XRP, BTC, ETH, LTC, BCH: “We could be in for another bout of high volatility” – Equiti’s David Madden

Rick Steves

“The sector has a track record of attracting publicity when the coins enjoy a surge higher, so if the cryptocurrencies retest their respective record highs, we could be in for another bout of high volatility”, Equiti Capital’s David Madden said. 

The cryptocurrency market has become the main attraction in the capital markets regardless of the exposure to these assets one may or may not have.

The extreme volatility observed throughout the years and especially since the launch of Bitcoin futures in late 2017, has garnered the attention of the media, retail investors, and now institutional players.

David Madden, market analyst at Equiti Capital, commented on this year’s wild moves: “Digital currencies were in the grips of a massive rally at the start of the year, some of which was down to Elon Musk. The Tesla CEO announced the electric vehicle group invested $1.5 billion in Bitcoin in February.

“Between late December 2020 and mid-April 2021, Bitcoin, Ethereum, Bitcoin Cash and Litecoin rallied by 124%, 495%, 377% and 230%, respectively. It’s an adage, that “markets don’t move in straight lines” and in late April, there was a sharp fall in the crypto market.

“Tighter regulation in China and concerns about the environmental impact of mining cryptocurrencies were cited for the sharp losses. The crypto market hit its peak in April, where Bitcoin almost reached $65,000 and then the entire sector turned lower. By late June, Bitcoin was trading below $30,000, its lowest mark in four months. Ethereum, Bitcoin Cash and Litecoin also suffered sizeable declines”, Mr. Madden stated in an internal document shared with Finance Feeds.

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The cryptocurrency market seems to be moving into the global ‘Main Street’, with El Salvador’s adoption of Bitcoin as legal tender being one of the key milestones for the asset class.

Secondly, we are seeing several firms within the blockchain space appointing key figures from the regulatory space as advisors or executives.

Baton Systems, for example, features an impressive line-up of industry leaders, including former CFTC chairman, Christopher Giancarlo, Citi’s former Global Head of Futures, OTC Clearing and FX Prime Brokerage, Jerome Kemp. This week, Baton announced Basel III reform Chairman Bill Coen as a senior advisor.

This only goes to show that this is only beginning, as SIX’s Thomas Zeeb said as the exchange group celebrated a FINMA license for its SIX Digital Exchange.

SDX’s international customer base will expand to include banks, issuers, insurance firms, institutional investors, who will then become a global exchange network for digital assets, unlocking global liquidity based on Distributed Ledger Technology.

It is still unclear what will be the outcome of the SEC v. Ripple lawsuit for the company, for XRP, and for the digital asset space in the United States, but it is commonly agreed the case will be precedent-setting, including a potential end for the Howie Test as we know it.

“The sector has a track record of attracting publicity when the coins enjoy a surge higher, so if the cryptocurrencies retest their respective record highs, we could be in for another bout of high volatility”, Equiti’s David Madden added.

The market found resistance earlier this week the day Bitcoin entered circulation as legal tender in Salvador. Except for Solana, which remains with double-digit gains this week, the top 10 cryptos by market cap are still hungover from failing to reach those all-time highs.

 

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