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Synthetix (SNX), Compound (COMP) and Maker (MKR) soar as Bitcoin stabilizes
On Jan. 11, #Bitcoin saw a steep correction as it dropped to around $30,500. It began to recover swiftly after the initial correction, rallying above $36,000 in the next 24 hours that followed.
DeFi tokens, including Synthetix (SNX), Maker (MKR), and Compound (COMP), outperformed the majority of the market. The primary reasons behind their performance are strong fundamentals for each project and improving market sentiment.
Highly anticipated roadmaps
DeFi tokens have generally performed well in recent weeks. Maker, for instance, surged by nearly 100% before the Jan. 11 correction alongside other large-cap cryptocurrencies.
The market sentiment around DeFi has already been generally positive. The release of highly anticipated roadmaps, like in the case of SNX, further amplified the positivity around the DeFi market.
On Jan. 12, Synthetic announced that it is transitioning to Optimistic #Ethereum in a blog post detailing its roadmap in 2021.
Optimistic Ethereum is a layer two scaling solution that allows users to transact and process smart contracts without encountering the scalability challenges that plague the Etheruem network.
When the Ethereum blockchain network becomes clogged, traders are forced to pay over $100 to $200 to process complex transactions. On layer two networks like Optimistic Ethereum, it is possible to offset these scaling issues. The Synthetix team explained:
“The transition to Optimistic Ethereum, a layer two scaling solution, will alleviate many of the issues experienced in 2020. There are two primary advantages to this transition: lower gas costs and higher throughput. Lower gas costs are good for all users and make the system more efficient. Higher throughput will enable us in partnership with Chainlink to reduce oracle latency, allowing for leverage via Synthetic Futures as well as a number of other protocol improvements.”
Other DeFi protocols and automated market makers (AMM) plan to eventually move to layer two scaling solutions, like SushiSwap as an example.
Market sentiment turns positive after the OCC statement
On top of the strong roadmaps of the so-called DeFi “bluechip” projects, the U.S. Comptroller of the Currency released an oped in the Financial Times discussing the potential to grant DeFi protocols banking charters.
Brian Brooks, the Acting Comptroller of the Currency and the former chief legal officer at Coinbase, wrote:
“Could the OCC even grant a national bank charter to open-source software that manages deposit-taking, lending, or payments, if it doesn’t have officers or directors? Not yet. Under current law, drawn up on the assumptions of the early 20th century, charters can only be issued to human beings. But those antiquated rules should be revisited, just as regulations that still mandate the use of fax machines should be.”
DeFi giants Synthetix (SNX), Maker (MKR), and Compound (COMP) rallied strongly as the price of Bitcoin (BTC) recovered.
Traders are generally optimistic around DeFi tokens and their resilience as well. Flood, a pseudonymous trader, said:
"Certain alts are holding strong during this dump simply because of their capital efficiency. $SNX is a good example, it’s one of the last coin’s one should sell when in need of cash or wanting to reduce exposure."
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Bitcoin price climbs 20% overnight as US banks brace for 40% profit cut
The dollar value of #Bitcoin (BTC) jumped 20% overnight leading into Jan. 12, as the world’s most well-known cryptocurrency recovered swiftly from a 27% decline suffered just days before. The broader cryptocurrency market followed suit on Tuesday, as over $150 billion flooded back into the global market cap on the same day.
The spot price of Bitcoin jumped from $30,468 to $36,633 in a little over 15 hours leading into Tuesday morning, representing overnight gains of 20.2%. This returned a majority of the losses incurred by the coin over the course of the previous weekend when the BTC price plunged from $41,880 down to $30,468.
As reported by Reuters on Jan. 11, major banking institutions in the United States will be hoping to put 2020 firmly behind them when fourth-quarterly numbers are released on Friday. Financial analysts are expecting a sharp contrast between Bitcoin’s recent fortunes and those of the legacy banking sector, with some anticipating losses of over 40%.
Citigroup Inc is expected to show a 42% decline for the last three months of the previous year, while analysts predict Wells Fargo & Co will suffer a similar drop of around 39%. Next week Bank of America Corp will release their own quarterly report, which is expected to show a profit decline of 33%.
Not every bank suffered equally towards the end of 2020, however, with JPMorgan Chase & Co expected to post a less severe 5% drop. Two major banks are anticipated to post positive numbers for the final quarter: Morgan Stanley is expected to post 1% profits, and Goldman Sachs Group Inc may be in for a 43% increase to quarterly profits off the back of a strong showing by its capital markets services.
Despite the apparent fluctuations exhibited in the banking sector, Barclays analyst, Jason Goldberg, says most firms will be aiming to close the door on 2020, and remain optimistic about the coming year..
“You can look at Q4 as somewhat of a transition quarter as you put some of the challenges from 2020 in the rear-view mirror and look ahead to an improved 2021,” said Goldberg.
Some bank stocks have already recovered 35% since the U.S. presidential election results in November. The announcement of a pending COVID-19 vaccine during the same time period is thought to have returned confidence to cautious investors.
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Crypto user recovers long-lost private keys to access $4M in Bitcoin
A student has claimed to have found private keys accidentally HODLed starting as early as 2011 which will unlock more than $4 million in Bitcoin.
