Cryptocurrencies: “Low prices not used for entry”

Cryptocurrencies have recently been on a downward trend, with the highs for the year a long way off. Crypto ETN trading has been rather quiet, with no follow-on buying. 
 

5 September 2024. FRANKFURT (Börse Frankfurt). Growing concerns about the US economy are weighing on Bitcoin, Ethereum & Co. “Crypto assets are weakening due to ongoing concerns about the US economy,” explains André Dragosch from ETN issuer ETC Group. In addition, there have been renewed net outflows from spot Bitcoin and Ethereum ETFs in the US as well as some negative news surrounding Ethereum. “Ethereum founder Vitalik Buterin is said to have sold Ethereum worth 10 million US dollars.” The ETC Group's “Cryptoasset Sentiment Index” has turned negative again from a neutral level.

All prices have fallen

Bitcoin has fallen month-on-month and costs 56,800 US dollars on Thursday morning - significantly less than its all-time high of almost 74,000 US dollars in March. However, this still represents a gain of 29% since the beginning of the year. The price of Ethereum, on the other hand, has almost fallen back to the level at the beginning of the year. The price currently stands at USD 2,405, compared to a peak of over USD 4,000 in March. The Ethereum spot ETFs approved in the US since July are among the biggest disappointments of 2024 for many, according to reports. The price of Solana has also fallen, from a high of USD 209 in March to just USD 132 today.

Interest rate cut as support, seasonal headwinds

Dragosch from the ETC Group does not expect a recovery for Bitcoin for the time being: “The consolidation is likely to continue in September, as September is historically the worst month for Bitcoin performance.” In the meantime, the expected interest rate cut in the US on September 18 had a supportive effect on cryptocurrencies. “In general, an interest rate cut is a good sign for risky investments,” notes Oliver Schäfer, Head of Germany at issuer 21Shares.

Hoping for Trump

The US election remains a major topic for the industry. The crypto-friendly positioning of US presidential candidate Donald Trump provided a tailwind for cryptocurrencies in July. According to Schäfer, Trump's election victory would be positive for the industry - at least if he keeps the promises he has made so far. “These include more crypto-friendly regulation, the promotion of stablecoins and the establishment of a national Bitcoin reserve.” However, the nomination of Kamala Harris as the Democratic candidate has made Trump's election victory more uncertain. Harris has so far kept a rather low profile with her statements on the crypto sector. 

Crypto ETFs: both sides played

ETC Group's figures for the full year 2024 show high inflows into the US Bitcoin ETFs from iShares and Fidelity, but high outflows from the Grayscale Bitcoin Trust ETF. However, funds also flowed out of ETNs such as the ETC Group Physical Bitcoin, albeit at a much lower level.

Trading in crypto ETNs is currently rather quiet, as traders report. “You can't say that the lower prices are being used to enter the market,” comments Andreas Schröer from Lang & Schwarz, reporting on buying and selling. “The smaller currencies such as Avalanche (CH1135202088) are trying to participate in the movements.”

Ivo Orlemann from ICF Bank also sees business in both directions. The VanEck Bitcoin (DE000A28M8D0), the 21Shares Ethereum Staking, Solana tracker from WisdomTree (GB00BNGJ9G01) and 21Shares and the VanEck Crypto Leaders (DE000A3GWEU3) in particular saw high turnover. The latter offers access to the largest and most liquid cryptocurrencies, currently Bitcoin, Solana and Ethereum and - with a significantly smaller share - Cardano, Avalanche and Polkadot. On Xetra, the Bitcoin trackers from the ETC Group, VanEck (DE000A28M8D0), WisdomTree (GB00BJYDH287) and Fidelity (XS2434891219) have the highest turnover today, but there is also some turnover in Ethereum (CH1209763130) and Solana ETNs (CH1114873776) from 21Shares.