The cryptocurrency market was hit hard again yesterday by a number of negative news, with bitcoin once falling to near $31,000. Compared to its all-time high of $64,000 in April, the price of bitcoin has fallen by more than 50%.
As of now, however, there is not much interest from traditional financial institutions to get in on the ground floor.
Ruffer, a London-based wealth management firm that made $1.1 billion in bitcoin, announced a few days ago that it had sold all of its bitcoin and said it was uncomfortable with the “speculative frenzy” in the cryptocurrency.
Ruffer has around £24 billion in assets under management. Over the past 12 years, Ruffer’s average return has been 20%, with bitcoin contributing one-sixth of that gain.
The firm invested in bitcoin when its price hovered at $15,000 last November, and made a total profit of more than $1.1 billion by the time it sold all of its bitcoins in April this year.
Duncan MacInnes, Ruffer’s fund manager, said the bitcoin market had previously overextended itself. Leveraged trading in cryptocurrencies, driven by debt, is increasing. Both the soaring price of bitcoin and the increasingly tightening regulatory environment have made holding bitcoin increasingly risky.
“It’s more appropriate to be on the sidelines at the moment, rather than in the middle of it,” MacInnes said.
Still, Ruffer said he would consider holding digital assets again as a hedge against inflation.
Antoni Trenchev, managing partner and co-founder of Nexo, a digital asset financial institution, believes the current regulatory posture will continue to put pressure on bitcoin prices, but that proper regulation will ultimately benefit the cryptocurrency market in the long run.
Mike McGlone, a Bloomberg industry research analyst, said
Yesterday’s decline could signal a new turning point. Bitcoin is currently supported at $30,000, having briefly fallen below $30,000 during last month’s plunge. A puncture of that price would likely trigger a new wave of selling.
However, Bitcoin’s Relative Strength Index (RSI) shows it is currently near oversold levels.
Vijay Ayyar, head of Asia-Pacific at cryptocurrency exchange Luno, said
The cryptocurrency market, which has more than tripled in market value over the past year, is now in a “cooling off” mode that could last for months or longer.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/why-arent-institutions-plunging-this-time-around/
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