Welcome to the 41st edition of ‘The Digital Asset Digest’. Today we look at some massive investments into Bitcoin, as well as celebrating some all-time highs. As a bonus, you get our regular technical analysis with a trading recommendation.
- With the announcement by Elon Musk that Tesla had purchased $1.5B of BTC, Bitcoin catapulted to new ATHs of $43.7K today.
- All eyes are on Bitcoin because now that it has broken $40k, the 30% drop can be viewed as a mild market correction similar to what occurred in 2017. Bitcoin looks like it’s still following the same fractal as the 2017 bull run, which means we could still be in part 1 of the bull run.
- Liquidity may dry out as people take some time off during Chinese New Year starting on the 12th. This is bolstered by FTX’s volume monitor showing a downward trend, as well as Asian-based exchanges largely skewing towards derivatives.
- We’ve noticed that every time BTC falls close to $30k, massive spot buyers from Coinbase Pro provide support and withdraw new holdings from the exchange.
- To further this bullish signal, we’ve seen record inflows of stablecoins ($552MM on Feb. 3) into exchanges and outflows of BTC from exchanges.
- ETH had choppy price action for last month where it was seeing higher lows, but has now broken through to ATHs and isn’t looking back.
- The ETH CME launch will bring extra volatility to the market. 2018 launch of CME Bitcoin futures coincided with the end of the bull run and the big question is if this launch will be different.
- Expect to see institutional investors go short ETH futures to cover their spot long exposure
- The runway for alts may be cut short if BTC or ETH continues to rally. However, we’re still seeing lots of price action on DOT and LINK.
“Hedge fund legend Bill Miller is exhibiting an even larger appetite for Bitcoin (BTC). According to a Friday filing with the United States Securities and Exchange Commission, The Miller Opportunity Trust is seeking indirect exposure to BTC via the Grayscale Bitcoin Trust.”
“Decentralized derivatives trading platform Injective has joined forces with Huobi’s ECO Chain to increase cross-chain derivatives adoption in the industry.
According to the announcement, the collaboration will enable traders to seamlessly bridge over Huobi ECO Chain (Heco) assets onto Injective, enabling the creation of new DeFi derivative products.”
“Tesla announced Monday it has bought $1.5 billion worth of bitcoin.
In a filing with the Securities and Exchange Commission, the company said it bought the bitcoin for ‘more flexibility to further diversify and maximize returns on our cash.’ ”
INDUSTRY WIDE SNAPSHOT
Trading based on a fundamental business model is a time-tested way to make money in the markets. Being able to choose a cryptocurrency that is innovating in a certain space and is likely to beat out the competition is a great way to invest.
However, another way to capture alpha is by looking at where the money is flowing and trying to beat it there.
Right now, it’s looking like Aave, Uniswap, Polkadot, Monero, and several other coins are going to have their own Greyscale funds. It’s not for sure yet, but the process is being explored for at least a few of these.
Much like in 2019 when one could do well by trying to predict which cryptocurrencies would be listed on Coinbase next, this is looking like the next level of this “flow of money” strategy.
It’s like these gains are already baked into the price of the above-mentioned tokens, but in the future, trying to figure out what Greyscale’s next move is could be a very solid path to follow.
”All bets are off the table now. I was worried that [at] around $35,000-$40,000 we were not seeing a huge amount of institutional flows, and over the weekend the market moved higher in a fairly weak fashion,” noted Chris Thomas, head of digital assets for. Swissquote Bank. “But Tesla would have bought over the last few weeks, a little every day.’ ”
Yesterday, the price of Bitcoin reached a new all-time high, coming to $44,863 at its highest point so far from its lowest point on Sunday of $37,400. This was an increase of 19.95% but what is even more significant is that a breakout was made from the significant horizontal resistance range and an impulsive move to the upside.
This indicates that the prior correctional formation from the 10th of January has ended and now we have a clear confirmation with the bullish momentum indicating a strong uptrend continuation.
After the five-wave move inside the ascending channel was ended we have seen a minor pullback but an immediate breakout to the upside. This was most likely the 3rd sub-wave of the higher degree 3rd wave which is why further upside movement would now be expected.
As the price is to develop its five-wave pattern further higher high could be seen in the upcoming days with potentially exceeding the $60,000 mark by the end of its development.
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, a research report on one of our portfolio companies was recently released and we think you’ll learn a lot from it. To check out this free report, click here!