Despite a red month, crypto continues to outperform traditional assets

The cryptocurrency market took a beating this month with a sea of red dominating price movements. After such a sustained rise in prices since December, a correction was due

By David Jones,  Chief Market Strategist at

As you may expect, panic and fear swept across the crypto market.  But, amidst all of the gloom and doom cryptocurrencies still continue to outperform traditional/legacy markets such as oil, stocks, and indexes. The longer-term returns on crypto-assets and their high volatility pique investors interest in a way that legacy markets simply cannot. The demand for this new asset class remains as high as ever.

Since cryptocurrencies are a new asset class, high volatility is to be expected. The new breed of trader is used to the highs and lows that come with the territory, but they remain unphased. Naturally, some crypto deniers are already gloating that cryptocurrencies are just another fad or another bubble. But, until proven otherwise, this is simply another dip in the relentless march that cryptocurrencies are taking into mainstream adoption.

Despite  – or perhaps, because of – the beating that the cryptocurrencies took last week,  it has still proven to be the most popular asset class this week with our clients. If the last few years have taught us anything about the trading psychology of the crypto faithful, it’s that a mere 50% collapse cannot dent their enthusiasm. There has been more stability in the likes of Bitcoin this week which so far has been building a base above $30,000. Whilst many fingers may have been burnt over the past couple of weeks, those who have been sidelined during the past few months are seeing this as an opportunity to get in on the cheap.  Only time will tell how wise a decision that ends up being.

More traditional markets that have caught the interest of clients this week include crude oil with something of a tug of war going on at the moment between buyers and sellers. If we cast our minds back just over a year, the May futures contract for oil famously traded negative for the first time ever, with the market effectively paying almost $40 a barrel to take oil off its hands. This week has seen crude back near its highs for the year so far, trading above $66.

There is quite a split between clients. Some expect that further economic recovery will see the price continue to soar, whilst others are betting on a price slide if US sanctions against Iran are eased and it starts supplying the world market once more.

Amongst individual shares, Tesla remains a popular one with our traders.  The electric vehicle company has not had the best few months, with the shares in reverse from January’s all-time highs  – the stock was down almost 40% from the $900 level hit early in 2021. But plenty of clients have been viewing this as a bargain price and have been picking up the stock. Perhaps with the recent Bitcoin burn-out, Tesla boss Elon Musk will tweet less about crypto and more about his own business – which may help to reassure investors.

David is a qualified technical analyst whose major role is to develop’s market-leading content through driving our YouTube channel, where he delivers info-reach videos, webinars, technical analyses and key market updates. He started his financial career in the 1990s as a currency analyst. He has held senior management positions at CMC Markets and IG Group, where he provided regular commentary to media and clients, and devised a wide range of educational programmes.

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