Welcome to the 32nd edition of ‘The Digital Asset Digest’. Today we will take a look at the technicals behind this latest bear run, as well as discussing liquidity dynamics of Ethereum as it relates to DeFi. Enjoy these updates!
Source: BNN Bloomberg
“Three years ago, Bitcoin’s historic surge dominated Thanksgiving dinner conversations. This year, the cryptocurrency is in the midst of another notable rally and yet almost no one’s talking about it. How fevered has Bitcoin’s latest leg higher been? With the coin trading around US$16,800, it’s been more expensive in only five other instances in the past decade, Bloomberg data show. All of those came during the 1,375 per cent surge in 2017 that saw it reach close to US$20,000 before a spectacular plunge wiped out 70 per cent over the next year. A cross above US$17,000 would mark its fifth-highest closing price ever.”
Source: Finance Magnates
“The Securities and Exchange Commission of Pakistan, also known as SECP, is working to develop a regulatory framework for cryptocurrencies. The report comes according to a paper on private digital assets that the SECP published on November 6th. The SECP further said that it “welcomes any input/comments. The document’s stated purposes include to create a “definition to recognize digital assets in Pakistan,” as well as to find a “way forward for designing and developing a robust regulatory regime at par with the World for regulating Digital Assets,” as well as to “present policy proposals to industry participants and stakeholders.”
“The Bitcoin Cash network, a result of a hard fork from Bitcoin, has split into two new blockchains, again. At press time, Bitcoin Cash ABC (BCH ABC) has received no hashpower, meaning that it is possible Bitcoin Cash Node (BCHN) will become the dominant software of the Bitcoin Cash network, according to data from Coin.Dance. The last “common block” among bitcoin cash (BCH, +3.30%) miners was #661647, mined by Binance. The first block that split the Bitcoin Cash blockchain was mined by AntPool. Since then, hashpower has been in BCHN’s favor, as miners have mined multiple consecutive blocks on the network.”
“On Nov. 7 several major media outlets announced that after 4 days of rigorous vote-counting in key battleground states Joe Biden had managed to secure enough electoral votes to become the 46th President of the United States. As the excitement over an incredibly close election starts to abate, analysts will take a closer look at how a Biden presidency may impact traditional markets and Bitcoin price.
In our most recent article on the Global Digital Assets blog, we discussed Tether and their monumental role in the cryptocurrency ecosystem as the largest stablecoin and 3rd-largest cryptocurrency.
Read it here!
INDUSTRY WIDE SNAPSHOT
This was a week of records, that’s for sure!
Total value locked (TVL) has been in an uptrend for a bit, and hit an all-time high of ~$13.95 billion before dropping back down to $13.73 billion. With $14 billion just around the corner, this is exciting enough, but we also have Uniswap hitting $3 billion TVL on its own, which is another major milestone.
This tracks well with the recent $16k milestone that BTC hit last week, and the fact that it is heading towards $17k. Across the board, the crypto world thinks we’re heading into a massive bull run.
The big question is how DeFi and this bull run will affect each other.
On-chain analytics provider Santiment shows that the amount of ETH being held on crypto exchanges is at a 2-year low. This is commonly seen as an indicator of confidence that Ethereum holders have in the long-term value of the cryptocurrency.
We see it as unlikely that Ethereum whales will sell off their currency anytime soon, but more importantly, the low liquidity of ETH could be due to the high TVL of the DeFi industry. With 13.55% of ETH being traded right now, that $13.73 billion that is off-exchange is actually having a very bullish effect on ETH”s price.
So as increasing TVL lowers ETH liquidity, we expect to see a run-up in ETH’s price. Although there will be an increase in ETH fees, long-term locking up of liquidity should counter the bearish effect and have an overall upward trend.
“Proof of stake is almost entirely capital costs (the coins being deposited); the only operating costs are the cost of running a node. Now, how much capital are people willing to lock up to get $1 per day of rewards? Unlike ASICs, deposited coins do not depreciate, and when you’re done staking you get your coins back after a short delay. Hence, participants should be willing to pay much higher capital costs for the same quantity of rewards.”
In the past seven days the price of Bitcoin has increased by around 10%, coming from its last Monday’s low at $14,895 measured to today’s high at $16,382. The price has reached $16,494 on the 13th of November but has fallen back to $15,766 before it came up to the current levels.
Source: Trading View
Looking at the hourly chart we can see that the pullback made from the 13th of November was a breakout to the downside from the ascending triangle made from the 5th. This is the continuation of the impulsive move from the 3rd of November when the price started its 5th wave from the Minute count.
As the price made a breakout it likely means that we are seeing the test of the November 6th high which was the 3rd wave from the lower degree Minuette count, for support. A bounce has been made after which the price started increasing again and is close to its last Friday’s high.
This is most likely the developing 5th wave from the Subminuette count which is to develop to the ascending triangle resistance line again before its completion. The price target for the expected increase would be somewhere around $17,000.
If this is the 5th wave from the Minute count it would mark the completion of the five-wave impulse from March 13th when the price of Bitcoin fell sharply to $4300 at its lowest spike and was increasing even since. In that case a more significant correction can be expected afterwards as since then we have seen the price mostly stabilizing and keeping up its floor levels on a sideways movement without significant downturns.
This concludes another issue of the ‘Digital Asset Digest’. We hope you enjoyed this week’s edition. We are constantly making changes and are always open to feedback.
On another note, our research team will be putting out a piece on the real estate industry tomorrow. To have this report sent right to your inbox, subscribe here!