As of now, the price of bitcoin has decreased by 23.4% from its peak of ,737, reached on March 14, 2024, about four months ago. Metrics indicate that this is the longest period in bitcoin’s history without a 25% decline during a bull market. In contrast, both the 2017 and 2021 bull markets experienced several […]
Bitcoin News
From Peak to Present: GBTC’s Bitcoin Holdings Decrease by 266,827 BTC in 71 Days
As of March 22, the bitcoin holdings of Grayscale’s Bitcoin Trust (GBTC) have diminished by 27,917.37 compared to its status three days prior, now amounting to 350,252 bitcoin valued at approximately .2 billion. Since evolving into an exchange-traded fund (ETF) listed on public exchanges, GBTC has shed billions in bitcoin over the preceding 71 days. […]
Bitcoin News
A Crypto Holiday Special With Blofin: Past, Present, And Future
Another year, another Crypto Holiday special from our team at NewsBTC. In the coming week, we’ll be unpacking 2023, its downs and ups, to reveal what the next months could bring for crypto and DeFi investors.
Like last year, we paid homage to Charles Dicke’s classic “A Christmas Carol” and gathered a group of experts to discuss the crypto market’s past, present, and future. In that way, our readers might discover clues that will allow them to transverse 2024 and its potential trends.
Crypto Holiday With Blofin: A Deep Dive Into 2024
We wrapped up this Holiday Special with crypto educational and investment firm Blofin. In our 2022 interview, Blofin spoke about the fallout created by FTX, Three Arrows Capital (3AC) collapse, and Terra (LUNA). At the same time, the firm predicted a return from the ashes for Bitcoin and the crypto market. The resurrection seems well underway, with Bitcoin surpassing the ,000 mark. This is what they told us:
Q: In light of the prolonged bearish trends observed in 2022 and 2023, how do these periods compare to previous downturns in severity and impact? With Bitcoin now crossing the ,000 threshold, does this signify a conclusive end to the bear market, or are there potential market twists investors should brace for?
Blofin:
Compared to previous crypto recessions, the 2022-2023 bear market appears milder. Unlike previous cycles, in the last bull market, the widespread use of stablecoins and the entry of massive traditional institutions brought more than 0 billion in cash liquidity to the crypto market, and most of the cash liquidity did not leave the crypto market due to a series of events in 2022.
Even in Mar 2023, when investors’ macro expectations were the most pessimistic, and in 2023Q3, when liquidity bottomed out, the crypto market still had no less than 0 billion in cash liquidity in the form of stablecoins, which provides sufficient support and risk resistance for BTC, ETH and altcoins.
Similarly, due to abundant cash liquidity, in the bear market of 2022-2023, we did not experience a “liquidity dryness” situation similar to March 2020 and May 2021. In 2023, with the gradual recovery of the crypto market, liquidity risks were significantly reduced compared to 2022.
The only troubling thing is that in the summer and autumn of 2023, risk-free returns of more than 5% have caused investors to focus more on the money market and brought about the lowest volatility in the crypto market since 2019.
However, low volatility does not indicate a recession. The performance of the crypto market in the fourth 2023Q4 proves that more investors are actually holding on to the sidelines. They are not leaving the crypto market but are waiting for the right time to enter.
Currently, the total market cap of the crypto market has recovered to more than 55% of its previous peak. It can be considered that the crypto market has emerged from the bear market cycle, but the current stage should be called a “technical bull market” rather than a “real bull market.”
Again, let’s start our explanation from a cash liquidity perspective. Although the price of BTC has reached k once, the size of cash liquidity in the entire crypto market has only rebounded slightly, reaching around 5b. 5b in cash supports over .6T in total crypto market cap, implying an overall leverage ratio of over 12x.
Additionally, many tokens have seen significant increases in their annualized funding rates, even exceeding 70%. High overall leverage and high funding rates mean that speculative sentiment has as much impact on the crypto market as improving fundamentals. However, the higher the leverage ratio, the lower the investors’ risk tolerance, and the high financing costs are difficult to sustain in the long term. Any bad news could trigger deleveraging and cause massive liquidations.
Furthermore, real improvements in liquidity are yet to come. The current federal funds rate remains at 5.5%. In the interest rate market, traders expect the first rate cut by the Federal Reserve to occur no earlier than March and the European Central Bank and Bank of England to cut interest rates for the first time no earlier than May. At the same time, central bank officials from various countries have repeatedly emphasized that interest rate cuts “depend on the data” and “will not happen soon.”
Therefore, when liquidity levels have not really improved, the recovery and rebound of the crypto market are gratifying, but the “leverage-based” recovery is significantly related to investors’ financing costs and risk tolerance, and the potential callback risk is relatively high. In fact, in the options market, investors have begun to accumulate put options after experiencing a rise in December to deal with the risk of any possible pullback after the start of 2024.
Q: Right now, we are seeing Bitcoin reach new highs. Do you think we are in the early days of a full bull run? What has changed in the market that enabled the current price action; is it the Bitcoin spot ETF or the US Fed hinting at a loser policy or the upcoming Halving? What is the big narrative that will go on in 2024?
