January 2021 – Market Commentary

2021 kicked off with a boom as prices rocketed upward in the first week of the year with Bitcoin hitting a new all-time high of $40.3k on January 8th. Ethereum followed shortly after and printed a new all-time high of $1,413, eclipsing the previous high that was set three years ago.

While the market ended in solidly green territory, the monthly numbers hide the considerable instability of the market. During the month of January, the market experienced a rapid 40% drawdown followed by a quick 40% recovery followed yet again by a 30% drawdown before clawing back from the lows.

In November, we described that the ball was only beginning to roll on this bull rally and we remain optimistic about short-term horizon trades. However, as the broader financial markets extend the 13-year up-cycle, the big question we find ourselves asking — is the price of cryptocurrencies a function of broader speculation and froth or are they a genuinely uncorrelated phenomena that will withstand the downward pressure of a financial recession.