According to a throwaway account from BitcoinHolderThankU, the Reddit user was able to cash out roughly $4.2 million in #Bitcoin (BTC) after finding the lost keys to 127 #BTC on Dec. 22, when the price of the crypto asset was in the $23,000s. They later liquidated the coins in the middle of the bull run.
“I spent the next week figuring out how to safely and securely liquidate such a large amount of Bitcoin for the cheapest price possible,” said the Redditor. “I went back and forth between different [over-the-counter principal desks] and ultimately ended up selling all 127 Bitcoins for a price of $33,439.02 per coin minus a 0.15% fee. The net was roughly $4.24 million.”
They claim to have earned Bitcoin in 2011 or 2012 through "surveys, watching videos, and completing random tasks" to ultimately use the coins for purchasing in-game currency for the online game DarkOrbit. The private keys were reportedly never really missing, just forgotten on an older model Dell computer as BitcoinHolderThankU ended up not purchasing the currency.
Unfortunately, if the Redditor’s account is to be believed, they missed out on $1 million in additional profit by not holding for just a few more weeks. Since December, the price of Bitcoin has passed $41,000 to reach new all-time highs. BitcoinHolderThankU admitted they “would not have sold all 127 Bitcoin” if the same situation had played out again.
“To give myself credit, I did HODL for 8-9 years which is more than the vast majority of crypto users,” they said. “I definitely would’ve done things differently if I were given a second chance.”
Despite their sudden fortune, the Redditor says they will avoid “expensive luxuries” and intends to put the bulk of the funds into the S&P 500, adding:
“I don’t want to end up like one of those people who win the lottery and blow it all in a matter of months/years [...] I’m going to continue living my life normally as I was on December 21st and every day before that.”
Unfortunately, not all stories involving misplaced or forgotten keys have such a happy ending. There may still be more than $285 million in Bitcoin lost somewhere in a U.K. garbage dump after an IT worker accidentally threw out his personal laptop with his keys in 2013.
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Key Bitcoin price metric signals BTC may be near a local top
According to data from CryptoQuant, miners appear to be selling large amounts of #Bitcoin (BTC). Historically, heightened selling pressure from miners marked a local top and led to sharp, prolonged corrections.
Why are Bitcoin miners selling?
In May 2020, on-chain analyst Willy Woo said that there would be two sources of unmatched selling pressure in the market after the block reward halving.
Woo pinpointed Bitcoin miners and cryptocurrency exchanges selling the fees they gain in the form of crypto assets as the sources of selling pressure. He said:
“There’s only two unmatched sell pressures on the market. (1) Miners who dilute the supply and sell onto the market, this is the hidden tax via monetary inflation. And (2) the exchanges who tax the traders and sell onto the market.”
Hence, in the short to medium term, miners could continue to serve as a major source of selling pressure on Bitcoin.
Based on data from CryptoQuant, the Miner Position Index (MPI) has surged significantly in the past few days.
On Jan. 10, the MPI reached a level that is on par with July 2019, when BTC price quickly fell below $14,000. Ki Young Ju, the CEO of CryptoQuant, said:
“Miner Position Index looks enough to make a local top. They're selling $BTC. I'm going to punt a small short to scalp $BTC in this short-term bearish market. Since December last year, they had been selling $BTC, but the correction was tiny due to institutional buying power.”
Ki later noted that he closed the scalp short, emphasizing that the correction was short-lived.
It is possible that the buyer demand coming from the U.S. is overwhelming the selling pressure from miners. This theory is supported by the recent trend of Bitcoin price trading at a higher premium at Coinbase than other major exchanges like Binance.
What traders expect in the short term?
Some traders expect Bitcoin to see a larger pullback in the near term. Edward Morra, a cryptocurrency trader, said that a possible scenario is a slow correction to around $36,000.
Morra noted that the scenario of Bitcoin falling all the way down to $36,000 is unlikely, but it would be a “typical bull market thing.” He wrote:
“I think unlikely scenario but I see some similarity to last week Sunday-Monday transition. By the way, this is very bullish to set low of the week on Monday and then expand, typical bull market thing.”
Philip Swift, the creator of LookIntoBitcoin, said that while Bitcoin is unlikely to see a 30% pullback, the rate of appreciation could decline. This could lead to slower momentum for BTC, especially as it retests the $42,000 resistance level in the foreseeable future. He explained:
“A point of clarification, as there seems to be some misinterpretation. I don't think $BTC is about to crash +30%, I thought/think the rate of price appreciation may slow down in the near term.”
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Dash price explodes 100%, BCH breaks out as Bitcoin cools off below $40K
#Bitcoin (BTC) price has once again dropped below the $40,000 level on Jan. 10 after crisscrossing it for the past three days as the spotlight shifted to altcoins, namely Dash (DASH) and Bitcoin Cash (BCH). The #BTC price drop comes after another failure to break through resistance at $41,500 in weekend trading.
One reason for the drop is likely an uptick in selling by miners. As reported yesterday, the Miner's Position Index (MPI) that calculates the ratio of BTC leaving all miner wallets to its 1-year moving average has reached levels where miners are selling.
Miner Position Index looks enough to make a local top," commented CryptoQuant CEO, Ki Young Ju, right before the price dropped.
"They're selling $BTC. I'm going to punt a small short to scalp $BTC in this short-term bearish market."