Blofin:
As stated above, we are still some way away from the early stages of a full-blown bull market. “Technical bull market” better describes the current market status. This round of technical bull market started with improved expectations: the spot Bitcoin ETF narrative triggered investors’ expectations for the return of funds to the crypto market, while the peak of the federal funds rate and expectations for an interest rate cut next year reflected the improvement at the macro environment level.
In addition, some funds from traditional markets have tried to be the “early birds” and make early arrangements in the crypto market. These are all important reasons why BTC’s price is back above k.
However, we believe that changes in the macro environment are the most important influencing elements among the above factors. The arrival of expectations of interest rate cuts has allowed investors to see the dawn of a return to the bull market in risk assets. It is not hard to find that in November and December, not only Bitcoin experienced a sharp rise, but Nasdaq, the Dow Jones Index, and gold all hit all-time highs. This pattern typically occurs at or near the end of each economic cycle.
The beginning and end of a cycle can significantly impact asset pricing. At the beginning of a cycle, investors typically convert their risky assets into cash or treasury bonds. When the cycle ends, investors will take cash liquidity back to the market and buy risk-free assets without distinction. Risk assets typically experience a “widespread and significant” rise at this time. The above situation is what we have experienced in 2023Q4.
As for the Bitcoin halving, we prefer that the positive effects it brings result from an improvement in the macro environment rather than the result of the “halving.” Bitcoin had not become a mainstream asset with institutional acceptance when the first and second halvings occurred. However, after 2021, as the market microstructure changes, institutions have gained sufficient influence over Bitcoin, and each halving coincides with the economic cycle to a higher degree.
In 2024, we will witness the end of the tightening cycle and the beginning of a new easing cycle. But compared with every previous cycle change, this cycle change may be relatively stable. Although the period of high inflation is over, inflation is still “one step away” from returning to the target range.
Therefore, all major central banks will avoid releasing liquidity too quickly and be wary of the economy overheating again. For the crypto market, a solid liquidity release will lead to a mild bull run. Perhaps it is difficult for us to have the opportunity to see a bull market similar to that in 2021, but the new bull market will last relatively longer. More new chances will also emerge with the participation of more new investors and the emergence of new narratives.
Q: Last year, we spoke about the most resilient sectors during the Crypto Winter. Which sectors and coins will likely benefit from a new Bull Run? We are seeing the Solana ecosystem bloom along with the NFT market; what trends could benefit in the coming months?
Blofin:
What is certain is that exchanges (whether CEX or DEX) are the first beneficiaries when the bull market returns. As the trading volume and user activities begin to rebound again, it can be expected that their income (including the exchange’s fee income, token listing income, etc.) will increase significantly, and the performance of the exchange tokens may also benefit from this.
At the same time, infrastructure related to transactions and capital circulation will also benefit from the new bull market, such as public chains and Layer-2. When liquidity returns to the crypto market, crypto infrastructure is an indispensable part: liquidity must first enter the public chain before it can be transferred to various projects and underlying tokens.
In the last bull market, the congestion and high gas cost of the Ethereum network were criticized by many users, which became an opportunity for the emergence and development of Layer-2 and also promoted the development and growth of many non-Ethereum public chains, while Solana and Avalanche are some of the biggest beneficiaries.
Therefore, with the arrival of a new bull market, more usage scenarios and possibilities for Layer 2 and non-Ethereum public chains will be discovered. Ethereum will also naturally not be far behind; we may witness a new boom in public chain ecosystems and tokens in 2024.
In addition, as an exploration of the latest applications of BTC, the development of BRC-20 cannot be ignored. As a new token issuance standard based on the BTC network that emerged in 2023, BRC-20 allows users to deploy standardized contracts or mint NFTs based on the BTC network, providing new narratives and use cases for the oldest and most mature public chain.
With the return of liquidity, the exploration and development of BRC-20-related applications may gradually begin, and together with other public chain ecosystems, they will make great progress in the new “moderate but long-term” bull market.
Cover image from Unsplash, chart from Tradingview
A Crypto Christmas Special With Sheraz Ahmed: Past, Present, And Future
Another year, another Crypto Christmas special for our team at NewsBTC. In the coming week, we’ll be unpacking 2023, its downs and ups, to reveal what the next months could bring for crypto and DeFi investors.
Related Reading: A Crypto Christmas Special With Jlabs Digital: Past, Present, And Future
Like last year, we paid homage to Charles Dicke’s classic “A Christmas Carol” and gathered a group of experts to discuss the crypto market’s past, present, and future. In that way, our readers might discover clues that will allow them to transverse 2024 and its potential trends.
Crypto Christmas With STORM: Bitcoin ETF Should Be Out Of Your Wishlist?
For today’s issue, our team got to chat with Sheraz Ahmed, Managing Partner at blockchain solutions provider STORM and founder of Decentral House. Ahmed has been present at some of the most important crypto events in 2023 and is constantly speaking with founders, organizations, and relevant actors within and outside the nascent sector.
Thus, Ahmed has a unique perspective on the industry, its blindspots, and possible catalyzers. During the interview, we talked about the downside of approving a Bitcoin spot Exchange Traded Fund (ETF) in the United States and why the space might be unprepared for a new bull cycle. This is what he told us.
