XRP Soars, Bitcoin Rollercoaster, eToro Down, India Crypto: Editor’s Pick
In another rollercoaster of a week in the crypto world, let’s take a look back at the news that dominated the forex, fintech, and crypto spheres in our best of the week segment.
XRP Price Jumps 25% within 30 Minutes
The trading week kicked off with the news that XRP price gained significant value, posting a 25% jump within just 30 minutes during the Asia session on Monday.
XRP jumped from $0.52 to $0.65 early on Monday after massive demand from retail investors. This meant that XRP has now erased all the losses it occurred after the SEC’s lawsuit against Ripple in December 2020.
Read more on the XRP price jump here.
Bitcoin Facing Liquidity Crisis, Says JPMorgan Strategist
While Bitcoin, the world’s largest cryptocurrency jumped above $58,200 on Monday with the total market cap of BTC touching $1.1 trillion, JPMorgan warned about its liquidity.
According to a note by JPMorgan’s strategist Nikolaos Panigirtzoglou, the market liquidity in Bitcoin is significantly lower than S&P 500 and gold. He added that even a small change in Bitcoin flows can have a large impact on the price of BTC.
Read more on the JPMorgan Bitcoin liquidity warning here.
UK Broker Trading 212 Suspends Trading in Penny Stocks
Finance Magnates reported on Monday that Trading 212 suspended trading in microcap penny stocks, which attracted the attention of both regulators and amateur investors over the past two months amid social media interest.
The FCA-regulated broker said it temporarily halts purchasing of penny stocks that are highly illiquid and have a market cap in the tens of millions. “If we don’t do so, we risk being suspended by both the relevant exchanges and market makers,” Trading 212 said in statements published on its website.
These tiny-cap stocks, commonly referred to as penny stocks, have for decades been a tool for fraudulent schemes, including the pump-and-dump where manipulators hype a stock before exiting positions.
Read more on the Trading 212 Penny Stock suspension here.
IG Group Suspends Margin Trading in 900 Small Cap-Stocks
On a very busy Monday, IG Group, Europe’s largest online trading platform, restricted the leveraged trading of several stocks on the back of the trading frenzy led by retail investors on social media. Retail platforms are under pressure to keep up with huge growth in retail investing, which is causing severe operational difficulties.
In addition to heavily shorted stocks, the new restrictions affected 900 shares, including insurer, Hiscox, malls operator, Hammerson, and clothing brand, Superdry. The figure represents less than 8% of the 12,000 leveraged equity products the listed broker offers to clients.
Read more on the IG Group Small Cap Stocks Suspension here.
Cryptocurrency Market Loses $200 Billion in 24 Hours
The Bitcoin Rollercoaster took a downward turn on Tuesday. The cryptocurrency market lost more than $200 billion in just 24 hours after the panic among retail traders caused a crash in Bitcoin and Ethereum. The world’s largest crypto asset, Bitcoin dropped below $49,000 on Tuesday as the total market cap of BTC reached $920 billion.
Ethereum, the world’s second-largest cryptocurrency reached its lowest level in 3 weeks after ETH dropped below $1,600
Read more on Tuesday’s crypto crash here.
eToro Down Then Back Online, Raises Minimum Deposits after Service Issue
For the second time in a month, technical difficulties shut eToro’s trading platform. Whilst the crypto markets were experiencing their worst day of 2021, eToro’s traders were left high and dry, unable to log in to their account or even use the offline mode.
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After around15 hours down, eToro finally restored service citing a Microsoft database software failure as the cause for the elongated outage.
At 9,25am GMT, eToro issued a statement explaining the outage and also its decision to raise minimum deposits “We will be raising the minimum first time deposit amount to $1,000 effective immediately. We will also be increasing the minimum copy value to $500.”
Read more on the eToro outage and drama here.
Indian Banks Sending Notices to Customers for Crypto Investments
As Finance Magnates covered this week, India is slowly moving towards a crypto dark age again as several top private banks have started to send notices to their customers who invested in digital currencies and made transfers from their accounts.
Big banks such as HDFC, HSBC, and Citi are seeking clarification from their customers on crypto transactions. Most of these customers are additionally required to visit the branch in person, and they are risking suspension of their accounts if they do not oblige.
Read more on the Indian banks crypto notices here.
Dubai Crypto Fund Sells Bitcoin to Bet on Cardano, Polkadot
FD7 Ventures, a Dubai-based crypto investment fund, said on Thursday that it plans to unload $750 million worth of its Bitcoin holdings over the next 30 days to buy two altcoins, Cardano (ADA) and Polkadot (DOT).
