapse of the price of bitcoin, ethereum and other cryptocurrencies in recent days, a study by Gartner published last week found that 5% of CFOs or other executives planned to buy bitcoin in 2021 for their balance sheet. Therefore, other companies may soon join Tesla and MicroStrategy. In addition, 11% of respondents said they would potentially buy bitcoin by 2024. The tech industry in particular was inclined to do so. On the other hand, 84% of all respondents stated that they are primarily concerned about the volatility of bitcoin when it comes to including bitcoin on their balance sheets. Following the spike in variation observed in recent days, the percentage of these responses would most likely be higher. The study was conducted on only 77 respondents, therefore it is relatively narrow-scale and not very reliable.