Q: Our team has coincided with you in several crypto events this year; where do you think most of these events coincide? And what do you believe has been overlooked during 2023, a narrative, a project, something people missed as the industry enters another cycle?
Switzerland, Europe, Dubai, Singapore, and Rio (de Janeiro). I do believe that we are too early for the next cycle. The broken models of the last bull run are yet to be rebuilt. Infrastructure has improved, custody, wallets, exchanges, and stablecoins, but the business models for Dapps (Decentralized Applications) have not evolved.
I fear that we enter into another vaporware cycle and, at best have to wait 4 more years for real use cases/adoption or risk burning ourselves completely with shitcoins and scams.
Q: As Crypto enters a new cycle, what’s different about the industry when you compare it to early 2021 and 2017? Where can investors see the growth? Is it in the players joining the industry, the financial products, or in its community?
There is a bit more maturity, although that sometimes just feels like the veterans are just numb to the pain this industry can self-inflict. We do see genuine interest from large institutional players in the financial, consumer, and impact fields. But can we convert those ideas into adoption?
Investment in utility and payment tokens is an oxymoron. They are not meant to be investment products and are not regulated as such. An investor could look into an infrastructure play, although I believe that is quite saturated today at approx. 0M. My bet would be early-stage protocol ecosystem funds (equity-based), with a portion of that taken in tokens for the utility of governance, etc., that might be attached.
Q: The upcoming approval of a spot Bitcoin ETF in the US seems like the perfect indicator that crypto has made it to the mainstream, but what’s the next frontier? Where does the industry go from here?
I don’t agree. For me, it just sounds like the bankers finally believe they can make money off our industry. Now, does that mean it’ll be good for prices in the short term and more eyeballs? Yes. But be careful what you wish for, as when the heavy artillery comes in, they crush everything/everyone in their path.
In 2023, we founded Decentral House. An innovation centre focused on blockchain-based application that provide the infrastructure to spark ideas to life. I believe that by having the right tools in your arsenal, you can navigate the Web3 space to find the light at the end of the tunnel. Without the right guidance, WANGMI (We Are Not Gonna Make It). Let’s work together to create an industry of trust we can all be proud of!
Cover image from Unsplash, chart from Tradingview
A Crypto Christmas Special With Material Indicators: Past, Present, And Future
Another year, another Crypto Christmas special for our team at NewsBTC. In the coming week, we’ll be unpacking 2023, its downs and ups, to reveal what the next months could bring for crypto and DeFi investors.
Like last year, we paid homage to Charles Dicke’s classic “A Christmas Carol” and gathered a group of experts to discuss the crypto market’s past, present, and future. In that way, our readers might discover clues that will allow them to transverse 2024 and its potential trends.
Crypto Christmas: A Deep Look Into The Bull Market And A Secret Pattern
Once again, the crypto analytics firm Material Indicators joined us to discuss the current market structure.
This year, we spoke with Keith Alan, one of the co-founders and analysts at the firm. Alan gave us his perspective on the bull market or what looks like the beginning of a bullish trend.
Material Indicators is well known for their reliance on hard data, and for sharing views that often questioned the general beliefs in the crypto market. This time was no difference as Alan pointed to the evidence favoring both sides, bulls and bears. This is what he told us.
Q: In light of the prolonged bearish trends observed in 2022 and 2023, how do these periods compare to previous downturns in severity and impact? With Bitcoin now crossing the ,000 threshold, does this signify a conclusive end to the bear market, or are there potential market twists investors should brace for?
MI:
Nobody could argue that 2022 was anything but a bear market. After Bitcoin reached an ATH in November of 2021 we saw the bear market develop in classic fashion by losing support at key technical levels. While the bear was playing out in somewhat predictable fashion, the market was caught off guard by the events that led to the FTX crash in November 2022. Because the contagion from FTX had a devastating ripple effect that was felt by the largest institutions with crypto exposure as well as banks, I actually expected prices to fall even lower.
At the time, fear and fighting among institutional players like Galaxy, Gemini and Grayscale (under DCG) who were among SBF’s largest institutional victims added to the concern that price would grind down towards the lower teens, yet somewhat remarkably and perhaps not so coincidentally on January 1, 2023 Bitcoin started to rally. What was first considered weekend whale games evolved long past the weekend, and in fact, through Q1/2023 I identified an entity on FireCharts which I nicknamed “Notorious B.I.D.” that was double stacking large blocks of bid liquidity to push price higher. There was a pattern to the behavior that made it somewhat predictable and tradable. Those moves were well documented in my X feed during that period of time. Once price reached k that entity disappeared. Even without the help of that manipulation pushing price up, and despite the fact that the macroeconomic situation was horrible, the geopolitical situation went from bad to worse and the US political situation evolved from a dysfunctional sh*t show to a full blown circus, the market continued to rally.