The move will reportedly better serve the needs of FD7 investors who are looking to diversify their portfolios in the cryptocurrency space. While Bitcoin presents stronger long-term opportunities, the popular cryptocurrency has become a relatively mature asset.
Read more on the FD7 Ventures Cardano and Polkadot investment here.
Grayscale Buys Ethereum Dip as ETH Drops Below $1,600
As Finance Magnates reported on Thursday, Grayscale, the world’s largest digital assets manager, purchased nearly $25 million worth of Ethereum (ETH) in a single day after the price of ETH dropped below $1,600. ETH has dipped nearly 20% in the last 5 days.
According to the latest data published by crypto analytics firm, Bybt.com, Grayscale has accumulated a total of 15,521 ETH in just 24 hours in an effort to take advantage of the recent crash in ETH.
Read more on the Grayscale Ethereum Purchase here.
Crypto Crash Intensifies as Bitcoin Drops 10%
We started the trading week with heavy gains in Bitcoin and ended with heavy losses.
Bitcoin, the world’s largest digital currency, lost around 10% of its value on Friday after the panic among retail traders triggered a $100 billion sell-off in the crypto market.
Around $900 million worth of long cryptocurrency positions got liquidated in just 24 hours as Bitcoin and Ethereum lost nearly 10% of their values in a single day. Approximately 142,000 crypto traders were liquidated in the previous 24 hours.
Read more on Friday’s crypto crash here.
Red Sunday: Crypto market drops $70 billion in value as Bitcoin, Ethereum, Litcoin tumble heavily
The prevailing market volatility at the crypto market led to heavy losses of global investors’ funds when roughly $70 billion worth of crypto positions evaporated into thin air within a day.
The downward trend gained momentum immediately after the flagship crypto touched below the $45,000 value amid several large sell orders placed around that price.
Crypto pundits alike breathed a sigh of relief during the week when Bitcoin managed to retake $50,000 — with some proclaiming that the asset had experienced “healthy correction.” But this narrative proved shaky when BTC plunged yet again on Friday to lows of $44,500. Other top Crypto assets including Ethereum, Litecoin were down more than 8%.
It’s key to note that most crypto assets are often volatile because of their high use for financial gain and speculating advantages used by global investors and crypto traders.
As such, individuals and hedge funds sell and buy Bitcoin as they wouldn’t do for any other financial asset (stocks, bonds) with regulatory limitations.
The Crypto market had suddenly become overheated and record sell-offs began leading traders to lose about $2 billion.
The global crypto market cap is $1.37 Trillion, a 5.66% decrease over the last day.
The total crypto market volume over the last 24 hours is $127.95 Billion, which makes a 19.38% decrease.
The total volume in DeFi is currently $9.80 Billion, 7.66% of the total crypto market 24-hour volume.
The volume of all stable coins is now $105.38 Billion, which is 82.36% of the total crypto market 24-hour volume.
Bitcoin’s dominance is currently 61.28%, an increase of 0.17% over the day.
At the time of writing this report, the flagship Crypto traded at $45,146.03 with a daily trading volume of $46.8 Billion. Bitcoin is down 5.37% for the day.
Sequel to the sudden correction seen in the Bitcoin market lately, it had been in on a bullish run relatively.
That being said, Nairametrics advises cautious buying in this fast-growing financial asset, as high market liquidity can expose you to significant losses and loss of funds. It’s highly recommended you seek advice from a certified financial advisor when buying these crypto assets.
Robinhood sees 6M new crypto traders to start the year
Robinhood has seen six million new cryptocurrency traders on its platform in the first two months of 2021.
“That’s more than the number of new crypto traders at Robinhood during the entirety of 2020,” Robinhood co-founder Vlad Tenev tweeted Thursday.
In 2020, the number of users trading through Robinhood Crypto peaked at 401,000 for a single month, with a monthly average of about 200,000 customers trading on Robinhood Crypto for the first time.
In comparison, each of the first two months of 2021 saw around 2.9 million users trading through Robinhood Crypto.
BITCOIN’S BIGGEST PLAYERS INCLUDE TESLA, SQUARE, MASTERCARD
Robinhood Cyrpto, which launched in Feb. 2018, offers seven tradeable digital currencies, including Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic and Litecoin. It also offers real time market data for digital currencies including Bitcoin Gold, Dash, Lisk, Monero, NEO, OmiseGO, Qtum, Ripple, Stellar, and Zcash.
The company’s average transaction size for its cryptocurrency trading has reached about $500 in the first two months of 2021, compared to an average transaction size hovering around $250 in 2020.
According to recent Congressional testimony by Tenev, the platform has over 13 million total users.
