By BR Correspondent
DURBAN - Luno, a South African cryptocurrency exchange, released a report outlining crypto movements during the first half of 2020.
Although Covid-19 and the ensuing deep market crash in March had a significant effect, it's pretty good news for cryptocurrencies.
Marius Reitz, GM for Africa, said that 2020 began with optimism, as the largest cryptocurrencies kicked off with a green candle month in January. This carried into February, with the price hitting a high for the year-to-date of $10,500 before a slight drop off. Covid-19’s effect on markets offset all the growth seen prior to March when it almost halved.
“We’ve bounced back since then, though. Bitcoin is around $10,700 now and has outperformed both the S&P 500 and Nasdaq, even after the brutal crash.
“The strong recovery since mid-March has taken the Bitcoin price all the way back to levels last seen in February this year. Ever-expanding monetary policy has also served to galvanise many of cryptocurrency’s biggest supporters. Equally though, many believe that Bitcoin’s role has been more as an inflation hedge than a safe haven, pointing to its abnormally-high correlation to the stock market during the stock market sell-off.”
The top three cryptocurrencies by market capitalisation are mostly in the green, with the exception of XRP, which has struggled so far this year and is down 9 percent. Ether (ETH) is the best performer, up 75 percent so far in 2020.
The recovery has stagnated in recent weeks, with the Bitcoin price ranging largely between $9,000 and $9,800 since early May.
Volumes trending upwards
The 7-day average real trading volume has been trending downwards since Bitcoin reached $10,000 again at the beginning of May. The trend for the first half of 2020 has still been upwards, but there is no certainty in this trend continuing as the market has been unusually relaxed lately. The second half of 2020 may be characterised by decreasing volume if it follows the trend in 2019.
Sentiment
Except for a longer period in February and a few spikes in May, the market sentiment (fear versus greed) has stayed below neutral and in the fearful area this year. Less than 25 percent of the first half has been in a greedy state, which gives a good summary of the year so far: Uncertainty and fear have been ever-present.
Institutional investors entering the space
Early in 2020, Luno predicted that institutional investors – banks, hedge funds, pension funds, endowments, etc – would show more interest in cryptocurrencies as they looked to diversify their portfolios.
“The pandemic seems to have caused many fund managers to re-evaluate their attitude towards cryptocurrency. In May, veteran hedge fund manager Paul Tudor Jones revealed that he had a stake in Bitcoin. Jones is famous for his prophetic bets against the US stock market in 1987,” said Reitz.
Elsewhere, the world’s largest digital assets manager, Grayscale Investments, has purchased more Bitcoin on behalf of its institutional clients since the third halving on 11 May than has been mined.
According to its Q1 2020 Digital Asset Investment Report, 88% of Grayscale’s customers are now institutional investors, the overwhelming majority are hedge funds.
BUSINESS REPORT ONLINE