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(Bloomberg) — Bitcoin seems to be stuck in a rut: Prices are flagging, online searches for the largest cryptocurrency and other digital assets have fallen off, fewer and fewer coins are changing hands, and crypto-related funds are seeing massive outflows.
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In fact, a UBS analysis of around 160 products shows April is set to see the largest crypto-ETF outflows on record, with investors having pulled more than $417 million so far this month. A Bitcoin product from Purpose alone has seen more than $220 million come out since the end of March.
In other words, the latest bout of crypto fever seems to be breaking, much as it did after the boom and bust of 2017 and 2018. The space is also no longer notching the huge influx of new investors that it had seen in the past two years.
“The vast majority of the population seem to have little interest in crypto because it’s too complicated, too volatile, too strange,” James Malcolm, head of foreign exchange and crypto research at UBS, said by phone. “So in a sense, we’re stuck at the moment.”
Cryptocurrencies, just like other assets considered to be riskier or more volatile, have sold off this year as central banks around the world raise interest rates to fight persistently hot inflation. Bitcoin peaked near $69,000 in November before a selloff commenced, and it hasn’t been able to recover. It’s down roughly 40% since reaching that record.
Aggregated trading volumes across crypto exchanges like Coinbase and Kraken have also fallen off as interest remains muted and the flow of new investors dries up. Meanwhile, Google searches for the word “Bitcoin” have also declined, and social-media activity via the Crypto Subreddit — as measured by things like comments and posts per day — is down from mid-2021 levels.
So what needs to happen for interest to perk up again? UBS’s Malcolm says industry participants want greater regulatory clarity, something that might still be a long way off. If prices started to rally again, investors could return.
“It either needs new people or it needs existing players to dedicate an increasingly large slice of resources to the industry,” he said.
One reason Bitcoin’s been stuck in a rut is that a lot of the coin’s supply has been moving into long-term-holder accounts. Analysts at Blockforce Capital, who used Glassnode data, cite the “massive amount” of the coin that’s been coming off exchanges recently — that gets taken “offline” and put into cold storage, meaning it’s not likely to be traded. The number of illiquid coins is not just growing, but the rate at which it’s doing so is accelerating too.
But the data could be hiding a silver lining. “We have only seen this level of outflow from exchanges four previous times since the start of 2018,” the analysts wrote in a note. “Three of those instances correlated with a sharp upward movement in price not too long after.”
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The deal comes just weeks after controversy surrounding one of Gem’s pseudonymous developers.
OpenSea, the largest NFT marketplace, acquired NFT aggregator Gem.xyz (Gem) to "better serve" its more experienced users, the company said in a blog post. The deal, which comes a few months after OpenSea bought DeFi wallet startup Dharma Labs, will allow OpenSea to "learn from Gem’s expertise and intuition about the advanced NFT community," the company said. The news comes about two weeks after Gem removed Josh Thompson, a core developer and former shareholder at the company, from its team over allegations from several individuals that Thomson had engaged in rape, sexual harassment and the grooming of minors, as BuzzFeed News first reported.
The central banker compared crypto market dynamics to the 2008 financial crisis and called for extra regulation and taxes.
Bitcoin price settled below the $39,150 support, Ethereum’s ether is struggling below $2,915, and DOGE spiked higher after rumors of Elon Musk buying Twitter.
Federal prosecutors on Monday announced charges against two Europeans who allegedly conspired with Virgil Griffith to help North Korea use crypto to evade sanctions. Alejandro Cao de Benos, a Spainard, and British citizen Christopher Emms provided information about cryptocurrency to attendees of the 2019 Pyongyang Blockchain and Cryptocurrency Conference, according to a press release from the U.S. attorney's office of the Southern District of New York. The charges follow Ethereum developer Griffith’s sentencing to five years in prison earlier this month and come as the U.S. government is paying more attention to North Korea's brazen alleged hacks of crypto projects worldwide.
The meme cryptocurrency often reacts to moves from the Tesla billionaire.
With bitcoin’s price still around the $38K mark, the larger crypto market was painted in red as top tokens saw losses on their daily price chart.
Dogecoin’s presence in the DeFi space is yet to appear, but according to Elon Musk, it doesn’t need any support from Ethereum to do so.
The cryptocurrency most associated with Tesla (ticker: TSLA) CEO Elon Musk was flying on Monday, with dogecoin rising 6% as and the rest of the digital asset space notched losses. Holders of the coin may want to thank Musk’s ambitions to buy Twitter (TWTR). Musk met with Twitter leadership over the weekend to discuss his proposal to buy the company for $54.20 per share, and progress has been made to the point where a deal could be completed Monday, The Wall Street Journal reported.
CRYPTO UPDATE Most of the largest cryptocurrencies were down during morning trading on Monday, with Ripple (XRPUSD) seeing the biggest move, tumbling 4.86% to 66 cents. Seven additional currencies posted decreases Monday.
Bitcoin and other digital assets have shown themselves to be correlated with technology stocks. Earnings this week from Big Tech could move the needle.
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