CHARLIE MUNGER: ROBINHOOD LURING AMATEURS WITH COMMISSION-FREE TRADING IS A ‘DIRTY WAY OF MAKING MONEY’
The announcement comes just a day after Berkshire Hathaway vice chairman Charles Munger warned that Robinhood and other brokerage apps are trying to lure amateur investors with promises of commission-free trading.
“Robinhood trades are not free. When you pay for order flow, you’re probably charging your customers more and pretending to be free,” the 97-year old investor said during the Daily Journal’s annual shareholder meeting, which was livestreamed by Yahoo Fiannce. “It’s a very dishonorable, low-grade way to talk. And nobody should believe that Robinhood’s trades are free.”
Munger blamed the brokerage apps for enabling the recent trading frenzy in stocks including GameStop by gathering “a whole lot of people who are using liquid stock markets to gamble the way they would in betting on race horses.”
“It’s really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors,” Munger said. “And if you’re selling them gambling services where you rake profits off the top like many of these new brokers who specialize in luring the gamblers in. I think it’s a dirty way to make money. And I think that we’re crazy to allow it.”
Robinhood fired back at Munger on Thursday, calling his comments “disappointing and elitist.”
“In one fell swoop an entire new generation of investors has been criticized and this commentary overlooks the cultural shift that is taking place in our nation today. Robinhood was created to allow people who don’t have access to generational wealth or the resources that come with it to begin investing in the U.S. stock market,” a Robinhood spokesperson told FOX Business in a statement. “To suggest that new investors have a ‘mindset of racetrack bettors’ is disappointing and elitist. It should be celebrated that we are seeing market investors begin to diversify and that education and awareness about the values of investing are diffusing further into previously untapped generations.”
In addition, Munger dismissed bitcoin, noting it is too volatile to become a “medium of exchange for the world.”
Warren Buffett’s long-time partner said the bitcoin is “really kind of an artificial substitute for gold and since I never buy any gold, I never buy any bitcoin,” he added. “I recommend that other people follow my practice.”
He described bitcoin as “the pursuit of the uneatable by the unspeakable,” paraphrasing a quotation about fox hunting from playwright Oscar Widle’s “A Woman of No Importance.”
ELON MUSK EXPLAINS TESLA’S $1.5B BITCOIN BUY
Despite critics like Munger, companies including Tesla and Square have recently begun to embrace the world’s biggest cryptocurrency, Bitcoin, with their own investments. Square announced on Tuesday that it would invest $170 million more in bitcoin while Tesla announced in an SEC filing earlier this month that it has invested $1.5 billion in bitcoin to “further diversify and maximize” the return on its cash. The electric automaker also said that it expects to begin accepting bitcoin as a form of payment for its cars in the “near future.”
Ticker Security Last Change Change % SQ SQUARE INC COM 230.03 +2.92 +1.29% TSLA TESLA, INC. 675.50 -6.72 -0.98% MA MASTERCARD, INC. 353.85 -0.72 -0.20%
In addition, companies like Mastercard and BNY Mellon have recently announced plans to introduce services supporting cryptocurrencies later this year.
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In another sign of cryptocurrencies going mainstream, digital currency exchange Coinbase filed its S-1 prospectus with the Securities and Exchange Commission on Thursday for a direct listing on the New York Stock Exchange, in which it plans to trade under the symbol COIN.
According to the paperwork, Coinbase has reached 43 million verified users as of the end of 2020, with 2.8 million users making transactions each month and a total of $90 billion of assets held in trust. Coinbase reported its first annual profit of $322 million on revenue of $1.2 billion. The company also disclosed ownership of $316.1 million worth of crypto assets on its balance sheet as of Dec. 31, compared to $33.9 million at the end of 2019.
“Since our founding in 2012, Coinbase has held bitcoin and other crypto assets on our balance sheet — and we plan to maintain an investment in crypto assets as we believe strongly in the long-term potential of the cryptoeconomy,” the company wrote in a blog post.
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Still for all the headlines, Coinbase’s S-1 filing acknowledged the significant risk that it is taking going forward due to the unpredictable volatility of cryptocurrencies.
“All of our sources of revenue are dependent on crypto assets and the broader cryptoeconomy,” the filing reads. “There is no assurance that any supported crypto asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of crypto assets or the demand for trading crypto assets decline, our business, operating results, and financial condition would be adversely affected.”
Bitcoin founder Satoshi Nakamoto, who is listed in the S-1 as an interested party in the deal, is also described as a potential risk, noting that his identification or the transfer of his Bitcoins could adversely impact Bitcoin’s value as well as Coinbase’s business.
Bitcoin, which has seen a meteoric rise in 2021, is hovering near $49,000 Thursday as of the time of publication.