Multiple events are causing the negative market sentiment
Bitcoin was trading at an intra-day high of 57,500 BTC/USD on Saturday before surging to an all-time high of $58,350 on Sunday. Afterwards, it tumbled through Monday and it is currently trading at $47,500, and multiple events may have contributed to this decline. Speculative investors have been riding the uptrend in both the crypto and stocks markets, but may now be frightened by the recent drawdowns – as e.g. seen by the recent decline in the Tesla stock. Speaking about Tesla, Tesla’s $1.5 billion Bitcoin purchase two weeks ago, did not prevent Elon Musk from saying in a public tweet on Saturday that he thinks the Bitcoin and Ethereum prices seem too high. The tweet was in response to a tweet from Peter Schiff, a financial commentator, who has been extremely outspoken for years on Bitcoin in a negative manner. This is not the first time Elon Musk has talked negatively about positions he directly or indirectly holds. Back in May 2020, Musk wrote in a tweet that he thought the Tesla stock was priced too high: “Tesla stock price is too high imo (in my opinion)”. Though it is unclear whether Musk holds any position in Ethereum, he holds directly in Tesla and at least indirectly in Bitcoin through his Tesla holdings. Another element contributing negatively to the market was when Treasury Secretary Janet Yellen published a statement yesterday warning investors of Bitcoin. In the statement, she added that the questions about legitimacy and stability remain unanswered.
Is Ethereum losing its first-mover advantage?
Notably, Ethereum has tumbled over the past days. After hitting an all-time high on Saturday at 2,033 ETH/USD, marking the first time it has been trading above $2,000, the cryptocurrency declined to a current price of $1,450 just days after hitting a new all-time high. The main reasons behind the price decline are the three factors mentioned above combined with the scalability issues that Ethereum faces. The cryptocurrency influencer Lark Davis was stressing Ethereum developers yesterday that they need to hurry up to solve the scalability issues, warning that rival chains will take over if the issues are not solved quickly enough. Lark Davis has previously been exceedingly talking well about Ethereum and this bull-run contributing to hitting several new all-time highs. Last week, we wrote that the decentralized exchange PancakeSwap on Binance Smart Chain (BSC) would most likely become the most used decentralized exchange measured on daily volume in the foreseeable future. Thereby, it would overtake the most popular decentralized exchange on Ethereum called Uniswap. Surprisingly, this happened already the other day sending a shock wave through the community as it signals the major scalability issues Ethereum has. Many are simply worried whether Ethereum will lose its first-mover advantage in the smart contract crypto-space. However, for the past 24 hours Uniswap has been handling slightly more volume compared to PancakeSwap.
Are CFOs about to put Bitcoin on their balance sheet?
Before the tumbling of Bitcoin, Ethereum and other cryptocurrencies the past days, a survey conducted by Gartner published last week concluded that 5% of CFOs or other executives plan to buy Bitcoins in 2021 for their balance sheet. Thereby, other companies might join Tesla and MicroStrategy shortly. Furthermore, 11% stated that potentially they will execute a Bitcoin purchase by 2024. Especially the technology sector was keener on the idea compared to other industries. On the other hand, 84% of the total respondents stated that their main concern by putting Bitcoin on their balance sheet correlates to the volatility of the cryptocurrency. Most likely this percentage is higher after the volatility throughout the past days. The survey was only conducted on 77 respondents making the survey fairly small and less reliable.