Other reasons are largely technical as BTC gives altcoins some time to catch up and due to sentiment. The Crypto Fear and Greed index, for example, has remained at dangerously high levels suggesting that a pullback is likely. In fact, the metric has remained above 90 or "extreme greed" for two months, the longest period in its history.
Bitcoin Cash follows Ethereum's breakout
Meanwhile, altseason continues with the bullishness apparently shifting from BTC to Bitcoin Cash in Sunday trading. The latter soared from $420 to as high as $630 in the past 24 hours.
The move marks a technical breakout from a multi-year bear market with BCH/USD now at the highest levels since November 2018.
However, the biggest gainer over the past 24 hours is Dash with its price rising roughly 40%. During the short parabolic rally, #DASH surged by over 100% from $95 to as high as $194, only to pull back to the $140 level.
The move also marks a technical breakout from a multi-year slump as major altcoins are now following in Ethereum's footsteps from last weekend, which several analysts pointed out as the possible start of "altseason."
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XRP price must break this key resistance to regain bullish momentum
#XRP holders are still struggling around the $0.30 area while the majority of the cryptocurrency markets are euphoric with #Bitcoin (BTC) price surpassing $40,000.
BTC price is currently over 100% higher than the previous all-time high in 2017, while XRP’s price is still down more than 90% from the all-time high in 2017. A lawsuit from the SEC against Ripple is certainly not bullish and is the primary reason for this overall weakness as this is prompting some exchanges to delist.
However, the chart might give some potential bullish outlook for the short term period if XRP’s price breaks several crucial resistance levels.
Resistance at $0.32-0.345 must break for more upsid
The XRP chart shows a very odd price pattern, as XRP’s price flipped the $0.21 area for support beautifully in 2020. This support/resistance flip caused a breakout above the significant resistance zone at $0.32-0.35. This breakout led to a run toward the $0.80 region, one of the most significant surges of XRP in recent years.
However, fundamentals kicked in as the SEC unveiled a lawsuit against Ripple, causing the price of XRP to tumble down into the range.
Now, the structure itself is destroyed and looks quite odd to chart on. Regardless of that bizarre move, crucial and beneficial levels can still be determined from here.
The critical level to hold for the bulls is the range low at $0.21-0.23, which once again provided a support in recent weeks.
Yes, the candles dipped below $0.21-0.23. However, the candle closes were above, indicating that support was found for XRP.
On the lower time frames, the $0.295 area is critical
Traders often zoom in to lower time frames to spot critical levels. Based on the higher time frames, critical levels are defined at $0.21-0.23 and $0.32-0.35 as support and resistance zones.
As long as that sustains support, multiple tests of resistances could occur. As the saying goes, the more often a resistance gets tested, the weaker it becomes. Therefore, a breakout toward $0.50 is in play.
On the other hand, if the $0.28-0.295 loses support, the next support area is the higher time frame support between $0.21-0.23. This area is also the range low throughout 2019 and 2020 and could usher in a more extended accumulation period for XRP.
XRP/BTC pair get clobbered
The XRP/BTC pair looks disgusting as it has been making new lower lows since the peak high in January 2018.
Hence, there are no arguments to be found for taking any position in XRP. However, there are some arguments to look for a potential reversal. One of them is the heavy increase in XRP trading volume recently, indicating that traders are accumulating the cryptocurrency.
This one could turn into a bull cycle once more if XR price flips the previous support levels at 0.00001550, 0.00002050. 0.00002350 sats for support.
The final argument is to watch for a potential bullish divergence on the daily, 3-day, or weekly timeframes. Once that starts to happen, a reversal could be near for XRP. However, until then, it’s still in a very precarious situation with a bearish outlook.
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Bitcoin price hits $40,000 less than three weeks after shattering $20K
#Bitcoin (BTC) hit $40,000 on Jan. 7 in the latest psychologically significant milestone for cryptocurrency bulls.
BTC price crushes the $30,000 corridor in record time
Data from TradingView confirmed #BTC/USD officially hitting dizzying new highs during trading on Thursday, bringing weekly gains to more than 40%.
In just one of various achievements for Bitcoin this year, the largest cryptocurrency conquered bearish prognoses of a retraction after rising rapidly throughout the past 24 hours.
As reported, Bitcoin’s NVT ratio led signals suggesting that the bull run was far from over, and likely only beginning.
According to analyst Michaël van de Poppe:
"Markets are doing great and the bull cycle is starting up nicely here. That means that the market will probably continue running heavily this coming year. With the standard 20-30% corrections, be prepared, they occur and they are opportunities."
"Less than a month after Bitcoin broke through $20k its price has doubled to $40k. It's now hard for anyone to deny we are seeing the maturation of a whole new asset class, This could be the 'broadband moment' for cryptocurrency - where every company and individual needs to think seriously about how they engage and interact with cryptocurrency," added Sui Chung, CEO of CF Benchmarks, which is the FCA-regulated indices provider used by CME.
Barry Silbert, who until today was CEO of asset manager Grayscale, summarized:
"Funny to think that a bitcoin price retrace to $20,000 would feel like the buying opportunity of a lifetime."
News of Bitcoin's successes meanwhile radiated beyond cryptocurrency circles, making it onto the radar of finance figures including Holger Zschaepitz, a popular financial commentator and regular contributor to German news publication Die Welt.