Now, nearly 12 months and > 150% from the day the rally began, the debate between bulls and bears over whether this is a confirmed bull market or a sequence of bear market distribution rallies literally continues today. While it’s understandable that someone could look at 150% and immediately assume bull market, it does require a deeper understanding of what distribution and accumulation look like. From my view, that still isn’t as clear as one would expect. Historically, the Purple Class of Whales with orders in the 0k – M range have had the most influence over BTC price direction. The order flow data I’ve been monitoring on Binance shows that through most of the year they (along with larger MegaWhales) have been buying dips and distributing significantly more than they bought on those dips on the uptrends that followed.
Only recently have we seen an uptick that could be an indication that the trend is shifting. Parallel to that, some on-chain data providers are showing an increase in the number of wallets holding BTC which is also an indication that we could be transitioning from a distribution phase to an accumulation phase and I’m looking for more clear evidence of that. One of the things I look for to get a sense of that is bid liquidity. I believe that “Liquidity = Sentiment,” and it’s no secret that order books have been thin on both sides of price through most of the year, however in the last 3 weeks or so, we’ve started seeing more institutional sized bid ladders coming into the order book and that fact supports a bullish thesis, as long as they don’t dump through the next pump.
With all of the above in mind, there are most certainly turns and twists that investors should look out for. Sure we are starting to see some improvements on the U.S. inflation and unemployment numbers, but something in those reports doesn’t jive with reality. For most middle and lower income Americans, credit card debt is climbing to new highs, rents have soared, home ownership is unattainable, grocery prices are high and a Metallica “Standing Room Only” Field ticket is 5. So in my mind, we still have a percolating macroeconomic problem and the geopolitical and U.S. political issues seem to get worse by the day.
Aside from that, the RSI has been over cooked for an extended period of time and we just had 8 consecutive green weekly candles. Both of those factors have historically led to corrections. I could give you the “History doesn’t have to repeat itself…” spiel or I can show you what historically happens after moves like this and let you decide.
Another potential twist to consider is that the current PA has a striking resemblance to the first leg of the 2019 rally that turned out to be a Fib retracement, that ultimately got rejected from the top of the Golden Pocket at .618 Fib. That led to a 53% correction before the Covid Crash took it down more than 70% from the .618 Fib.
At this stage, I’d be surprised to see a downside move that deep without the aid of a Black Swan, but we are currently having some interaction with the Golden Pocket that seems familiar. While it is reasonable to expect some resistance entering and exiting the Golden Pocket, there is one very weird twist to what we are seeing and that is a strange pattern I’ve noticed occurring on or around December 17th. Every year since 2017 there has been a move on December 17th that had Macro implications. The only exception to that is last year when it happened on December 20th. On each occasion the price action led to a macro breakout or breakdown. It’s too soon to tell if this move will validate the pattern on the day of writing (Dec 19th), but on the 17th we saw BTC get rejected from the lower end of the Golden Pocket and also lose the 21-Day moving average. Price has been flirting with both of those levels ever since so we’ll have to wait to see how it plays out over time. Aside from those things I’m watching the upcoming ETF window very closely. I think that the market is numb to SEC delays on these decisions, but there is so much anticipation that this time we’ll see an approval, that a flat out rejection has the potential to be the catalyst that triggers a correction.
Regardless of where you side on whether we are or are not in a confirmed bull market, we’re seeing a lot of evidence that if we are not in it, we’re close to it. If you’re a long term investor and you haven’t already started building a position, it’s a good time to identify some targets to start scaling into one. This of course depends on your time horizon and risk appetite, but if you have a long term outlook and 6 figure targets for BTC it’s still early enough to get in, but it’s also a good idea to save some dry powder for a correction because in my opinion, it’s not a matter of if it will come, but when.
Q: Right now, we are seeing Bitcoin reach new highs. Do you think we are in the early days of a full bull run? What has changed in the market that enabled the current price action; is it the Bitcoin spot ETF or the US Fed hinting at a loser policy or the upcoming Halving? What is the big narrative that will go on in 2024?
MI:
Despite the ongoing debate between bulls and bears over whether or not we’ve been in a bull market, I can say that despite the uptrend, there has been no clear confirmation that we’ve been in a bull market through most of the year. However, the fact that we’ve recently started to see more institutional sized bid ladders coming into the order book along with the on-chain data that indicates more wallets holding for longer and the recent buying after the R/S flip at k are indications that we may be on the verge of a breakout.
There’s no doubt in my mind that a lot of the momentum we’ve been seeing is related to the next ETF decision window opening January 5-10 and the April 2024 Halving. The FED’s recent decision to pause rate hikes and hint at a pivot to cuts in 2024 certainly added fuel to that momentum that pushed price above k. In typical crypto form, we also had some help in late October through early December when I noticed some familiar patterns in the order book. I can’t confirm with absolute certainty if it was the Notorious B.I.D. spoofer we saw in Q1 returned, but it was the same game I identified through Q1 being executed and there is no question that it helped push price up through the k – k range before it disappeared.
(…) As much as I’d like to see a correction come before we get there (the Bitcoin spot ETF decision), the market doesn’t care what I want. I would expect it to come before the Halving. Whether it comes before or after the ETF decision window closes remains to be seen. In the meantime, I’ll continue to watch order book and order flow data and trade what’s in front of me.
