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 .
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.
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
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.