With the great Evergrande crisis involved as an added determining factor, the saying that “it sparkles, but it doesn’t rain” can be applied to the price of large cryptocurrencies. In reality, China is continuing a logical correction after the great rally in July and August which, since the veto, has not reached the 10% level. And the same happens in the case of the second most liquid cryptocurrency, ethereum, which also holds the pull.
“It may be a little early to make final valuations, but I think that cryptocurrency investors are doing a maturity exercise. Sales were important the day the veto was decreed, but then they have been losing steam, as can be seen in the figures daily trading of bitcoin and ethereum. The thing about China is a stick, but to a certain extent it was expected, “says a portfolio manager of an Anglo-Saxon firm.
Indeed, for these assets always at the center of the controversy, the Chinese veto is a litmus test that at the moment they are passing with a note about to enter the last quarter of a year in which they have once again filled the pocket of the investors. When the month of October 2021 began, bitcoin was browsing levels slightly above $ 11,000 and in March it had surpassed 60,000 after an astonishing run.
Since then and after a correction as powerful as it is healthy, he has been searching for the balance point. What is evident is that the cryptocurrency market is maturing or, in other words, gaining strength in the face of shocks. Now, and at least for now, the impact of the Chinese veto has not had even half that of the decision of the second largest economy in the world in the spring to prohibit its banks from providing cryptocurrency services to its customers.
Strong market punishment
So the market punished virtual currencies with a drop of more than 20% generated at full speed. And there are many episodes of strong declines caused by a ‘tweet’ – there are, as an example, those of Elon Musk, capable of moving the price by 10% – or a more or less malicious rumor. Cryptocurrencies are beginning to overcome all this, which without leaving behind a great – at times brutal – volatility, are no longer so easy to handle.
“The big difference is that there are more and more institutional investors with significant positions in cryptocurrencies, and that gives them more and more stability,” they point out in a large ‘broker’ of digital currencies. The reality is that, for many large managers, large cryptocurrencies are already considered a great investment alternative. A high-risk alternative, but one that should have a place in portfolios in its proper proportion.
The great paradox is that while states increase their pressure on ‘cryptos’ – the United States and Europe prepare restrictive rules of the game – more and more companies and fund managers are giving the ‘placet’ to these assets. This is the case of a heavyweight like BlackRock, which already qualifies bitcoin as a potential alternative currency. Its funds already give entry to this cryptocurrency, a decisive step for the global financial industry.
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