Mati Greenspan of Quantum Economics suggested that:
"Charts only tell the past and we're in brand new territory. This bull run began at $10k and 10x the previous all-time high seems about the norm for a bitcoin bull cycle. So since we're approaching the halfway mark with extreme momentum, outstanding volumes and exceptional fundamentals, I see this as a stop on the road to a Bitcoin price that could possibly be around $100k."
On the other hand, David Lifchitz, CIO of asset management firm ExoAlpha, added a note of caution. Bitcoin, he argued, was rising too quickly, invoking memories of the dot-com boom.
"What is concerning is not the fact that BTC is going higher, it's its velocity (the speed at which it goes...) that is worrisome... definitely in bubble territory, but history has shown that 'markets can remain irrational longer than you can stay solvent," he told Cointelegraph in private comments.
"In late 1999, everybody was convinced that we were at the top but the tech stock bubble lasted another 3 months and went higher and higher until it eventually popped big time."
Altcoins beat Bitcoin gains in 2021
Year-to-date, BTC/USD has delivered returns beaten only by certain altcoins. Currently, Ether (ETH) is up 62% for the year and #Stellar (XLM) has rallied 150%. As a result, Bitcoin's dominance index has slid below 70%.
In #Ether’s case, all-time highs remain right around the corner and some analysts estimate that the top altcoin could rally as high as $2,600 in the short term.
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Bitcoin’s 20% rebound in one day is one of its biggest ever — But there’s a catch
The price of #Bitcoin (BTC) rose 20% on Jan. 12, from $30,500 to around $36,600, across major exchanges. But while the rebound after the correction has been strong, there are two warning signs.
First, the funding rate in the futures market remains high. The funding rate is a mechanism that incentivizes the minority of the market.
For example, if there are fewer short-sellers in the market, then buyers have to pay short-sellers a fee every eight hours. If the funding rate is high, it means buyers are paying sellers.
Second, the U.S. dollar strength index (DXY) is beginning to recover, which could be a bearish sign for Bitcoin and gold.
What comes next after the drop and the recovery of Bitcoin?
According to Julien Bittel, a multiasset fund manager at Pictet Asset Management, the U.S. dollar is “very oversold.”
The dollar has continuously declined since the coronavirus pandemic began in early 2020, struggling to compete against other reserve currencies, like the Japanese yen.
The uncertainty around the United States election and the stimulus further led to the underperformance of the DXY throughout 2020.
Bittel said that the dollar is now looking oversold and the dollar’s momentum could strengthen in 2021. He wrote:
“The dollar is looking very oversold. I still think a stronger dollar will be a key theme to watch out for in 2021. Speculators are back to being near record short DXY as a % of total OI. The current drop in DXY looks very similar to the one from 03/17-02/18. This analog would suggest a base could be in place by late Q1 2021.”
The positive outlook of the dollar poses a risk to Bitcoin’s momentum because alternative stores of value are priced against the dollar.
Hence, if the dollar begins to rally, both gold and Bitcoin could see a potential pullback, particularly after a strong quarter.
Atop the rising dollar, the high funding rate of the Bitcoin futures market is an issue in the short term.
A high futures funding rate is not necessarily bad in itself, but if the price of Bitcoin declines while the funding rate remains high, it could raise the probability of a correction.
The combination of the dollar’s momentum and the overheated derivatives market make a pullback more likely in the near term.
Lack of stablecoin inflow is another concern
Ki Young Ju, CEO of CryptoQuant, said that a “second dumping” could occur, as was seen on Jan. 11. He stated that miners are selling with no stablecoin inflows, which is a problematic trend.
Stablecoin inflows typically represent buyer demand from sidelined capital. If stablecoin deposits to exchanges increase, it indicates an overall bullish market sentiment. Ki wrote:
“Nothing has been changed since yesterday. Miners are selling, no significant #stablecoin inflows, no #Coinbase outflows, and 15k $BTC flowed into exchanges since yesterday. We might have second dumping.”
In the foreseeable future, the ideal scenario for bullish traders would be to wait for the funding rate to neutralize and stablecoin inflows to increase.
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Where does this 28% Bitcoin price drop rank in history? Not even in the top 5
#Bitcoin (BTC) may have dipped 28% in recent days but analysts have already put the scale of the losses firmly in context.
As noted on Jan.12 by Nathaniel Whittemore, host of The Breakdown Podcast, the period between 2016 and 2017 alone saw a grand total of six corrections that were larger than this week's drawdown.
BTC price correction bows to 2017
2017 is famous among market participants as being a record-breaking year for price action. In addition to 1,000% annual gains, Bitcoin saw multiple hurdles as it climbed to then all-time highs of near $20,000.
"Fun fact: #bitcoin had 6 pullbacks bigger than our recent -28% in the record setting 1000%+ growth year of 2017," Whittemore commented, citing a chart with data from Travis Kling, CEO of crypto asset manager Ikigai.
As #BTC/USD fell from fresh record highs of $42,000 to just above $30,000, familiar criticism of Bitcoin's volatility from mainstream financial sources and other critics returned. A subsequent rebound to $36,700, itself record-breaking in speed, in turn attracted claims of market manipulation.
Business as usual for hodlers
For long-term investors, however, the events are nothing new, echoing as they do the surface-level behavior seen during other bull runs.
