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Crypto selloff continues as investors remain bearish

By Robert Davis

17:39, 10 January 2022

NFT display on smartphone and screen
Crypto selloff continues as investors remain bearish – Photo: Shutterstock

Last week’s cryptocurrency selloff continued Monday as bitcoin briefly dropped below the $40,000 per unit mark by 14:30 UTC.

The move pushed the broader cryptocurrency market lower as well. Over the past week, other popular assets like ethereum, solana, and polkadot all lost more than 18% of their value.

The decline has also corresponded with a nearly $300bn (£221bn) decrease in the total market capitalisation, according to trading data from Binance’s CoinMarketCap.

The total crypto market cap currently stands at over $1.9trn, the lowest point since the end of September 2021, with bitcoin accounting for $778bn or 40% of the total.

Total Cryptocurrency Market CapTotal Cryptocurrency Market Cap – Chart: CoinMarketCap

Impact on digital asset products

Digital asset products have also felt the impact from bitcoin’s tumble as investors remain bearish. Last week saw a record $207m (£152.55m) of outflows from these products, according to the latest fund flows report from CoinShares.

Bitcoin’s outflows totalled $107m last week, which analyst James Butterfill said is likely “a direct response to the FOMC which revealed the US Federal Reserve’s concerns for rising inflation.” The FOMC, or Federal Open Market Committee, is the Federal Reserve’s policy making body. Minutes from the FOMC's December meeting indicated the US central bank intends to raise interest rates this year to combat rising inflation.

Ethereum’s outflows totalled $39m last week, bringing its five-week outflow total up to $200m, CoinShares said.

ETH/USD

3,494.82 Price
-0.220% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

XRP/USD

0.61 Price
+1.120% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BTC/USD

67,451.05 Price
-0.520% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

DOGE/USD

0.14 Price
-2.310% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

Investment products like the ProShares Bitcoin Strategy ETF and the Grayscale Bitcoin Trust have both felt the additional market pressures, falling by 12% and 15% over the last week, respectively.

According to ProShares’ website, a $10,000 investment in its bitcoin ETF from October 2021 is worth approximately $6,600 today.

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NFT bull market?

There are some signs of life still in the market, despite its sanguine stance over the past seven days.

According to a recent note from analyst Teng Yang, nonfungible token (NFT) transaction volumes on Ethereum jumped more than 70% last week, a level not seen since August 2021.

OpenSea captured more than 90% of the traffic following the platform’s announcement that it secured more than $300m in funding at a $15.5bn valuation.

Read more: AMC offers new NFT to shareholders

Markets in this article

BTC/USD
Bitcoin / USD
67451.05 USD
-354 -0.520%
ETH/USD
Ethereum / USD
3494.82 USD
-7.53 -0.220%
SOL/USD
Solana / USD
180.3434 USD
-3.0286 -1.660%
SOL/USD
Solana / USD
180.3434 USD
-3.0286 -1.660%

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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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