Q: Last year, we spoke about the most resilient sectors during the Crypto Winter. Which sectors and coins will likely benefit from a new Bull Run? We are seeing the Solana ecosystem bloom along with the NFT market; what trends could benefit in the coming months?
MI:
The vast majority of my focus is on Bitcoin and to be honest, after seeing so many ponzi’s in the space, it’s the only digital asset I truly trust. There are certainly some great opportunities with certain alts, but with that comes increased risk. As for sectors, it’s no secret that AI and Gaming have been hot. According to some research I’ve been reviewing Memes, DePin and GambleFi are dominant narratives right now.
The fact that Memes are more dominant than something that’s actually physical like DePin speaks to the immaturity of this market. Perhaps a better way of stating that is, “We are still early.” That said, if I’ve learned anything in crypto there is an opportunity cost associated with having high standards and principles for projects you invest in. As ridiculous as that may sound, the biggest upside potential seems to come from some of the most meaningless projects because they have large communities of “Crypto Bros” pumping them and thin liquidity makes them easy to pump. Just know that they also come with a huge risk and like every other ponzi, you don’t want to be the last guy holding the bag.
I personally tend to avoid memes for all the reasons I mentioned above, but I do trade DOGE on occasion because it’s been a relatively easy scalp lately. Elon Musk playing kingmaker with that coin doesn’t make me like it any more or less (okay maybe less), but the results have been predictable. The fact he has obtained a money transfer license for X (Twitter) and that he has a DOGE logo on his X profile has me considering taking a flier on DOGE, but that’s not something I’m recommending to anyone who isn’t willing to lose that money. The fact he has SpaceX launching a DOGE sponsored satellite next month should at the very least bring a short term pump.
Of the leading narratives mentioned, Memes may be the most dominant, but DePin is the most interesting to me, because it’s associated with something very real and very hot right now. For those who may not be familiar, DePin stands for Decentralized Physical Infrastructure Networks which are blockchain protocols that build, maintain and operate infrastructure for the AI industry. (Do Your Own Research).
The fact that you mentioned Solana is proof that nothing changes sentiment like price. Solana has been through the ringer since falling from it’s ATH in November 2021 and the FTX crash of 2022 delivered another 80% correction that took it to single digit levels. There is no denying that it has been on an epic run recently. It’s somewhat puzzling to me how that is happening at the exact same time FTX liquidators have started the long process of distributing over B worth of $SOL back into the market.
Rather than speculate on what may be behind that, I’ll say that it is apparent that they have a very strong community and despite the network issues they’ve had in the past, they seem to be growing in popularity in staking pools. Then again, nothing influences sentiment like price, so I expect we’ll see a number of coins filter their way in and out of the leading narratives through the year. I’m just hoping more of them do so for legitimate reasons rather than fake news or P&D groups. IMO, until we see the projects with real teams, real use cases, real adoption and real revenue establishing themselves as the best projects to invest in for their fundamentals, “We’re still early.”
Keith Alan is President at Keith Alan Productions, Inc., Co-Founder at Blacknox, LLC and Material Indicators, LLC. Nothing written should be taken as financial advice. For more insight and analysis follow @KAProductions and @MI_Algos. Find premium tools for traders at Material Indicators.
Cover image from Unsplash, chart from Tradingview
NewsBTC
A Crypto Christmas Special With Jlabs Digital: Past, Present, And Future
Another year, another Crypto Christmas special for our team at NewsBTC. In the coming week, we’ll be unpacking 2023, its downs and ups, to reveal what the next months could bring for crypto and DeFi investors.
Like last year, we paid homage to Charles Dicke’s classic “A Christmas Carol” and gathered a group of experts to discuss the crypto market’s past, present, and future. In that way, our readers might discover clues that will allow them to transverse 2024 and its potential trends.
Crypto Christmas: What’s Behind The Bitcoin Rally, And Which Coin Has The Most Potential?
This year, we kicked off this special with JLabs Digital, formerly Jarvis Labs. One of the most prominent crypto analytics firm in the nascent sector. Their insight into the market dynamics has been popular due to their use of solid data and easy-to-follow style.
Since 2022, the team at JLabs Digital has been expanding as they bring in new analysts, educational tools, and new ways to share their insights. Last year, we spoke to one of its founders, Ben Lilly, who was betting on crypto becoming “better” and more mature due to the lessons left by the fall of FTX and others.
JJ walked us through the differences between this rally and previous years, the most undervalued coin in the sector, the potential twists in the market, and more.
Q: In light of the prolonged bearish trends observed in 2022 and 2023, how do these periods compare to previous downturns in severity and impact? With Bitcoin now crossing the ,000 threshold, does this signify a conclusive end to the bear market, or are there potential market twists investors should brace for?
JJ:
So with Bitcoin now crossing over the ,000 threshold, does this signify a conclusive end to the bear market (…) I’m leaning towards the twist portion of that. I think most of this rally was really driven by disbelief and people shorting it to each pump, especially as we neared K, there was just a huge washout of shorts that had ated over the past year between options and derivatives. So that forced buying is really what set us up over ,000 in my opinion. So now to sustain this, there’s going to have to be continued spot buying to see the price above, say ,000 to ,000.