"During the previous cycles, the #Bitcoin drawdowns in the 20% to 40% range have taken anywhere from a day to a little over a month to find a bottom," on-chain analytics service Ecoinometrics summarized with comparative charts of its own on Monday.
"If you were waiting for the dip then it is the occasion to accumulate while you can."
Ecoinometrics nonetheless noted that historically, only around 15% of Bitcoin's total price corrections have surpassed the fall from $42,000.
Popular industry figures meanwhile reiterated that lower price levels amounted to little more than a buying opportunity for zealous investors.
"It's hard to believe Bitcoin is up 10% year to date for 2021 this morning at $32,000. But that's how this works. If you can't handle the crazy volatility, then manage that concern with your position size. I'm treating this morning's move as a big buying opportunity," Preston Pysh, co-founder of The Investor’s Podcast Network commented.
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Bitcoin’s short-term price trajectory could be bleak, says Celsius CEO
Healthy price corrections are generally part of market bull runs. With one such drop currently underway, Celsius’ CEO Alex Mashinsky thinks $16,000 could be in the cards.
“I have been predicting that Bitcoin and many altcoins will hit new all-time highs during 2021 and beyond,” Mashinsky told. “Still, we will see several corrections, like what is going on today, that will allow savvy investors to accumulate these assets at a discount.”
After #Bitcoin broke its 2017 record high in December 2020, the asset continued upward in parabolic fashion, finding itself worth more than double its one-time high of $19,892 less than two months later.
Bitcoin nearly reached $42,000 on Jan. 8 before beginning its recent descent, holding a value near $32,700 at time of publication. From its all-time high near $42,000, down to its recent low, Bitcoin has already corrected approximately 28% in price.
Mashinsky said:
“I see Bitcoin prices plunging even further than 25%. Sooner or later, the bears will accumulate enough pressure to see a correction. Overall I see the potential for bitcoin prices to fall all the way back to $16,000 before the end of the first quarter.”
Bitcoin’s price has soared with lightning-like velocity in recent weeks. Although bull markets often include price pullbacks, what are some signs that might occur when this price correction is over? “Regardless of this drop and many more to come, we will continue saying the same thing since 2017,” Mashinsky said, adding:
“There is nothing better than HODLing your BTC and earning yield on it because very few investments delivered the returns of Bitcoin over 1,3 & 5 years. This process will flush the weak hands and transfer the baton with all their BTC from the short-term speculators to the long-term institutions and HODLers.”
Bitcoin’s bull run also comes in line with a number of other economic factors, including money printing and possible inflation.
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Ethereum price tumbles to $915, but traders are bullish for 4 key reasons
The past week has been an emotional rollercoaster for #Ether (ETH) traders, as there were seven four-hour candles of a 10% or larger price movement.
Furthermore, the most recent 30% drop to $920 triggered $550 million in liquidations on long futures contracts. To complicate things even further, this current price correction is taking place just four weeks ahead of the launch of CME's ETH futures.
It’s possible that even the most bullish Ether traders did not expect an 85% rally to occur in just eight days. During that short timespan, the top-ranked altcoin blasted through the $800 resistance and quickly climbed to $1,350, which is only 5% below its all-time high.
In 2017, Ether's swift climb to $1,400 was primarily backed by the initial coin offering boom, but this time a different set of factors drove Ether's price higher. Many DeFi platforms rely on the Ethereum network, and Ether is the most common asset used as the gateway to these platforms. Aside from increased activity on the Ethereum network, the increased use has also resulted in high transaction fees.
At the moment, there is not much negative news flow coming from the Ethereum camp or major media outlets. Data shows that Ether's fundamentals are still strong, and investors are content to wait for further Eth2 network developments.
To understand whether the recent crash reflects a potential local top, investors should gauge the network use metrics on the Ethereum network. A great place to start is analyzing transactions and transfer value.
The chart above shows the indicator spiking above $8 billion in daily transactions, a 200% increase compared with the previous month's $2.6 billion average. This noticeable hike in transaction and transfer value signals strength and suggests that Ether's price is sustainable above $1,000.
Exchange withdrawals point to whale accumulation
Increasing withdrawals from exchanges can be caused by multiple factors, including staking, yield farming and buyers sending coins to cold storage. Usually, a steady flow of net deposits indicates a willingness to sell in the shortterm. On the other hand, net withdrawals are generally related to periods of whale accumulation.
From Jan. 4 to Jan. 11, exchanges faced net withdrawals of 460,000 #ETH. This move signals a potential accumulation from whales either transferring to cold wallets or putting these coins into the DeFi ecosystem.
This move contradicts the usual expectation that large holders rush to deposit on exchanges as Ether approaches its all-time high. Apart from a 100,000 ETH net deposit on Jan. 10, the net withdrawal trend has prevailed since December 2020.
The futures premium is still unusually high
Professional traders tend to dominate longer-term futures contracts with set expiry dates. By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.
The three-month futures should usually trade with a 1.5% or higher premium versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as backwardation and indicates that the market is turning bearish.
The above chart shows that the indicator has been ranging from 3.5% to 6%, which translates as moderately bullish. The current 4.5% rate is equal to a 19% annualized premium and is significantly above the 6% neutral threshold. This shows that despite the recent $1,000 dip, professional traders are still confident in Ether's price potential.
