Are New All Time Highs Looming?

GB Market Commentary 28/09/2021

by Freddie Evans

Crypto markets continue to reflect the negative trend of the equities market as bitcoin has fallen over 4% in the last 24 hours to $41,820. Some analysts still hold that a new all-time high will be hit by the end of the year, while others predict another sell-off before we start to see an upward trend. However, the mentality on the market is now risk off as there is significant speculation over the state of the equities market and the global economy. Ethereum futures are still holding some bearish sentiments as the price moves below the $3000 mark, currently at $2,896, losing 6.38% over the last 24 hours.

Institutional investors were buying the recent dip, unaffected by China FUD with three consecutive weeks of inflows. This comes after 13 of the last 17 weeks has seen institutional outflows. The Peoples Bank of China’s new ban on crypto transactions triggered an 8% dip, drawing institutions to seize the opportunity and buy. The Communist parties fear of crypto has had the power to cause large price drops but has also been a catalyst for new bull runs in subsequent months. Some people see the crackdown by China as a positive, with China being unable to have any control over the market.

It is reported that Morgan Stanley has doubled its Grayscale Bitcoin Trust (GBTC) ownership since April this year. Morgan Stanley’s Europe Opportunity fund, which boasts $371 million in assets, owns 58,116 shares in GBTC as of 31 July. Estimates are that their value is over $2million. It is important to note that this isn’t Morgan Stanley’s only holdings of GBTC, as shares are also held in other institutional portfolios. The Morgan Stanley Insight Fund has the most holdings in crypto, with over $31.7 million in shares in GBTC.

Two weeks ago, we commented on the potential effects of new crypto regulation in SouthKorea, with the deadline of regulation changes now passing and having severe consequences. The new rules are aimed at increasing transparency to prevent financial crimes, including money laundering. Only 29 exchanges are regulated by the InformationSecurity Management System (ISMS) and submitting the correct reports before the deadline. This means that 37 crypto exchanges will have to shut down as they cannot trade legally, facing fines and imprisonment if they don’t comply. Moreover, only four of the exchanges accept Korean Won by partnering with banks; the rest operate as crypto-only exchanges.

In lighter news, Facebook announced a $50 million investment fund tasked with developing its virtual metaverse. The Facebook metaverse will allow people to interact with digital objects and the physical world through a virtual environment. Facebook is only beginning its metaverse, which it predicts will take a decade before operational. At the same time, crypto developers have already made progress in building decentralised and interoperable metaverses of their own. For example, Decentraland’s Ethereum based metaverse has a decentralised community-owned virtual world where users can build environments and showcase digital content that can be monetised.