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Crypto market rebounds after weekend sell-a-thon

By Robert Davis

22:36, 29 November 2021

Ethereum token in front of an exchange
Ethereum token in front of an exchange - Photo: Shutterstock

The cryptocurrency market recovered on Monday after the discovery of the Covid-19 Omicron variant catalysed a sell-off over the weekend.

By 21:30 UTC, the largest assets like Bitcoin and Ethereum were up 4.2% and 5.5%, respectively. Bitcoin reached a per-unit price of $58,247.00 while Ethereum stood just below its 24-hour high at $4,449.00.

Microstrategy purchase

One reason the crypto markets recovered on Monday was because software as a service company Microstrategy purchased 7,002 bitcoins for more than $414m during its fiscal fourth quarter.

That purchase brings the company’s total holdings up to more than 121,000 Bitcoins at an aggregate value of $3.5bn, according to a filing with the Securities and Exchange Commission.

CEO Michael Saylor has made purchasing Bitcoin a secondary aspect of his 32-year-old business. However, the company describes the asset on its website as one that can offer its holders financial freedom and the ability to “run their own hedge fund.”

Interest rates

Meanwhile, other analysts point to recent interest rate policy discussions as reasons for the crypto market’s volatility.

US Treasury bond yields have been creeping up since Federal Reserve chair Jerome Powell was renominated to the post last week.

The benchmark 10-year bond yield increased to 1.517% on Monday after falling sharply on 26 November because of the Omicron variant news.

BCH/USD

376.95 Price
-2.210% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

BTC/USD

63,861.20 Price
-0.060% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

XRP/USD

0.56 Price
-3.270% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

DOGE/USD

0.12 Price
+0.020% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

Joo Kian and Genevieve Yeoh, research analysts at Delphi Digital, wrote in a note published on 24 November that the increasing interest rates could make investors less hungry for risky investments like cryptocurrencies.

Digital asset inflows

James Butterfill, an investment strategist at CoinShares, wrote in a blog post that the in-and-outflows of certain assets suggests there is “continued appetite for digital assets.”

Last week, digital asset inflows totalled $306m, bringing November’s total up to $787m and year-to-date inflows up to a record $9.5bn, according to CoinShares trading data.

While Bitcoin and Ethereum continue to lead the pack in terms of total inflows, assets like Polkadot and Solana are leading, when their inflows are compared to their assets under management.

Bitcoin and Ethereum brought in a total inflow of $270.4m last week, representing 88% of the total inflows.

However, Polkadot and Solana brought in inflows that were 8.6% and 5.9% of their assets under management compared to the 0.5% and 0.12% inflows for Bitcoin and Ethereum, respectively.

Read more: Crypto markets fall on China debacle, stablecoin fears

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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