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Does a stronger dollar mean Bitcoin price is destined to lose $30K?
#Bitcoin price has been accelerating massively in recent months, with Bitcoin (BTC) rallying from $10,000 to $41,500. This rally went vertical without any major corrections in between.
However, every upward cycle has its standard 30% corrections, which can even be considered healthy for more upside.
Bitcoin’s price started to fall south in the past days as it dropped 25% to $30,000. This dropdown was also influenced by the U.S. dollar’s sudden surge, which might be bottomed out in the short term.
Bitcoin price flips bearish on lower time frames
A trend reversal starts with lower time frames flipping bearish, and this chart is an example of such a trend reversal. The $38,900 support was lost after multiple tests.
That’s not bad in itself. But when the support level flips bearish into a resistance, that’s likely to trigger continuation downward.
A similar support/resistance flip occurred at the $36,300 area, after which the price accelerated downward to the support areas at $32,500 and $30,000. Traders and investors should remember that downward corrections almost always occur in a fast and painful move.
However, support seems to be found at $30,000, which can induce some range-bound constructions for now. Such a range-bound construction is healthy for the markets, as strength can be built for the next impulse wave. This impulse wave will most likely occur at a later stage in 2021.
Fibonacci confluences with the current support levels
The 3-day chart shows confluences on the levels of interest for Bitcoin investors. In general, the previous all-time high at $20,000 would be a tremendous gift to the entire market. However, above this last all-time high, other levels are found and will likely be formidable support.
These levels are aligned with the Fibonacci indicator. The first significant level of support is found in the region between $29,500 and $30,500. This is the level where Bitcoin’s price is currently finding support.
From here, a relief bounce toward $35,000 to $37,000 could occur before another final dip starts.
That final dip could be toward the region around $25,000 to $26,000, as that’s the next Fibonacci level.
Dollar bouncing signaling weakness across markets
One of the primary variables for this recent correction across the crypto and equity markets is the strengthening of the U.S. dollar. The dollar strength index (DXY) landed on a significant support level and marked a temporary low with a daily bullish divergence.
Since then, the dollar has been rallying upward, causing other inversely correlated markets to drop south.
The first area of resistance is constructed around the 92-points level. This area of resistance would automatically mean that other markets could correct further.
The ultimate support level to watch
The ultimate level to watch for Bitcoin traders is the weekly time frame, which is the 21-week moving verage. In 2016 and 2017, Bitcoin’s price rested on this moving average as support through the entire bull cycle.
It’s not unlikely to have a similar test happen in the coming months, and it would suit with the likelihood of some consolidation before continuation. However, investors shouldn’t be worried at all about the current value of the 21-week MA. It’s a lagging indicator, however, which means it’s going to crawl up in the coming weeks toward the $25,000 area.
That region would mean a correction of around 40% for the crypto markets, which is also something that has happened more than once in previous bull cycles before new highs.
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Bitcoin whales are profiting as 'weak hands' sell BTC throughout $40K bull run
#Bitcoin (BTC) is changing hands fast after its drop to $32,000 and only millionaires are winning, data shows.
Statistics governing wallet balances from Glassnode on Jan. 11 reveal that the main investors “buying the dip” are those with a balance in excess of 1,000 BTC ($36 million).
"Millionaire" wallets keep growing
Compiled by Elias Simos, protocol specialist at blockchain infrastructure provider Bison Trails, the numbers suggest that the wealthy have been profiting from Bitcoin being sold by smaller investors throughout December and January.
“Addresses with more than 1k $BTC continue growing at the expense of all others–even as this most recent downturn is taking effect,” Simos summarized.
“While you were selling, whales were gobbling up your Bitcoin…”
While the number of wallets with smaller balances decreased as BTC/USD climbed from $19,000 on Dec. 1 to recent highs of $42,000, the 1,000 BTC+ group became an outlier, growing in presence.
The net effect is thus weak hands selling to strong — and the richer the entity, the stronger the hands.
“Don't be part of the #BTC transfer to billionaires, corporations and hedge funds .... at least not yet,” entrepreneur Alistair Milne warned Twitter followers while responding to Simos’ findings.
Guggenheim hints it will sell BT
While institutional buy-ins have become the standard narrative of Bitcoin over the past few months, a rogue “weak hands” signal from one of them caught analysts’ attention this week.
As reported, Guggenheim Partners, which announced a sizable fund allocation to BTC in late November, is allegedly planning to sell some of its holdings already. The trigger came from CIO Scott Minerd, who on Monday said that Bitcoin’s weekend drop provides the impetus to rethink its position.
“Bitcoin's parabolic rise is unsustainable in the near term. Vulnerable to a setback,” he wrote.
“The target technical upside of $35,000 has been exceeded. Time to take some money off the table.”
His suggestion appeared to confuse market participants, with responses querying the rationale behind the decision, coming just weeks after Guggenheim’s initial entry.
“CIO of huge firm day trading btc? It's a 5-10yr hold minimum,” macro investor Dan Tapeiro argued.
Institutional uptake comes amid a more fundamental supply and demand squeeze for Bitcoin, with large buyers already outpacing what miners can produce each month. At the same time, miners have stepped up their sales in recent days, in what one theory suggests is some well-earned profit-taking at or near all-time highs.
