Jakarta, CNBC Indonesia – Cryptocurrency prices have been sliding this week, while other hedging assets have strengthened, such as US government bonds and gold, indicating that investors are starting to abandon digital hedging assets.
The Bitwise 10 Index, which records price movements of 10 major cryptocurrencies in the world, dropped 14.4% in a week on Friday trading (23/4/2021) to 77.5. On Friday last week, the index was at the level of 90.5.
In the Bitwise index, bitcoin accounts for 72.8% of its net asset value followed by etherum at 20.9%. The remaining 12% comes from other cryptocurrencies, namely Litecoin, Bitcoin Cash, Chainlink, Stellar, Uniswap, Filecoin, AAVE, and Cosmos.
Bitcoin price itself fell 15.1% from US $ 60,863.58 on Saturday last week, to US $ 49,254.75 this afternoon (17:00 WIB). This means that this week the price of this most popular cryptocurrency has dropped US $ 11,608 / chip, or the equivalent of Rp. 168.5 million.
This price position is further away from its all-time high on March 13, 2021, amounting to US $ 61,606.06 (IDR 895.6 million). Meanwhile, Ethereum also fell 5.2% to the level of US $ 2,234.56 per unit, after last Saturday it was at the level of US $ 2,392.52 / unit.
Cryptocurrency corrections were in the opposite direction of the stronger 10-year US government bond prices, where the yield (which moved in the opposite direction of the price) continued to weaken to the 1.5% level, leaving this year’s high of 1.77%.
Market players are buying up US government bonds amid the increase in Covid-19 cases in several countries, especially India and Europe, to protect the risk of delayed world economic recovery.
On the other hand, world gold prices also rose 0.64% this week to the level of US $ 1,787.75 per troy ounce, compared to last week’s position of US $ 1,776.31 / troy ounce.
Investors originally believed that cryptocurrencies were an alternative asset to hedge (hedging) their wealth from the scour of inflation. However, the volatility is very high due to limited supply and the lack of a fundamental basis on which prices fluctuate.
However, this week’s correction proves that the position of the digital currency has not yet gone hand in hand with natural hedging assets that have real underlying assets.
CNBC INDONESIA RESEARCH TEAM
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