The bitcoin price stabilised in the past seven days after billions of dollars in leveraged longs were flushed out of the market last weekend, but the largest cryptocurrency has remained in a short-term downtrend. Risk assets remain under pressure due to the expectation of faster unwinding of stimulus from the U.S. Federal Reserve.
Ether fell more than bitcoin over the last week, -3.81% vs -0.78% respectively.
Bitcoin’s market cap is still below $1T, sitting at $929.4B, market dominance rose slightly to 41.11%, and the value of the entire crypto market dropped to $2.26T.
|Price||High||Low||Change from previous week|
|BTC (in US$)||$49,252||$51,934||$47,023||-0.78%|
|ETH (in US$)||$4,060||$4,482||$3,897||-3.81%|
Source: CoinMarketCap. As at 12 December 2021. Past performance is not indicative of future performance. Performance is shown in U.S. dollars and does not take into account any USD/AUD currency movements.
News we are keeping an eye on
In what looks to be welcome support for crypto from the U.K. financial world, FTSE Russell, creator of the indices FTSE 100 and Russell 2000 and a global provider of benchmarks, analytics, and data solutions with multi-asset capabilities, is planning to launch a crypto index containing 43 digital assets.
According to the FTSE Russell website: “Institutional interest in digital assets is growing and as a leader in data, indexes and analytics we deliver quality crypto data to meet client needs. We have developed tools and methodologies to facilitate clear performance measures in these assets, bridging the gap between “crypto-native” providers and the traditional investment community.”1
In his address to the Australia-Israel Chamber of Commerce, Melbourne, the Federal Treasurer, Hon Josh Frydenberg, spoke on the opportunity and progress towards Australia becoming a leading digital economy embracing and capitalising on the convergence between finance and technology, and backing this vision with “unprecedented investments across almost every dimension of this transformation – cyber security, data and digital technology to name a few.”
The Government will commence a consultation on the feasibility of a retail central bank digital currency (CBDC) in Australia, with advice to be provided by the end of 2022. In addition, reforms focusing on payments and crypto will progress in two phases next year. The reforms will clarify the regulatory and tax treatment of crypto assets and new payment methods for businesses, and aim at ensuring only legitimate and ‘traditional’ providers participate and are regulated appropriately. In turn, this should drive more consumer interest, leading to more entrants and innovation.
The Treasurer described the reforms as the most significant to our payment system in 25 years. He stated: “The Government’s reforms are designed to ensure consumers can have confidence in who they are dealing with and the obligations that are owed to them.”2
This week I take a look at Realised Loss which denotes the total loss (USD value) of all moved coins whose price at their last movement was higher than the price at the current movement. Taking a look at this chart gives us an indication of whether the sellers in last week’s steep drop were coming from coins in profit or loss.
Citing data from on-chain analytics company Glassnode, the Realised Loss chart spiked, showing over $3B of losses were realised last week at a price of $48,962. There were only two other dates in May and June which had larger realised losses, redistributing coins that were accumulated between January and June, so most of the coins that sold would have been accumulated in October or more recently.
Bitcoin: Realised Loss
Last week, Coinbase announced it would open up decentralised finance (DeFi) services to customers across over 70 countries. Eligible customers in these countries can now earn yield on the defi stablecoin issued by Makerdao called DAI. According to the Coinbase blog: “Coinbase is making DeFi more customer friendly and accessible. Eligible users will now be able to access the attractive yields of DeFi from the comfort of their Coinbase account with just a few taps and without the network fees.”3
Investing in crypto assets or companies servicing crypto-asset markets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto-asset markets.
Investing in crypto assets or crypto-focused companies is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment.
Any investment in crypto assets or crypto- focused companies should only be considered as a very small component of an investor’s overall portfolio.
Off the Chain will be published every Tuesday, and provide highlights of key developments in bitcoin and the rest of the crypto market along with analysis, insights and the latest news in the world of crypto.
It provides general information only and is not a recommendation to invest in any crypto asset, crypto-focused company or investment product.