Weekly Crypto Market Report: Nov 1-7, 2021 - Bitcoin, Ethereum, Polkadot, Aave & More
Market Fundamentals Analysis
It's early days, but November appears to have done a good job picking up the bull run-torch from October. BTC closed out the week, having been almost entirely range bound between C$73k-79k, before witnessing a rally today. Volatility fell steadily by approximately 8% over the course of the week and currently sits at ~58%. ETH however positioned itself to witness another upward trend, as it hit a new ATH of C$5,950 and is up by 8% week on week. ETH/BTC has returned to 19.8%. Non-ETH L1s have seen their dominance increase with AVAX and LUNA joining the ATH club soon after SOL did so last week.
DeFi king AAVE had a fabulous weekend as it was up 7% on the back of the announcement of Aave v3.0 - the first major update to the protocol since December 2020. The proposed update will improve capital efficiency, risk mitigation, decentralization and cross-chain facilitation. As of date, Aave is live on Ethereum, Polygon and Avalanche with plans to expand to more. Ethereum DeFi "blue chips" face significant competition from non-ETH DeFi apps - Aave's aggressive expansion onto other chains and efforts to make the transfer between them through the portal seems to be a distinct advantage, making it a wise way to compete. Voting for the update began last Friday and is scheduled to close on 11/11. Early returns show overwhelming support, with volumes up, along with strong inflows and momentum.
Notably, DOT is taking a breather down 7% after it hit another new ATH of C$69.7 last week, as it nears parachain auctions. On a side note, Solana's run leading into breakpoint has been staggering. It's up 33% over the past week and it's now a Top 5 market cap coin.
Derivatives have lost steam over the past couple of days. BTC futures OI is stable across some venues but is decreasing steadily on the CME. CME OI is 26% lower than ATHs seen on 10/25. Perp funding rates are trending between +1-3.5bps after being slightly more elevated through most of the last week. Similarly, ETH futures OI is stable too and perp funding rates are fluctuating between the +2.5-4bps range. With volume dropping for BTC and ETH, there isn't much happening in the options space for both tokens over the last few days. In a general sense, there is barely any outsized directional positioning in the marketplace, which is good for stability. Potentially, this could mean that BTC and ETH stay range-bound while dispersion might increase across altcoins. At current levels, BTC dominance stands at 43%, while ETH has seen a slight tick upwards, and currently dominates 20% of the whole $2.86T crypto landscape.
Last week was important from a macroeconomic standpoint for markets. The October US jobs report was impressive. The US added 531k jobs vs. expectations of 450k, while the unemployment rate fell to 4.6% vs. an expected 4.9%. Both figures beat expectations for the first time in three months. As a result, both crypto and equity markets hit record highs. Interestingly, however, BOE shocked markets by keeping their key rates unchanged, citing growth concerns even though they are forecasting increased inflation. This is probably the reason for BTC’s lack of movement immediately post-announcement, as some might have predicted a sell-off on the expectation of hawkish pressure on the central bank. The macro floor under BTC remains uncertain for now, and to some extent depends on the FED’s take on interest rate hikes, and when they will be implemented.
- Vikram Pandit, the former CEO of Citigroup Inc. and co-founder of Orogen Group, declared that traditional financial institutions and banks will think about trading crypto soon.
- New York City’s mayor-elect Eric Adams, announcing plans to have city schools teach students about the technology that underpins Bitcoin and other cryptocurrencies.
- JP Morgan lead analyst Nikolaos Panigirtzoglou has predicted that the price of bitcoin could reach $146K in the long term, with a short-term price target of $73,000 for 2022.
- Federal Deputy Luizão Goulart, a Brazilian congressman, proposed a bill to legalize crypto payments as a mode of payment for public and private sector workers.
Bitcoin Technical Analysis
BITCOIN, after making the all-time high of C$82,759 faced stiff resistance around the peak and witnessed some profit booking. The asset corrected almost by 13.5% making the low of C$71,662. BTC made the ‘Tweezer Bottom’ pattern at the crucial level at C$71,660 near (38.2% Fibonacci Retracement Level) which indicated that the bulls were aggressively defending the support. Post this move, the asset was consolidating and was forming a ‘Bullish Pennant’ pattern. However today BTC gave a breakout above the ‘Bullish Pennant’ and is trading near the all-time high and if it breaks and closes above the all-time high then we can expect the prices to further rally up to C$90k - C$95k mark. The rising Moving Averages and RSI (64) indicates strength in the uptrend.
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Information provided in the weekly market report is for information purposes only and should not be interpreted as investment, legal, or tax advice. Prior to investing, it is very important to evaluate your investment objectives and your risk tolerance carefully. This technical report is not meant to provide guarantees of future performance, and users should not rely on it, as the actual performance and financial results may differ significantly.