This week in crypto: 4/20 to 4/26
In this week’s report: Understanding Bitcoin’s ups and downs, ETH hits all-time high, and top NFL prospect signs crypto deal
Published on April 26, 2021
The big picture
Crypto markets continued to see major volatility for the third straight week, with Bitcoin capturing the bulk of the headlines. After plunging to a low of around $47,000 over the weekend, Bitcoin prices began to rebound as investors seemingly took advantage of a “buy the dip” opportunity and pushed the cryptocurrency as high as $54,000 today — the biggest single-day jump since February. Prices remained sharply up for the year, with Bitcoin maintaining around 80 percent of its growth since January. (Learn more about volatility.)
So what caused the drop? Some analysts pointed to the Biden administration’s announcement that it will seek to increase taxes on capital gains. But a factor that clearly accelerated the decline was the liquidation of leveraged Bitcoin bets, many of which were made by traders overseas who assumed that prices would continue to rise. When prices began to fall, as The Wall Street Journal reports, “many of those bets were automatically liquidated, adding more downward pressure on the price and leading to a vicious cycle of further liquidations.”
Meanwhile, Ethereum has seen a similarly wild ride. On April 22, the second-biggest cryptocurrency by market cap reached an all-time high of $2,650 only to lose over 20 percent of its value over the weekend. Prices finally stabilized around $2,500 on Monday. (See current crypto prices.)
Activity on the Ethereum network, which powers much of the booming world of decentralized finance (or DeFi), has also reached new all-time highs. On April 24th, the network had over 900,000 active addresses (a good indicator of a rising user base) surpassing all previous records.
Global search interest for crypto in general also reached a new all-time high this week.
Venmo offers crypto to 70 million users
In mainstream crypto-adoption news, Venmo has added functionality to allow the 70 million U.S. users of the payment app to buy, sell, and hold Bitcoin, Ethereum, Litecoin, and Bitcoin Cash — the same cryptocurrencies offered for limited trading by parent company PayPal. In rolling out the new feature, Venmo noted that more than 30 percent of its customers already trade crypto or equities, and that 20 percent only started investing in those markets during the COVID pandemic.
“Demand on the crypto side has been multiple-fold to what we initially expected,” Paypal CEO Dan Schulman told Time. “In the next five to 10 years, you’re going to see more change in the financial system than you have over the past 10 to 20 years.
(In related news: Time isn’t just interested in crypto from a journalistic perspective. The nearly century-old news magazine said it will start to hold Bitcoin on its balance sheet and accept crypto for subscription payments.)
Uniswap hits $10 billion in weekly trading volume
Uniswap, a decentralized exchange (or DEX) that allows users anywhere in the world to trade crypto without an intermediary, reached an all-time trading-volume high this week of $10 billion. Uniswap is the most popular DEX running on the Ethereum blockchain, and is one of DeFi’s biggest protocols. UNI, the governance token used to vote on key protocol changes, is currently the fourth largest cryptocurrency by market cap on Coinbase — with a total value of more than $18 billion.
One issue users of all Ethereum-based apps including Uniswap have increasingly faced are rising transaction fees (also called gas) — making it expensive to use the network. Multiple solutions to this issue are in the works, from the long-planned transition to the ETH2 blockchain (scheduled for sometime in 2022) to the nearer-term rollout of a “Layer 2” scaling solution called Optimism later this year. Uniswap developers are confident that Optimism will allow for significantly cheaper Uniswap transactions.
Canada continues to lead in crypto ETFs
One likely driver of Ethereum’s momentum was this week’s launch of three ETH exchange-traded funds (or ETFs) in Canada, which have already drawn over $138 million in trading volume. ETFs are similar to mutual funds, and generally track the price of an asset or basket of assets (like the S&P 500). Several Canadian Bitcoin ETFs launched earlier this year and have become hugely popular — with over $1 billion in assets under management already. Canada’s largest digital-asset manager, 3iQ (with around $1.5 billion under management) announced plans to raise more than $200 million by listing its BTC ETF on the Nasdaq Dubai exchange.
U.S. investors continue to hope for the launch of crypto ETFs here. A number of such products have submitted applications to the SEC in recent months. Learn more about what ETFs are and how they work.
NFL players make crypto deals, Norway tests CBDC
Clemson quarterback Trevor Lawrence, the overwhelming favorite to become the NFL’s top draft pick, signed an endorsement deal with crypto firm Blockfolio and had his league signing bonus paid in bitcoin.
He’s not the only player to make crypto moves this week. Kansas City Chiefs tight end Sean Culkin announced that he would become the first NFL player to have his entire salary paid in bitcoin.
In 2021, Morgan Stanley began offering Bitcoin investing to wealthy clients. Regulatory filings show that the Bitcoin fund has raised nearly $30 million in its first two weeks. JPMorgan now has plans to offer a similar investment opportunity to wealthy clients.
Norway will begin testing its central bank digital currency (or CBDC) after four years of research. As Business Insider reports: “CBDCs are digital currencies backed by their respective countries aimed at increasing payment efficiency at a lower cost compared to fiat currencies. Typically, these are powered by blockchain technology, a secure system of recording that is almost impossible to hack.”
AllianceBernstein, a fund manager with $697 billion assets under management as of March 2021, shared research exploring Bitcoin’s environmental, social, and governance questions.
Wondering which cryptocurrencies would have provided the biggest return on investment (or ROI) over the last week, month, and year? Our weekly chart shows how you would have done: