Retreats by institutions
Part of bitcoin downfall appears to be a temporary reversal in the theory of increasing cryptocurrency acceptance.
Musk revealed earlier this year that he was buying it for his automaker’s balance sheet. Several payment processors announced upgrades to support more crypto transactions, and major Wall Street banks formed crypto trading teams for their clients. Coinbase, a cryptocurrency exchange, went public in mid-April.
Following Musk’s recent announcement about the discontinuation of Bitcoin as a form of payment, On Twitter, he said Tesla had “diamond hands” and that the business is not selling its bitcoin holdings.
Coinbase, which had risen beyond $400 shortly after its debut on April 14, had fallen below $220 per share by Wednesday morning. Its direct listing coincides with bitcoin’s recent all-time high.
Also, according to a new JPMorgan analysis, institutional investors are returning to gold based on futures contracts. Bitcoin
is frequently cited as a potential value store alternative to gold.
The weakening is not unique to crypto, implying that investors are moving away from more riskier bets.
Tech and growth stocks, which outperformed the market during the coronavirus outbreak, have underperformed recently.
The Ark Innovation ETF, managed by Cathie Wood, is down almost 30% from its February highs. The Nasdaq Composite had lost 6.9% since its April 26 closing high as of Wednesday morning. Over the same period, the Russell 2000 is down 5.6%.
The reductions may have coincided with the extended tax payment deadline, causing selling pressure as investors sought to pay capital gains taxes.
Regulators around the world are increasingly scrutinizing bitcoin and kindred assets as they gain market share.
This could lead to another ‘crypto winter’ and lower trading activity. Many developing countries may consider crypto as a danger to their fiat currency and monetary system, according to Bernstein’s Harshita Rawat.
On Tuesday, China, developing its government-backed cryptocurrency, reaffirmed its ban on financial firms providing crypto trading services.
According to newly appointed Securities and Exchange Commission Chair Gary Gensler, regulators should be “technology neutral,” but more consumer protection needed in crypto markets.
The rise of dogecoin, which began as a joke before gaining popularity with Musk’s support, may have harmed the crypto market’s overall trustworthiness. Smaller, less established currencies may linked to the crypto bull market rather than greater institutional interest.
More casual cryptocurrencies have also gained popularity recently. On Monday, Barstool Sports founder Dave Portnoy announced that he had purchased $40,000 worth of safemoon, a “s—-coin.”
“Early. A Ponzi scheme requires early entry.