I think it’s possible we get up to that range, but I don’t think we’re just going to get to that range and keep ripping. I think sooner or later we’re going to come back down and retest that ,000 mark. So that’s an eye investors and traders should have their eye on into 2024. I do think you’ll inevitably get that large leverage washout as is very typical in Bitcoin.
Q: Right now, we are seeing Bitcoin reach new highs. Do you think we are in the early days of a full bull run? What has changed in the market that enabled the current price action; is it the Bitcoin spot ETF or the US Fed hinting at a loser policy or the upcoming Halving? What is the big narrative that will go on in 2024?
JJ:
I do think we’re entering a new bull market, but that said, there’s always going to be twists and turns and leverage liquidations. Keep that level in mind. K to K, think will be as good an entry as any if we get that opportunity in 2024.
Anytime we see those big breakouts we saw in October, it’s just so typical Bitcoin to come back and retrace it. But what it first wants to do is engineer liquidity. So you have to realize the people that paint these charts are very sophisticated and they want to make you enter at less than optimal prices and sell less than optimal prices. So how they do that, they kind of coax you into buying at K. (They make you think) It’s never going to go back down again. And then next thing you know you’re holding onto those buys and it’s at ,000 and you’re being forced to sell.
I think this (rally) is much different. Basically if you look at 2021, we had (Microstrategy’s Michael) Sailor and Tesla buying (BTC), but outside of that, as we know, it was a lot of leverage to (investors) such as Three Arrows Capital, Grayscale, the Digital Currency Group that was overlooking it. All these people were getting access to massive amounts of leverage due to how cheap it was to borrow the dollars at the time, due to the interest rates being zero, they were using that to leverage themselves and basically pump Bitcoin artificially. And then we all saw that washout last year and as opposed to what we see now, this is actual institutional buying.
So there’s been no doubt that I’m sure BlackRock, Fidelity, et cetera, they’re not buying now, they were buying below ,000, they were buying throughout the ,000 range. They’re not buying above ,000 to ,4K. So we do see a bit more strength at the bottom of the market, which is going to form a better base for 2024.
But that said, there’s always going to be those ups and downs, but I think long-term, the fact that we saw that capitulation from kind of the leverage deigns to institutional players who know how to organize and manage these trades more efficiently, I think it’s very bullish for Bitcoin and definitely regime shift.
I think it’s kind of forming. I mean as of right now, the future’s kind of unpredictable, but the things I see, we have this ETF coming. Do I think it’s going to be like the moment it’s approved, Bitcoin’s just going to take off? No, there’s a lot of complications with that. Like the Grayscale BTC trust, I think they hold over 600,000 BTC that’s going to have to get distributed. I’m not sure that there’s enough demand as of yet to just soak up all that supply that’ll be coming onto the market. But as we go down the line a few months later, these ETFs are rolling. BlackRock has their team of thousands of advisors out there selling this because they’re incentivized to. And at the same time we have “The Halving” where supply cuts down on the amount of emissions miners able to readily sell as supply.
So you’ll have this massive influx. It’s very hard to be overstated the amount of new demand that will be coming online because of the ETF. At the same time we have “The Halving” event which is going to cut down on the amount of supply available for sale. I think that’s kind of forming a perfect storm in of itself. And then you look at the dollar, the DXY index, this is something I hit on a lot in my articles and the videos that we do on YouTube, and you see it’s (the DXY) been on a downtrend throughout 2023. It looks like it’s getting worse into 2024.
We just had the Fed signaling that they’re thinking about rate cuts, which is usually as good a sign as any that those rate cuts will be happening. So the dollar will be weakening. At the same time we have this massive new demand for Bitcoin. At the same time the supply of Bitcoin’s dropping down. So you can see that all the stars are aligning for new all time highs, a hundred thousand plus targets. But it’s going to be a tricky road there.
Like I said, I think we’re going to inevitably go back down to that to K range, and then probably in the second half of the year we’ll really see it defy expectations to the upside.
Q: Last year, we spoke about the most resilient sectors during the Crypto Winter. Which sectors and coins will likely benefit from a new Bull Run? We are seeing the Solana ecosystem bloom along with the NFT market; what trends could benefit in the coming months?
JJ:
It’s hard to say. As of right now, the narratives that’ll take hold, there’s going to be some crazy pumps on things and there’s going to be wild narratives like we saw with DeFi in 2021, what those are right now, we could guess, but there’s nothing definitive in my mind that it seems like, I think a lot of it’s being priced in now, actually. You see kind of these wild altcoin pumps over the past month. I don’t know how sustainable that is over the near term, but I think one thing people are overlooking is if this BTC ETF gets approved, we’ve kind of set the legal precedent that what the SEC did in approving the Bitcoin ETF, the futures ETF, but not approving the spot was illegal.
They’ve already approved Ethereum futures ETFs and now there’s a bunch of spot Ethereum ETFs open for application. So I think it’s inevitable that those will get approved and I think Ethereum is wildly underpriced. Not to say we won’t get pullbacks from here, but those are pullbacks you should be looking to buy because I think an Ethereum spot ETF is almost a hundred percent likely in the second half of 2024. And I think we’ll see some coins that were probably overpriced compared to Ethereum. If you factor that in, and I think we’ll see Ethereum and its use cases really start to take life in 2024. You see a flight to value at some point there, rather than the wild speculation that happens on other alts.
