Welcome to the 22nd edition of ‘The Digital Asset Digest’. Over the last few weeks, we’ve been talking a lot about internal trends within crypto. This week, it seems like all sectors, both inside and outside of crypto, took a tumble.
This week’s analysis may seem a bit bleak, but these types of corrections are natural and could easily be followed by positive news. Learn more about what we expect to happen inside.
Bitcoin suffered a strong drop near the later end of this week as many of the past weeks’ gains were erased and it dropped 14.85%. Ether and XRP suffered much the same fate with 26.65% and 17.68% drops, respectively. Tether continues to hold the spot of the third largest crypto and has widened its lead considerably.
Bears were patting themselves on the back last week, with nearly every sector performing down (the single exception being consumer non-cyclical). The NASDAQ closed down 5.81% and the S&P 500 ended down by 3.61%. Political tensions may finally be affecting the markets, or it’s possible the bulls are a little tired out.
Gold’s weekly performance negated last week’s 2.0% gains, with a loss of 2.64%. Crude oil was down far more, with a steep drop of 14.15% after the effects of Hurricane Laura were felt throughout the country.
“I was right on #gold, but wrong on #Bitcoin. The latter did manage to get through resistance and rally up to $12K, thanks in large part to a ride on gold’s coattails and a massive TV advertising buy by Grayscale. By falling back to $10K Bitcoin quickly returned to a bear market.”
“Like Bitcoin, Defi is still “very young” in the financial industry. In order for Defi to grow, the world must first have a sympathetic view on Bitcoin, and financial institutions must realize that this is an opportunity to transform Cefi to Defi. Well, this is only the very first step for Defi to become a major sector in the financial industry.”
“Businesses have trimmed all that they could trim and are starting to lay off workers, not because they are being forced to shut down, but because there is no real demand for their services.
The airlines being the biggest example of this with American Airlines announcing they would be laying off or furloughing 40,000 employees in the coming weeks without government assistance.
Basically, the real pain economically is just now going to be felt if the government doesn’t act and that is preemptively being reflected in the equity markets as well as the crypto markets.
It’s a major reason why the markets have been pummeled the last several days.”
“Abel was a “large-scale promoter” of the club, according to the Department of Justice announcement yesterday. He posted videos online about the scheme and gave presentations and speeches about BitClub throughout the US, Asia, Africa and Europe. He allegedly told US investors to use a VPN—a virtual private network that enables its users to browse the Internet anonymously—to evade US authorities.”
INDUSTRY WIDE SNAPSHOT
“Covid-19 and the flow of government handouts have been manna from heaven for Robinhood. The firm has added more than 3 million accounts since January, a 30% rise, and it expects revenue to hit $700 million this year, a 250% spike from 2019, according to a person familiar with the private company’s finances. Not since May Day 1975, when the SEC deregulated brokerage commissions, giving rise to discount brokerages like Charles Schwab, has there been a more disruptive force in the retail stock market. Robinhood’s commission-free trading is now standard at firms including TD Ameritrade, Fidelity, Schwab, Vanguard and Merrill Lynch.”
Source: Trading View
We are continuing our bullish thesis on Bitcoin, even with the recent drop below $10k. We remained bullish all throughout August, largely due to the positive fundamental factors at play, and this hasn’t changed.
Yesterday’s drop seems more like a correction than the beginning of a bearish trend for 3 big reasons:
- The RSI dropped far into the oversold territory.
- Bitcoin’s price quickly rebounded back above $10k, indicating a strong support level there.
- The MACD indicates the same sharp rebound that usually precedes an uptrend.
Our near-term thesis remains the same, and we expect $12k to be regained in the next 2 weeks as momentum builds and consolidation at this level continues.
The rotation into altcoins has been very strong so far this year, and with the Grayscale premium coming under attack, this trend may go even further. Bitcoin has performed well over the course of 2020, and as tensions rise, we’re curious to see what happens in the markets as much as you are. Join us next time on ‘The Digital Asset Digest’ to find out.
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As always, thanks for reading and we hope to hear from you soon.