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LGT Navigator: Cryptocurrencies in free fall

May 20, 2021

It's been a rough week for cryptocurrencies so far. The situation peaked on Wednesday when there were outages on the two major digital currency trading venues, Binance and Coinbase. Following interruptions in order processing, market participants witnessed significant price drops.

Cryptocurrencies

The skyrocketing of digital payments is once again taking an abrupt pause. Across the board, cryptocurrencies have lost value since Monday (Bitcoin -15%, Ethereum -26%, Ripple -22%, Dogecoin -36% since the beginning of the week). Fueling this week's volatility was an announcement by Space-X founder and Tesla CEO Elon Musk that fossil fuel consumption in running Bitcoin's decentralized infrastructure is high and that his electric cars cannot be purchased with Bitcoin as of now, contrary to an earlier promise. The People's Bank of China has followed suit and made its aversion to cryptocurrencies known, once again. The large fluctuations in value on Wednesday are nevertheless for the most part difficult to explain. However, since the beginning of the year, cryptocurrencies still have a respectable increase in value (Bitcoin +37%, Ethereum +257%, Ripple +425%, Dogecoin +7315% since the beginning of the week).

Japan's exports continue to recover

In an environment of rising global demand for cars and electronics, hopes are rising that a trade upswing will put Japan back on the growth track. Japan's exports recorded their strongest monthly growth since 2010 in April. Survey data on consumer confidence also reached a two-year high in May. For Japan, much depends on demand in the two key markets of the US and China, where the hunger for goods is slowly picking up again after the disastrous previous year. According to officials, however, a recovery of the overall economy will require a recovery of the service sector, which is currently fully dependent on the progress made with vaccinations.

US Fed: First advances on tapering discussion

Some officials of the US Federal Reserve are open to debating a reduction of the massive bond purchases. This would put the topic of tapering on the table earlier than expected. According to Bloomberg, some officials suggested that if the economy is continuing to make rapid progress towards the Fed's goals, it would be appropriate to begin the discussion of adusting the pace of the large asset purchases. Other participants noted that it would probably take some time until the committee's price stability and maximum-employment goals are met. The next Fed meeting is on June 15-16.

 

 

Economic Indicators May 20

MEZ Country Indicator Last period
01:50 JP Trade balance (April)
14:30 US Philly Fed Index (May) +50.2

 

Earnings Calender May 20

Country Company Period
NL NN Group Q1
US Ralph Lauren Q1

 

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

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