It’s been a dramatic week in the world of crypto with Bitcoin taking centre stage in major stories. Bitcoin’s dip by around $30k was the largest crypto capitulation event ever recorded; HSBC decides not to offer Bitcoin and crypto products; Greenpeace scraps its Bitcoin donations channel, and Bank of England distances itself from cryptocurrencies.
Bitcoin’s $30k plummet was the largest crypto capitulation event recorded
According to data from a recent Glassnode report , Bitcoin’s dramatic losses last week was the biggest crypto capitulation event ever recorded, in terms of realised losses by Bitcoin investors. The report explained, “The magnitude of realised losses on-chain this week has, eclipsed all previous capitulation events, including March 2020, Nov 2018 and the sell-off that ended the last bull market in Jan-Feb 2018.”
With Bitcoin’s most recent crash, the number of profitable Bitcoin addresses fell to 76%, with 24% of Bitcoin addresses experiencing remarkable losses. The report also warned investors that Bitcoin would continue to be sold by the following categories of holders that are likely to offload their holdings:
- BTC holders who bought in the last 3 months and are at a loss;
- BTC holders who want to cash out a profit as they feel BTC has topped; and
- BTC miners who are forced to sell to cover operational costs and/or if the recent China ban has affected their BTC mining.
Bitcoin, in the short term, has been fighting back in an attempt to recapture the $40k mark with it trading at $38,600 at the time of writing.
HSBC decides not to offer Bitcoin and crypto products
HSBC has made the decision not to offer Bitcoin or cryptocurrency investment products to its customers. The recent swing in cryptocurrency value has reinforced HSBC’s negative stance towards crypto assets. CEO of HSBC, Noel Quin, said that the bank had no intention of operating a crypto trading desk or offering crypto-related investment products to its clients due to its volatile nature.
This announcement comes despite a growing trend for major financial institutions announcing crypto investment opportunities for their clients.
Earlier this month, Wells Fargo announced that major clients would be eligible for crypto investment products, while Morgan Stanley and Goldman Sachs are proceeding with their roll-out of institutional-grade Bitcoin funds for their clients.
Giving his opinion on HSBC’s position regarding Bitcoin and cryptocurrencies, Quin said, “I view Bitcoin as more of an asset class than a payments vehicle, with very difficult questions about how to value it on the balance sheet of clients because it is so volatile.” Quin did, however, show support for central bank digital currencies as they would be a simple and effective cross-border payment solution.
Greenpeace scraps its Bitcoin donations channel
Greenpeace has made the decision to scrap its Bitcoin donation channel amidst the concern over its excessive energy consumption. The Bitcoin donation channel was implemented in 2014 as a growing number of donors wanted to contribute with crypto. Greenpeace has since decided to cancel the facility as they find crypto mining is no longer tenable in this era of rapid global warming.
Greenpeace’s main concerns centred on Bitcoin’s skyrocketing energy consumption due to the price of Bitcoin shooting up. Travis Nichols, Greenpeace USA media director, mentioned that they had looked at the wider perspective as Bitcoin’s environmental profile came to light. He said, “The huge and ever-growing amount of energy needed to run Bitcoin is largely down to the particular technology used to maintain this digital currency, but it also points to a wider challenge for the future of the internet. As web services grow and become more complex, the demand for computing power will continue to go up over the next few years, and that will require much more energy.”
Bank of England distances itself from cryptocurrencies
The governor of the Bank of England, Andrew Bailey, has expressed his scepticism over cryptocurrencies and digital assets describing them as a danger to the public. In an address to the British parliament’s Treasury select committee, he said, “I’m sceptical about crypto-assets, frankly, because they’re dangerous and there’s a huge enthusiasm out there.”
Earlier this year, Bailey was firm in his views that cryptocurrencies do not have the structure that is likely to work as a payment alternative over the long term. He also reiterated his stance at a World Economic Forum event where he highlighted privacy concerns of cryptocurrencies describing that “it is an underestimated challenge of creating a digital currency.”
Bailey’s statements, however, are a slight deviation from two key executives at the Bank of England who publicly acknowledged the possibility of a state-run digital currency.