Weekly TL;DR - Aug 15 to Aug 21, 2022 - BTC, ETH & more
Risk assets struggled Friday, with Nasdaq trading 2.2% lower and BTC trading down about 10% on the same move. That’s a pretty brutal Beta on a downtick, especially when BTC has been struggling to track equities on the way up. ETH traded worse, making the extent to which ETH is crowded extremely evident. Through the weekend, BTC was relatively flat, and ETH continued to sell off, with ETH/BTC down to .075 compared to above .08 late last week. Over the past 72 hours, ETH has managed about 50% more realised vol than BTC, a state which could very well persist between now and the Merge.
While ETH was down about 11% over the past 72 hours, EOS is up about 10%. There will be a contentious hard fork scheduled for September 21 as the EOS Network Foundation spins off of the EOSIO blockchain due to the lack of development of the EOS DeFi ecosystem (link). EOS, as a token, sits in an interesting space in the market structure: it’s been around long enough that it trades just about everywhere, though it hasn’t gotten much love from the market and as such liquidity has decayed considerably
In the DeFi 2.0 space, Fei is closing down in a surprising way, leaving protocols to which it has promised funds out of luck. Fei was part of one of the largest DeFi mergers to date, joining with Rari at the end of 2021. In April, the protocol was hacked for $80m, and governance token holders voted against using protocol-controlled-value to fill the gap. Why does this matter? Fei is selling off all of its protocol-controlled-value, a total of about $120m of ETH, and the proceeds will be used to pay off TRIBE holders. TRIBE traded +30% over the weekend as a result, despite the announcement it would wind down.
Bitcoin (BTC) and several other alts witnessed a sharp sell-off on Aug. 19, but the reason for the same remains unknown. The sharp fall resulted in liquidations of more than $550 million on the day, marketwide. Barring a V-shaped bottom, other formations take time to reveal their true impact, as buyers and sellers compete to gain the upper hand. This results in several random volatile moves that could be beneficial for short term and arbitrage traders, but long-term investors should avoid getting sucked into the noise. The % of Bitcoin supply that has been stagnant since 2017 hit a new all-time high of 24.35% on Aug. 18, suggesting that investors continue to hold the asset, not seeking minor short term gains.
The macroeconomic scenario doesn't seem to be witnessing much change either. The S&P 500 ended its recovery after minutes from the FED’s July meeting. The FED hinted that rate hikes are likely to continue, as there is no hard evidence of inflation easing. The impact of this was seen negatively in the marketplace, causing financial markets to go into the red, though much of this seemed to be factored in already.
It is difficult to say at which point the crypto market is today, but the past few weeks have seen volatility, and now some form of consolidation seems to have set in. Investors continue to remain cautious, while short term traders are banking to the volatility to make short term gains.
- Australia's new government finally signals its crypto regulation stance.
- Celsius’s financial troubles mounted further as a new coin report showed the company had a balance gap of $2.85 billion, more than double what it had shown in the bankruptcy filing.
- Ripple partners with Travelex to launch enterprise crypto payment service in Brazil.
- The Prudential Authority of the Reserve Bank of South Africa sent out guidelines to its subsidiaries in an effort to prevent illicit activities, encouraging banks not to cut all ties with cryptocurrency.
BITCOIN TECHNICAL ANALYSIS
BITCOIN after making the low of C$22,950 on 18th June surged almost by 40% within three months and made the high of $C$32,229. However, the bulls failed to manage the grip on the asset as BTC faced stiff resistance around the C$32,000 (50% Fibonacci Retracement Level) and did not give a daily closing above the resistance. Post this move, the asset witnessed a correction by forming a ‘Lower Top Lower Bottom’ pattern and made the weekly low of C$27,075. On a daily time frame, BTC is trying to take support at the lower uptrend line of the ‘Ascending Channel’ pattern. To rally, it needs to give a breakout above the pattern. BTC has a strong support at C$26,500, If it holds and sustains the support then we can expect the up-move whereas a break or close below the support will lead to further downfall.
Disclaimer: This blog is not intended to provide investment, legal, accounting, tax or any other advice and should not be relied on in that or any other regard. The information contained herein is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of cryptocurrencies or otherwise.