Bitcoin falls further as China cracks down on crypto-currencies
I ended a piece in which I compared the cryptocurrency with 17th-Century Dutch tulips or London houses in the 1980s with this thought: “Unless and until Bitcoin can be used to buy a sandwich, or be accepted by your friends when you pay them back for a restaurant meal, then it is likely to remain just a playground for geeks and gamblers.”
Bitcoin holds steady, Ether climbs, XRP drops – crypto movers and shakers
Bitcoin holds steady, Ether climbs, XRP drops – crypto movers and shakers
Posted on May 21, 2021 by Jonathan Symcox share
Bitcoin maintained its value of just under $40,000 in the last 24 hours after a volatile few days.
BTC had sunk as low as $34k on Wednesday – which meant it had lost 30% of its value in a single day, and 50% in a month – but seems to be holding at the time of writing (7am).
Bitcoin has been damaged recently by Tesla’s decision to no longer accept it as a payment method due to environmental concerns, such is CEO Elon Musk’s influence on the crypto markets these days.
Following a general crypto bloodbath following the banning on Tuesday of Chinese financial institutions and payment companies from providing crypto transaction services – and the country’s warning against speculative crypto trading – most coins rebounded in the last 24 hours.
One exception was Ripple’s XRP coin, which fell 4% to $1.11. It was worth $1.53 on Tuesday morning and is down 18% compared with seven days ago.
Ethereum (ETH) rose 4% in 24 hours to $2,728 but is still down 29% on a week ago.
Dogecoin (DOGE), the coin created as a crypto parody and based on a meme, is heavily backed by Musk. The CEO has pledged to work with developers to improve its blockchain infrastructure. After drops on consecutive days of 16% and 14%, it recovered by 6% in the last 24 hours to reach 39 cents.
Litecoin (LTC) held firm around $200 after dropping a massive 25% of its value in the previous 24-hour period. The altcoin – billed a lighter and faster version of Bitcoin – is worth 37% less than a week ago.
However, the market may be bracing itself for further turmoil after US Federal Reserve chief Jerome Powell echoed China in saying cryptocurrencies pose risks to financial stability and said greater regulation may be coming.
The US Treasury Department also raised concerns that crypto could be used in tax evasion and said large asset transfers in the sector should be reported to authorities.
The majority of coins climbed or held their value. Monero (XMR) rose the most, up by 28% to $297, while Nano (NANO) is 23% higher at $8.62.
To see how the valuations of the biggest movers and shakers – and main coins – have changed over the last few days, click here.
For up-to-the-minute valuations of the top 100 coins by market cap, and the one-hour price change, see below.
To see the Crypto Rich List, the world’s richest people in cryptocurrency, scroll down to the bottom of the page.
Canadian Bitcoin ETFs rattled by crypto tumult
Two Canadian bitcoin ETFs issued “market disruption” warnings during this week’s crypto turmoil, highlighting the risks faced by the vehicles that are increasingly popular with retail traders.
Bitcoin tumbled by almost a third at one point on Wednesday, a lurch lower that triggered curbs meant to ease panicky trading in the market for futures tracking the cryptocurrency.
The brief trading halt on the Chicago Mercantile Exchange posed a potential problem for two funds run by Horizons ETFs Canada that track bitcoin futures.
The Horizon funds sent an alert in the Toronto morning to their market makers, which facilitate trading in ETFs, that they would not be able to honour the day’s buy and sell orders if the futures price remained at its lower limit at the close of trading.
“We were on high alert at 9am,” said Steve Hawkins, chief executive of Horizons ETFs Canada. “We had to put in place all the business continuity plans for these ETFs.”
The futures price eventually began moving again as bitcoin recovered, but the incident illustrates that even crypto-linked products that trade on regulated exchanges face risks from the large swings in the market.
“I’m hoping this has opened the eyes of the retail investing public to understanding how volatile this asset class is,” said Hawkins.
The situation comes as US regulators are considering at least 11 applications to launch crypto ETFs, vehicles that would be easily accessible to regular retail investors. In a statement last week, the Securities and Exchange Commission said its staff would consider whether “the Bitcoin futures market could accommodate ETFs” and cautioned on the risks of “highly speculative investment”.
Horizon launched the pair of ETFs in April based on bitcoin futures traded on the CME, after winning approval from Canadian securities regulators. The two funds, which are priced in Canadian dollars, allow traders to take bets on whether bitcoin’s price will rise or fall through regular investment accounts.
Horizons’ funds are part of a handful of bitcoin and ethereum-based ETFs launched on the Toronto Stock Exchange this year, which were hailed as a milestone for exchange traded crypto products. Some of these funds and their proposed US counterparts are backed by direct holdings of crypto assets, while the Horizons funds are based on futures.
Despite the volatility on Wednesday, Hawkins said many retail traders remained interested in trading these kinds of ETFs. “This is something that people want to trade and own,” he said. “[Bitcoin] is a very, very high risk underlying asset and people have to know that. ETFs are very clear about the risk disclosure.”
Click here to visit the ETF Hub