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Bar owner wants to sell two NYC watering holes for $1M in Bitcoin
New York City bar owner and crypto enthusiast Patrick Hughes is offering to sell two of his popular restaurants in the Hell's Kitchen neighborhood of Manhattan for cryptocurrency.
According to a report from the New York Post, Hughes will accept crypto payments in the form of #Ether (ETH) or #Bitcoin (BTC) for the sale of Hellcat Annie’s and Scruffy Duffy’s located on 10th Avenue in New York City. A sign in front of the bars states that the asking price is 800 ETH or 25 BTC for both properties — roughly $1 million at the time of publication.
Photo courtesy of Tamara Beckwith, NY Post
“I’m hoping to catch one of these crypto dudes who always wanted to own a bar,” said Hughes, referring to crypto as decentralized, global, and a “hot currency.”
The 56-year-old Queens native owner cited the shutdowns caused by the global pandemic as the one of the reasons behind the sale. Hughes reported he had been forced to reduce the number of staff at Hellcat Annie’s and Scruffy Duffy’s by roughly 90%, from 50 people before the March outbreak to “five or six” today.
Despite the seemingly first ever sale of a NYC bar for #crypto, some on social media criticized Hughes for the timing. The price of Bitcoin has surged to new all-time highs entering the new year, while New York businesses are still suffering the effects of the pandemic.
“NYC is a rapidly depreciating asset right now with the exodus of people leaving the city,” said Redditor Chuyito. “Hard pass.”
“Seems like he’s lowering the number of buyers for himself,” said Crypto Twitter user dladowitz. “No one is gonna commit to a price in BTC with a 30-day close period for escrow. Could double your price.”
Bars and restaurants have promoted crypto adoption by offering Bitcoin payments as a medium of exchange. Room 77, a bar and restaurant in Germany, was one of the first brick-and-mortar businesses to accept Bitcoin, with one customer buying a pint of beer in May 2011. The establishment closed its doors in October, which patrons speculating it may have been related to restrictions due to the pandemic.
At the time of publication, the price of Bitcoin is $37,761, having fallen 6% in the last 24 hours. The price of ETH has surged 21% in the last week to reach $1,266.
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Traders flock into altcoins as Bitcoin price trades sideways
The bullish momentum seen throughout the week has spilled over into the weekend as the majority of the top-100 tokens listed on CoinMarketCap are posting double-digit gains.
#Bitcoin (BTC) entering a brief consolidation period and the possibility of a third round of stimulus checks for American citizens are two possible reasons for today’s bullish price action.
While there are concerns about the recent large Bitcoin inflows into South Korean exchanges by #BTC whales, fundamentals factors like miner sentiment and decreasing supply are keeping investors feeling relatively optimistic about Bitcoin’s future price prospects.
A growing number of experts have voiced their opinion that Bitcoin’s recent bullish surge is due to outflow from gold as the top cryptocurrency is quickly becoming the preferred inflation hedge for the millennial generation.
Bitcoin finds a new range in uncharted territory
Following the new all-time high price in Bitcoin (BTC) of $41,940 on Jan 8, the top cryptocurrency has entered what looks to be a brief consolidation phase as bulls attempt to push the price higher after confirming the $40,000 level as support.
At the time of writing, BTC is up 1.53% on the day and trading at $40,690 as the 24-hour trading volume has seen a 26% decrease from the record high’s set on Jan 8.
Predicting what comes next is a difficult task at these price levels due to the absence of a price ceiling. In regards to price volatility, Chad Steinglass, the head of trading at CrossTower suggested that increased volatility could be the norm until the market moves “into a more stable environment of balanced flows and more stable prices.”
In private comments to Cointelegraph, Steinglass said:
“I think we're entering a stage in the markets where $1,000 intraday swings are pretty much going to be normal… Market maker liquidity relative to big player size is getting smaller and smaller. With market makers having reduced capacity to warehouse risk relative to trading flow, I expect prices to move pretty quickly.”
Has a new altcoin season started?
As has been the case in previous bull markets, a rise in the price of Bitcoin is often followed by a consolidation phase. During this time, traders tend to shift their attention toward altcoins and Bitcoin profits shift into smaller cap cryptocurrencies.
According to Jean Baptiste Pavageau, a partner at ExoAlpha, the current bullish momentum seen from Bitcoin will eventually slow down and at this juncture investors are likely to pile into altcoins. Pavaageau told:
“Indeed, we have started to observe a classic “wealth” distribution pattern over the past 2 weeks, where Bitcoin investors are looking to take their profit and invest in other blue-chip coins. While the upside on Bitcoin is decreasing, the altcoin market is becoming more appealing for traders and investors who are looking for large returns. We expect to see Bitcoin dominance starting to decrease and the altcoin market booming over the next few weeks.”
#Ether (ETH) price continues to surge to new yearly highs as the price rallied 4.2% to $1,267. Meanwhile, Bitcoin Cash (BCH) and Bitcoin SV (BSV) are up 23.6% and 61% respectively.
Coming off a week filled with positive developments for stablecoin projects, MakerDAO and its MKR token, which govern the development of the DAI stablecoin, has seen an increase of 45% over the past 24-hours and currently trades for $1,530.