Cover image from Unsplash, chart from Tradingview
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‘Cantillon Effect’ Can Be Countered by Having ‘Bitcoin Only’ Companies Present at the Negotiating Table — Swan Bitcoin MD
The crypto industry can stop the so-called Cantillon Effect from occurring by establishing large enough “Bitcoin only” companies that will sit on the negotiating table with the U.S. Federal Reserve and major financial institutions, Swan Bitcoin’s Terrance Yang has said. According to Yang, the U.S. Department of Justice’s settlement with Binance has increased the likelihood of such an institution joining the negotiation table.
The Cantillon Effect
Terrance Yang, the managing director (MD) of the bitcoin exchange platform Swan Bitcoin, has defended the proposal to create enough “Bitcoin-only” companies saying this is the only way the crypto industry will be fairly represented at the negotiating table. According to Yang, the U.S. Department of Justice (DOJ)’s recent settlement with Binance has increased the chances of such an institution joining the negotiation table.
As was recently explained by Swan Bitcoin co-founder and CTO Yan Pritzker, the crypto industry needs to fight back against opponents who seem to have ratcheted up the pressure in recent years. Ordinarily, this can be achieved by having “a large selection of banks willing to do business with Bitcoin companies.” Nevertheless, in his Nov. 11 post on X (formerly Twitter), Pritzker suggested making companies in the crypto space “big enough to be relevant negotiators.”
Some critics argue that creating such powerful entities could have negative consequences for the industry in the long run. However, in his written answers sent to Bitcoin.com News, Yang doubles down on why Swan believes this to be the solution.
“For decades now the [U.S.] Federal Reserve Bank and all major banks and institutions have been the key negotiators at the table. We recently published a detailed study of why this needs to change and how [the] Federal Reserve drives the Cantillon Effect which in turn impacts inflation and fiscal debt,” Yang said.
Bad Actors Have an ‘Incentive to Feed and Spread False Narratives’
According to Yang, it is such Bitcoin-only companies that can fill the “void” which has grown each time authorities have gone after large crypto exchanges like Binance and Coinbase.
Concerning the perception certain players are not doing enough to counter false crypto narratives often peddled by critics like U.S. Senator Elizabeth Warren, Yang suggested this may be because they “have an incentive to feed and spread false narratives.”
Therefore, as the industry works on how to respond to the attacks which have seen the space shrink, Yang said only those with good standing should “write their Congressional representative, and speak out on social media.” In addition, such unblemished individuals and entities should “stop doing business with ‘bad actors’ that are facing lawsuits and are in trouble.”
While it is generally agreed that the recent actions by the U.S. regulators will prompt crypto firms to ponder leaving the United States, Yang is adamant that “bitcoin will [still] thrive in the U.S.”
What are your thoughts on this story? Let us know what you think in the comments section below.
SDM Financial to Present Informative Webinar on Digital Asset Derivatives for Miners, Funds, and HNWIs
PRESS RELEASE. SDM Financial is thrilled to announce an upcoming webinar focused on digital asset derivatives, taking place on Tuesday, May 23, 2023, at 10:30AM EDT. The webinar is tailored to provide digital asset mining firms, crypto-focused funds, and digital asset investors with valuable insights into the benefits of digital asset derivatives in effectively managing risk and optimizing returns.
The webinar will feature a panel of experts who will share their knowledge and expertise:
- Alan Mittleman, Head of US & Derivatives at SDM Financial
- Matt Williams, Head of Derivatives at Luxor Technologies
- Joseph Dillon, CEO at Adakon Energy
The expert panel will delve into various aspects of the digital asset derivatives market, discussing how to hedge with different types of structured digital asset products, their benefits and risks, and the state of the market. Participants will also have the opportunity to ask questions about this emerging asset class and gain valuable insights into the most effective strategies for incorporating these instruments into their investment portfolios.
With energy prices on the rise, cryptocurrency miners in particular face distinct challenges in managing their exposure. The panelists will explore diverse use cases of derivatives trading for crypto miners as well as funds, delving into effective hedging strategies and discussing the relevant trading instruments for different scenarios.
Alan Mittleman, Head of US & Derivatives at SDM Financial, emphasized the significance of the webinar, stating, “Digital asset derivatives present a unique opportunity for risk management and enhanced returns in the digital asset industry. This webinar will provide three different perspectives to help participants navigate this dynamic market.”
The webinar is a must-attend event for mining firms, crypto-focused fund managers, and high net worth individuals seeking to understand how using derivatives can benefit their investment strategy. By attending, participants will gain significant knowledge into how digital asset derivatives can play a pivotal role in managing risk and optimizing returns.
To pre-register for the webinar, visit https://app.livestorm.co/sdm/hedgingwithderivatives. Limited spaces are available, so secure your spot today and take a proactive step toward protecting your digital asset investments.
