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24.05.2021 – Statement

Statemen Market Development

Statement about the recent correction of bitcoin price

Zug, Switzerland — FiCAS AG sees the most recent correction as the result of the combination of a series of headlines with negative influence on prices and a context of new all-time high prices reached in a relatively short period of time with a material role played by leverage. FiCAS believes that despite the recent correction and ongoing downward pressure, the underlying institutional adoption-led upward trend related to bitcoin and more broadly to selected cryptocurrencies is intact. It is however likely that the current downward pressure and volatility may persist for a while, driven by heightened regulatory uncertainty and erratic retail investors behavior. In this connection, FiCAS would welcome a regulatory upgrade concerning cryptomarket infrastructure and conduct as a way to support the development of institutional-grade cryptofinance.

Recently, the USD price of bitcoin went from an all-time high level of USD 64’705 on 14 April 2021 to USD 31’663 on 17 May 20211 1. This correction corresponds to a decrease of -51.1% from the all-time high price. Volatility and downward pressure have continued in the following days.

The recent correction was bitcoin’s sixth major historical correction from all-time highs. Five other bigger corrections, ranging from -86.9% to -56.3%, affected the USD price of bitcoin in the past and, overall, bitcoin price experienced 15 corrections from its all-time high price levels during its lifetime, most of them ranging between -29.6% and -49.9%  2.

FiCAS believes that the most recent correction has resulted from the combination of a concentration of headlines with negative price influence and a context characterized by new all-time high prices, reached in a relatively short period of time and with a material role played by leverage.

Extreme corrections are more likely to occur after a prolonged period of a substantial increase in value. Bitcoin went from USD 6’845 on 14 April 2020 to USD 64’705 on 14 April 2021 – an increase of 845%.

An increased use of leverage by means of derivatives contributed, particularly from January 2021 on, to this significant appreciation. The total number of outstanding derivative contracts reached a level of USD 27.7bn on 13 April 2021. With margin calls at work, liquidations reached a level of USD 7.1bn on 18 May 2021  3 .

The last two weeks have witnessed a series of news and events with an immediate negative impact on cryptocurrency prices.

  • On 13 May 2021 Elon Musk, Tesla’s CEO, tweeted that the electric-car maker would not accept payments in bitcoin. The alleged reason was concerns regarding the consumption of non-renewable resources associated with the energy needed to mine bitcoins. This decision was taken only weeks after Musk announced that Tesla would be buyable with bitcoin and a couple of months after Tesla’s treasury invested a substantial amount of cash in bitcoin.
  • On 13 May 2021, Tether, the major stablecoin (USD-backed) providing liquidity to the cryptocurrencies market, disclosed the as of 31 March 2021 only 3.8% of the over USD 40 bn Tethers in circulation were backed by cash (that is USD). The rest was backed by cash equivalents, short-term deposits, commercial paper, secured loans, corporate bonds, funds, precious metals, and other investments. This was the first disclosure of the reserve investment breakdown and surprised market participants on the negative side.
  • On 18 May 2021, China reiterated and reinforced the ban on banks and payment firms from providing services related to cryptocurrency transactions. Beijing had made trading in cryptocurrency illegal in 2019, but people were still able to transact online. Now payment firms including online firm are prohibited from facilitating transactions in cryptocurrencies.
  • On 19 May 2021, China informed that its Mongolia Autonomous Region would ban crypto mining and clean up and shut down virtual currency mining. On May 21, the Financial Stability and Development Committee of the State Council resolved to crack down on bitcoin mining and improper trading behavior as part of the effort to control financial risks.
  • On 20 May 2021, the U.S. Treasury announced the requirement for businesses that receive crypto assets with a fair market value of more than USD 10’000 to report transactions to the IRS. The OCC informed about talks with the U.S. FED and the FDIC aimed to set up a financial regulatory interagency policy team focused on cryptocurrencies and pursuing a clearer regulatory framework for the cryptocurrency industry.

FiCAS believes that despite the recent correction and ongoing downward pressure, the underlying upward trend related to bitcoin price and more broadly to the prices of selected altcoins is intact. This trend is driven by the institutional adoption in the context of a digital evolution in which cryptofinance and cryptoassets play a major role.

There is no evidence of any significant reduction so far in the bitcoin treasury levels of the institutional players that have built holdings during the last 6-7 months. On the contrary, there is evidence supporting increases in holdings from already invested institutionals during the last days.

FiCAS thinks that the current downward pressure and volatility may persist for a while, driven by heightened regulatory uncertainty. A recent study by the ECB 4 shows that crypto-assets do not currently pose financial stability risks. The ongoing regulatory work is consequently likely to focus on strengthening investors protection aspects.

FiCAS would welcome regulatory clarity at the level of market infrastructure (operations and governance of cryptoexchanges), market conduct (influence of individual headlines on prices), and suitability requirements for retail investors. Regulatory clarity should build on the supportive stance traditionally taken by the large majority of the regulators globally, ensuring that financial innovations deliver sustainable benefits to consumers, investors, and the broad society.

FiCAS also believes that the alt-season will resume following regulatory clarity and lower bitcoin volatility / renewed bitcoin directional stability. Many alt-coins have reached important specific milestones over the last few months that justify higher valuations.

FiCAS looks forward to continuing offering its seasoned cryptocurrencies market know-how and analytical tools through its unique actively-managed Exchange-traded Product – BTCA. FiCAS pursues an investment strategy predicated over the mid-term (3-5 years). Not least due to overall weak market infrastructure in times of stress, FiCAS does not trade volatility in the context of price corrections if it believes that such correction and volatility is not affecting the fundamental trend.

As additional resources, our investors and interested parties are invited to consult FiCAS House Market View – updated quarterly. This is included as an Appendix to FiCAS Investment Policy (available in this link). FiCAS comments further on its trading activity in the monthly performance reports (here).

Please feel free to ask us questions anytime by sending an email at

FiCAS Team


This statement is not an investment advice. This statement should not serve as a basis for investments decision-making in the product of FiCAS. Any interested investor should study the prospectus before investing in the FiCAS product ( Any past performance mentioned in the statement is not necessarily an indication of future performance.

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