The overall #cryptocurrency market cap now stands at $1.1 trillion and Bitcoin’s dominance rate is 69%.
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As gold crashes, Jim Cramer says money is ‘all going to crypto’
As the price of gold plunged on Friday, CNBC’s Jim Cramer said the rise of #crypto may partly explain the sudden disinterest in the precious metal — a potential sign that the mainstream has flipped the script on #Bitcoin (BTC) and digital assets.
When asked why gold isn’t rallying amid the political chaos on Capitol Hill this week, Cramer said the market is either not as chaotic as it seems or that all of the money is going into cryptocurrency:
The price of gold sold off more than $60 on Friday, hitting a low of $1,852.50 per troy ounce on the Comex division of the New York Mercantile Exchange. Bitcoin, meanwhile, surged to new all-time highs above $41,000.
Cramer is a recent convert to Bitcoin and cryptocurrency, having bought the mid-December 2020 dip when BTC was under $18,000. He said of his purchase at the time:
“I will buy — like I usually do — as something comes down. [...] I’m going to diversify into some Bitcoin — not a big position for me — but it's certainly important to be diversified, and Bitcoin is an asset and I want to have a balance of assets."
If Cramer held onto his BTC, his position has more than doubled by now.
The flagship cryptocurrency continues to outperform gold and every other major asset thanks in part to an influx of new institutional buyers. Measured in bullion, 1 Bitcoin is now worth more than 20 ounces of gold. A week earlier, the Bitcoin-gold rate was around 15 ounces.
The idea that Bitcoin is taking market share from gold is nothing new. A recent analysis from JPMorgan Chase concluded that Bitcoin’s digital gold narrative is pulling investors away from precious metals. The analysts said this trend could intensify as more institutional money pours into the crypto space.
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Bitcoin price quickly rebounds to reach $41,000 as market cap passes Tencent
#Bitcoin (BTC) returned to $40,000 on Jan. 8 as another price consolidation period ended characteristically briefly.
Data from Coin360 and TradingView showed BTC/USD quickly rise to recapture the psycholigically significant price level during trading on Friday.
After a 9% fall following runs to all-time highs the day before, Bitcoin managed to stay lower only for a matter of hours before bullish momentum returned. Thereafter, the largest cryptocurrency not only matched its all-time highs, but delivered a new one — $40,087.
"Seems we only dump to shake out the weak hands these days," a popular social media trader summarized on the day.
Big player market caps topple to BTC
Bitcoin also beat the market cap of Chinese giant Tencent and briefly passed "darling" tech firm Tesla as it rose to $41,000 per coin.
Data from CoinMarketCap and Companies Market Cap confirmed that on Jan. 7 Bitcoin almost entered the top five companies by market cap.
As BTC/USD crossed the $40,000 mark, Bitcoin's market cap grew to unprecedented levels, topping out at $745 billion. A day later, following a correction, the figure retreated to $737 billion before regaining its earlier record.
At the same time, Tesla delivered a swift 7.3% daily gain, allowing it to outpace Bitcoin once again after losing its market cap prowess to the cryptocurrency for a short period. On Friday, the company was on $773 billion as Bitcoin once again sailed through $40,000.
A more decisive victory came over Chinese tech giant Tencent, however, which at $716 billion firmly bowed to Bitcoin's momentum. Previously, Tencent was also worth more than Tesla.
As reported, Tesla had likewise outperformed against stocks and cryptocurrency in 2020, beating even Bitcoin's performance versus its March lows. A look at Tencent stock growth meanwhile underscores the slow pace of gains which characterized other stocks compared to cryptocurrency.
"There are still companies in the world that are worth more than #Bitcoin. Crazy," Tyler Winklevoss, co-founder of Gemini exchange, commented on the phenomenon.
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Finally, a good reason to sell Bitcoin: Hodler liquidates to pay off parents’ mortgage
Reddit’s r/Bitcoin community continues to pull on our heartstrings. On Thursday, a user by the name of “u/Bigtony96” claimed to have sold their entire #Bitcoin (BTC) stash to pay off their parents’ mortgage.
The Redditor supposedly unloaded a total of 6 BTC accumulated over the past three years to close out the remaining balance on their parents’ home. They said there was enough money left over to cover taxes and, possibly, buy a new car.
“Today is the day I've dreamt of for the past several years, and it feels so surreal,” the user said.
In the post, u/Bigtony96 explained their motivation for wanting to help their parents, whose restaurant business was ravaged by government lockdown orders:
“My parents are everything to me. [...] They're in the restaurant business and the pandemic forced them to burn through a large chunk of their savings, and they stress out over finances every single day. My dad always told me one day he'll retire once the house is paid off, and that day is finally here.”
While u/Bigtony96 didn’t specify exactly when the BTC was sold, the sale likely occurred on Thursday, as evidenced by the title of the post: “Just sold to pay off my parents’ mortgage.”
Bitcoin’s price surged above $40,000 on Thursday in a remarkable show of force. As reported, it took BTC less than three weeks to double in price from $20,000.
This isn’t the first time Cointelegraph has picked up on intriguing stories from Reddit’s Bitcoin and crypto communities. Earlier this week reported that a user sold their free Reddit Moon tokens to make rent after burning through all their savings. Another managed to covert their Moon tokens, which are earned through community engagement, into Bitcoin for huge profits.
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