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Investors relax while Bitcoin blows up

Investors relax while Bitcoin blows up

Last Updated: ‎‎‎‎‏‏‎ ‎
January 24, 2023

Cryptos have taken a beating this last week

The story of this week is definitely about the price crash in cryptos. After a stratospheric rise during the last 6 months (Ether went up almost 11x, while Bitcoin did a relatively modest 4.6x) we have been seeing a sharp sell off. The chart below shows this wild rollercoaster ride (prices normalized to 100).

The selloff has been vicious. Coinbase estimated that around USD 8 billion of leveraged trades were liquidated last week. Social media feeds were full of horror stories from retail investors who had recently taken leveraged bets on the market .

Source: Bloomberg

Investors remained calm

Compared to the ‘crypto carnage’, our investors are quite calm. As mentioned last week there is already a significant slowdown of activity since retracement #3 in late March. That pattern continues.

This might change, but as of the moment, we are not seeing signs of outright panic. In fact we saw a little bit of buying emerge (see chart below). This investor activity is in sync with the price action in the broader equity markets. S&P500 and NASDAQ were more or less flat for the week and Eurostoxx 50 is showing signs of a breakout.

Source: Canopy Data and Analytics

As you can see from the chart

  • There is a clear slow down in trading volumes
  • There was some selling a few weeks ago, but it is very small compared to the outright panic we saw last year
  • We actually saw some buying last week

The buying was predominantly technology and communication stocks

Source: Canopy Data and Analytics

Conclusion (tl;dr)

  • Cryptos are having a very bad week
  • As mentioned previously, investor activity has slowed down significantly, but there are no signs of panic at the moment
  • We will continue to monitor the situation as it evolves

Please note that this newsletter is just a data analysis of actual investor behavior and does not constitute investment advice in any form.

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