Bitcoin, like many other assets, charted its own path in May, moving out alongside major news events.
The digital currency experienced some notable volatility early in the month, climbing nearly 15% from $ 8,767.67 on May 1st to its intra-month high of $ 10,062.72 on May 7th, CoinDesk data shows.
However, the cryptocurrency quickly lost all of those gains, plummeting to less than $ 8,200 by May 9th, additional CoinDesk figures reveal.
In the remaining weeks, bitcoin recovered, repeatedly moving toward $ 10,000 but failing to break that level.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
These price fluctuations occurred during a month in which bitcoin experienced several notable events.
Paul Tudor Jones
Paul Tudor Jones, billionaire hedge fund manager, told clients earlier this month that he was buying bitcoin as an inflation hedge, according to Bloomberg.
Jones was one of the 400 richest people on the planet at the time of this writing, according to a recent estimate made by Forbes, which set its net worth north of $ 5 billion.
Stressing that governments have spent trillions of dollars on asset purchases and fiscal stimulus in recent months, they opted for bitcoin over other assets like commodities and Treasuries, Bloomberg reported.
Bitcoin experienced a halving on May 11th, when the mining prize was reduced from 12.5 bitcoin to 6.25 bitcoin.
As a result of this development, the rate at which a new supply of bitcoin is entering the system has been cut in half.
Although bitcoin did not get sharp gains after the halving, such an upside is probably on its way, said Tim Enneking, managing director of Digital Capital Management.
“The halving has never had much of an impact on the halving date,” he said.
“The big move from that is almost certainly coming.”
Big Bitcoin Transfer
Just over a week later, on May 20, Twitter is handling Whale Alert tweets that 40 units of bitcoin had been “transferred from a possible wallet owned by #Satoshi (dormant since 2009) to an unknown wallet,” an event that created significant visibility.
Client Call Goldman Sachs
Another development that caught the attention of crypto enthusiasts was the revelation that Goldman Sachs Investment Strategy Group plans to criticize bitcoin on a May 27 client call.
A slide deck for this event was released ahead of the call, and Michael Dudas, founder of The Block, tweets about it on May 22.
“Cryptocurrencies including Bitcoin are not Asset Class,” the investment bank wrote at the top of one slide, stressing that digital currencies do not generate earnings or cash flow.
“We believe that security whose appreciation depends primarily on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients,” noted the slide deck.
The statements made by Goldman Sachs have drawn widespread criticism from market participants.
Michael Moro, CEO of Genesis Global Trading and Genesis Capital, described the investment bank’s analysis as “elementary, to say the least,” claiming it was “not meaningful.”
He was not alone, as a weekly newsletter released by TradeBlock emphasizes:
“The criticisms of the investment bank have limited merit, given that various digital currencies actually generate ‘cash’ flows such as exchange tokens that often transfer value to investors in a similar way to dividends or buy-backs.”
Zac Prince, CEO and founder of startup Fintech also pushed BlockFi.
“The cryptocurrency market is largely driven by global retail investors,” he said.
“As a result, Goldman Sachs does not say it is not asset class or investment-worthy … does not immediately have a negative impact!”
Bitcoin ‘Unrelated’ Price Movements
Moro spoke to the way bitcoin markets behaved over the past month, noting their anomalous nature, but stressing that the digital currency on its own does not operate this way.
“The assessment that the price of bitcoin remains unconnected, even to the industry’s spicy news, is generally accurate,” he said.
“Overall, though, I feel that all financial markets are currently out of touch with news. Given everything that is happening in the world today, does it make sense that NASDAQ is flat for the year? ”Moro stressed.
While people and governments around the world have been dealing with a myriad of challenges, the turmoil that follows can be motivating more people to explore digital currencies, said Catherine Coley, CEO of Binance.US.
“Crypto access and awareness continues to expand while the non-digital world is becoming increasingly unstable,” he said.
“In the last month, we’ve seen more people outside of crypto start talking about crypto (for example, JK Rowling and 3-time US football gold medalist Christie Rampone),” he said Coley.
“As we are all stuck at home, more stimulus packages are being sent out through USD while digital currencies, like BTC, unconnected to the traditional banking system, seem more appealing as Americans look for additional ways to build their financial health and diversify their assets. . ”
Disclosure: I own a small amount of bitcoin, bitcoin cash, litecoin, ether and EOS.