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August 14, 2022

Bitcoin struggles continue

Simon Peters, cryptoasset analyst at multi-asset investment platform eToro 

Bitcoin’s struggles continued last week, with weakness in price continuing through the week.

While BTC’s price was subject to less volatility than in previous weeks of trading, it moved on a downward trend, having begun the week around $21,000, trading down to its current level around $19,000 by midweek.

A notable undercurrent is underway with BTC however. As the price falls so-called bitcoin ‘whales,’ or holders with large accumulations of the cryptoasset, are moving to buy up more tokens. The largest non-exchange bitcoin wallet, whose identity remains unknown, has acquired thousands more tokens as the price slid, taking its value to over $2.53 billion.

Ether experienced a similar slide in the week with the cryptoasset beginning around $1,200 before trading down to around $1,050 by Thursday where it has held steady since.

The price weakness for ETH comes as progress toward The Merge rumbles forward. The Gray Glacier upgrade was successfully implemented on the Ethereum Mainnet last week, bringing The Merge a step closer – where the network will see a transition to proof-of-stake, which could have a major impact on the economics of the platform.


EU passes MiCa laws

The European Union has forged ahead with a new set of rules to govern cryptoassets and markets involved. It is a big step in regulation of cryptoassets with few other jurisdictions applying such comprehensive rules to the sector.

Reserve requirements for stablecoins have been beefed up, new rules over transaction reporting are in place and ESMA has new powers to enforce actions upon crypto providers that don’t protect investors or comply with market rules, threatening stability.

Of course, only time will tell what the economic impact will be on the crypto market. The EU is a large segment but not the biggest. Much innovation comes from Europe but in reality crypto is broadly in need of greater supervision to set key ground rules for players and stabilising markets, without stifling innovation. The EU is leading, but with the Financial Services and Markets Bill due in the UK, it is soon to follow.


Cardano upgrade reaches critical milestone

Smart contract blockchain Cardano has reached a critical step in its march toward a new hard fork for the platform. Attempting to improve performance for the blockchain, the introduction of ‘pipelining’ could have a transformational impact on its efficiency.

Cardano forms one of several major competing blockchains that now essentially compete for the interest of blockchain and crypto projects as a basis for their work. As such, it’s critical for the platform to continue developing to remain competitive.

Pipelining involves batching transactions together to save time for users of the network. It promises to speed up transaction times and increase traffic capacity. Whether this will pan out in practice remains to be seen – but an indication that the hard fork has been a success could be supportive of the cryptoassets price.


JPMorgan sees end to crypto winter

Major global investment bank JPMorgan, which has continued its march into crypto despite a tough quarter for investors, says it sees healthy funding and contagion backstops as signals that the crypto winter may soon be over.

The bank touches on a really important point in its affirmation that funding is still flowing toward crypto projects. What is different now from past pullbacks is retail investors are no longer alone in experiencing the adversity.

Instead, multiples of major financial and other institutions are now there in the market too. The point JPMorgan makes is clear – while some money is flowing out of the sector, other smart money is still buying in. What is essential for investors therefore is to consider investment cases carefully and look at those which present the strongest long-term opportunities.




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