Finance, AntaraNews – Bitcoin is an emerging digital currency designed as an investment vehicle, like gold or silver bullion. People buy it in hopes its price will appreciate, much like purchasing stocks or bonds.
Others use Bitcoin for online transactions that bypass credit card companies and payment processors, eliminating middlemen for faster, cheaper, more secure transfers.
Bitcoin dips below $50K
Monday was another tough day for cryptocurrency, as risk-off sentiment caused asset classes to crumble. Bitcoin BTC plunged below $50,000 and reached its lowest level since February.
The crypto market has experienced an 17% loss since January’s high point and lost all gains accumulated for 2017. According to blockchain analytics platform IntoTheBlock, BTC holders who are in profit have fallen from 93% down to 75% of holders who remain profitable.
Fears that Cameron and Tyler Winklevoss’ application for a Bitcoin ETF with tracking prices of both bitcoin and ether will be denied by US Securities and Exchange Commission is exacerbating the sell-off, prompting investors to exit cryptos in favor of less risky equities and bond markets; buying the dip may backfire leaving investors underwater.
Crypto market crashes 17%
Cryptocurrency market volatility has long captivated investors and enthusiasts. In 2016, we have witnessed numerous noteworthy events within this space, such as hacks of major exchanges and the collapse of FTX Trading; consumer watchdog CHOICE issued calls for stronger consumer protection measures to safeguard investors and enthusiasts.
Crypto markets have experienced a global selloff as weak US job data and Middle Eastern tensions reignited recession worries, while uncertainty regarding whether Jerome Powell will raise interest rates is also contributing to investor pessimism.
Bitcoin and ether have experienced substantial price falls, dropping 17% since February and 23% respectively to all-time lows. This market correction is significant and has wide-reaching ramifications for the industry as investors adjust their allocations and risk tolerance levels while regulators move in response; all this spells uncertainty for digital currency markets going forward.
Crypto ETFs are a flop
The initial excitement surrounding the introduction of bitcoin ETFs may have died down since their introduction, yet that may not signal its death knell for the industry as a whole. While crypto enthusiasts may prefer trading directly (especially as many coins can be broken down into fractions allowing investors to trade exact quantities), ETFs provide more accessible avenues for average investors looking for exposure.
Cryptocurrency jargon can be an insurmountable barrier to entry for many investors, making ETFs an indispensable solution. They take care of network and transaction fees that could become overwhelming in short order.
Investors must keep in mind that crypto ETFs do not always track the price movements of digital tokens they represent, especially futures-based ETFs which may experience volatility due to contract rollover and may expose investors to unexpected risk. According to Tony Sycamore from IG Markets analyst Tony Sycamore is optimistic about these transformative instruments’ enormous potential and believes this industry has yet to fully realize it’s potential.
IG Markets analyst Tony Sycamore
Under pressure from major crypto and stock market sell-offs, Bitcoin dominance (the ratio between BTC’s market value to that of other cryptocurrencies in the ecosystem) briefly reached 58% early hours on August 5. Sycamore explained this was likely caused by Ether (ETH), which has suffered due to being built largely upon Bitcoin itself and experiencing price drops as quickly as 18% within just two hours according to CoinGecko data.
Reacting to market volatility, he noted the breaking of uptrend support for both the NASDAQ and S&P as further indicators of instability, particularly ahead of key US inflation data and Federal Reserve interest rate decisions. Furthermore, he speculated that an Institute of Supply Management services PMI report could deliver either an “inflationary blow” or a “rebound”.