Stay tuned to our social media and never miss any updates from SDM Financial:
Website: https://Sdm.Financial
Twitter: https://twitter.com/SDM_FI
LinkedIn: https://www.linkedin.com/company/sdm-financialinc
This is a press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.
Why Ethereum Could Present Unique Opportunity For Investors If It Drops Below $1,600
Ethereum has been retracing on its previous weeks’ profits and seems ready to re-test support levels below its current price. The crypto market has seen significant gains as the macroeconomic landscape shows signs of improvement, but the crypto winter is not in the review mirror yet.
As of this writing, Ethereum (ETH) trades at ,630 with a 1% loss in the last 24 hours. Over the previous week, the cryptocurrency recorded sideways price action outperforming other assets in the top 10, such as Bitcoin (BTC) and XRP, which recorded a 5% and 3% loss, respectively.
One Macro Event, Two Opportunities For Ethereum
Per a report from investment firm Blofin, the two largest cryptos by market capitalization, Bitcoin and Ethereum, have seen relatively slow price action over the past 24 hours. However, this status quo could change in the coming days.
At least in the crypto options sector, there has been a decline in Implied Volatility (IV), which measures expectations of future price movement. This metric is approaching its January 2023 level, suggesting the IV is bottoming and could spike again.
As seen in the chart below, IV declined after a significant increase in early January. At that time, the price of Ethereum and other cryptocurrencies appreciated and trended to the upside.
In the current context, Blofin notes less interest from Market Makers to defend ETH’s current levels. These investors might hedge against the spike in IV and potential downside price action from macroeconomic events. The firm noted:
Ether’s situation is not very optimistic. (…) MMs will not tend to buy in spots hedging against the gamma exposure once the price collapses before the weekend.
In other words, large investors could be waiting for a clearer view of the macroeconomic landscape. Next week, the U.S. will publish its Consumer Price Index (CPI), a proxy to gauge inflation in the dollar.
If the metric beats expectations, with recent data pointing towards a strong U.S. labor market, the Federal Reserve (Fed) could exercise more pressure on global markets, including digital assets. These measures could lead Ethereum to re-test its yearly lows.
In a separate report from the on-chain firm Jarvis Labs, an analyst points towards the clues hinting at a change in the market regime. Supported by a decline in the U.S. dollar and a historical bullish signal, Bitcoin’s (BTC) golden cross of its 50-day moving average above the 200-day moving average.
Whenever these moving averages intertwine, the crypto market enters a new bull run amid a spike in volatility and some price declines in the short term. Thus, if ETH crashes below ,600, long-term holders could take advantage of a potential opportunity.
Polkadot Could Present Buying Opportunity As Bullish Outlook Continues
The Polkadot price has breached the resistance mark in the past trading sessions. Over the last 24 hours, DOT has appreciated by 3.8%. The price of Bitcoin has been surging, which has caused other altcoins to also move upward on their respective charts.
When Bitcoin crossed the ,000 price mark, other altcoins broke past their immediate resistance marks. Polkadot price momentum remains bullish in the shorter time frame. The technical outlook for DOT showed that despite a price correction, accumulation on the chart increased.
Polkadot demand also showed an increase on its chart. The asset’s price has to remain above the .40 support line and breach the .20 resistance level if the coin has to maintain a bullish stance for a longer time frame.
The daily chart of DOT also points towards an incoming fall in price, which means that traders might be presented with shorting opportunities. Currently, DOT is trading at an 89% discount from its all-time high secured in 2021.
Polkadot Price Analysis: One-Day Chart
DOT was exchanging hands at .89 at the time of writing. Polkadot had formed a cup and handle pattern, which means that the bullish momentum can continue, which is why Polkadot resumed its northbound journey on the daily chart.
Overhead resistance for the coin stood at . Toppling the mark can take the coin to .20. As Polkadot was overbought, demand for the coin could trickle down.
This can cause the price to fall for a few trading sessions before it starts to rise again. In case of a price retracement, DOT will encounter its local support at .40 and then at .33.
These two levels can be an entry point for buyers, as the altcoin will rise in value after it touches these support lines. The amount of Polkadot traded in the last session was still green, indicating that buying pressure remained.
Technical Analysis
The asset had secured a multi-month high in registering demand in the past week. The coin was overvalued a week ago, and as a result, demand has retraced slightly. The Relative Strength Index fell back from the 80 mark, which was a sign of the asset being overbought.
At press time, DOT again registered an uptick, indicating that buying strength was building again. On that note, the price of DOT was above the 20-Simple Moving Average line, hinting that buyers were driving price momentum in the market.
The coin was also above the 50-SMA (yellow) line. Despite that, the 50-SMA line crossed above the 20-SMA line, which signified a death cross. A death cross means an incoming fall in value. This reading corresponds to traders finding the chance to short the asset.
The Moving Average Convergence Divergence (MACD), which depicts price momentum and reversals, showed declining buy signals. This means that the price will fall over the next trading session.
The Parabolic SAR also sides with the MACD as the dotted lines were formed above the price candlestick, indicating that the asset’s price direction was starting to become negative. Overall, the bulls could continue to dominate the price action in the shorter time frame.