Wednesday, 26 January 2022

Market Summary

Market Summary 26 January 2022

Bitcoin Price: US$ 36,934.26 (+0.78%)
Ethereum Price: US$ 2,457.37 (+0.79%)


Key Trends as Markets Seem Fed Up

  • Bitcoin put in a miserable week, dropping to $38.4K at the time of writing. In the hours and days that followed, BTC had no mercy as it continued its swan dive to fresh lows. After yet another series of liquidations, Bitcoin dropped another 11% before bouncing off $34K, a key level of support.
  • As we head into the conclusion of this week’s FOMC meeting on Wednesday, Bitcoin is in an interesting position. After a precarious weekend, Bitcoin finds itself within striking distance of the range it broke down from last week. However, a golden rule in trading is that previous resistance becomes support when the associated resistance level (or price) is broken (and vice versa). In this case, we have broken down through some key support, so we’d expect these levels to act as resistance as price revisits these areas. Key resistance levels to watch are:
    • $38.5K — This was the price level where BTC tried to find support before pulling back to $34K.
    • $39.5K-$41K — This range has multiple confluence factors. First, this is the previous range low. In addition, this range includes the 2022 yearly VWAP, which has already proven to be a key level of dynamic resistance for BTC over the last 3 weeks.
  • Retail option traders are positioning themselves net short the 25MAR $40K calls and net long the 25MAR $35K puts, indicating a more bearish outlook for BTC.
  • Institutional flows, however, point to the opposite outlook i.e. selling the 25MAR $35K puts and buying 25Mar $40K calls.
  • The latest wave of risk-off sentiment is not isolated to the world of crypto; risk assets, most notably high growth tech stocks, have also taken a beating over the last few weeks, with top benchmarks like the Nasdaq 100 Index down ~15% from recent highs. Popular incumbents like GOOGL and AMZN have fallen 10-15% since the start of the year, whereas other high flying names like NVDA or NFLX have dropped ~24% and 38% YTD, respectively, so crypto assets aren’t the only ones taking it on the chin lately.
  • Correlations between BTC and the equity market tend to rise when volatility expectations rise above longer term averages.
  • We talked about how BTC is becoming the canary in the coal mine for risk assets because of the strong similarities in the biggest macro tailwinds that propelled both to new highs over the last 18 months. Interestingly, BTC is catching a bid today ahead of the FOMC meeting tomorrow, coinciding with a small pullback in hawkish market expectations the last few days (as measured by Fed funds futures).


Ex-Goldman Sachs banker launches crypto app after $33M raise

  • The former head of product for “Marcus by Goldman Sachs” has launched a crypto investing app, “Domain Money,” raising $33 million from investors on Tuesday.
  • Adam Dell, brother of Dell computers tycoon Michael, assembled a team of 25 former staff members from Goldman Sachs. Other staffers are leaving their roles at Bridgewater Associates, Morgan Stanley, Coinbase Global Inc. and BlockFi. Former Goldman Sachs chief technology officer Elisha Wiesel, and Christopher Giancarlo, the former chairman of the Commodities Futures Trading Commission have also been tapped to join the project.
  • The app is targeted at retail users, who will be charged an annual management fee of 1% for actively managed and curated investment plans. The app features real-time market intelligence, live customer agents as well as social sentiment analysis.


Zuckerberg’s Diem reportedly weighing sale after stablecoin plans falter

  • Meta-backed crypto initiative “Diem” is reportedly trying to sell its assets, seemingly calling time on Facebook founder Mark Zuckerberg’s grand ambitions for a stablecoin to act as the internet’s currency.
  • Diem — which was previously known as Libra — is Meta Platform’s cryptocurrency initiative. According to insider sources speaking with Bloomberg, it is considering selling assets to return capital to its investors.
  • The sources said that Diem is in discussions with investment bankers to determine the best way to sell its intellectual property and cash out on whatever value the project has maintained.


IMF urges El Salvador to remove Bitcoin’s status as legal tender

  • Members of the executive board at the International Monetary Fund are urging lawmakers in El Salvador to no longer recognize Bitcoin as legal tender.
  • The IMF reported on Tuesday that though digital payments had the potential to increase financial inclusion in the Central American nation, the use of Bitcoin (BTC) as legal tender carried “large risks” related to financial stability, financial integrity and consumer protection. The executive board directors urged El Salvador authorities to “narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status,” also expressing concern about the potential risks of issuing Bitcoin-backed bonds.
  • The officials’ recommendation came following the conclusion of an Article IV consultation in El Salvador. According to the IMF, during such a consultation, a team of economists visits a country “to assess economic and financial developments and discuss the country’s economic and financial policies with government and central bank officials.”


YouTube CEO hints that NFTs could be added to creator platform

  • YouTube’s CEO, Susan Wojcicki, addressed YouTube’s priorities for 2022 in a letter published Tuesday on the company blog. Among those priorities is the possibility of adding nonfungible token, or NFT, features for the platform’s video creators.
  • What this could look like is yet to be determined, however. No additional details were provided in Wojcicki’s statement aside from the claim that the YouTube team will use developments in the Web3 space “as a source of inspiration.”


‘The Internet Computer for Geeks’: A New DFINITY White Paper

  • The Internet Computer reimagines blockchain architecture. It was conceived to deliver on the concept of a “world computer” that arose within the early Ethereum community, reflecting years of dedicated research and development by a team of more than 200 world-renowned cryptographers, distributed systems engineers, and programming language experts at the DFINITY Foundation.
  • To help make the technology behind the Internet Computer accessible and understandable to the public, the DFINITY team has published “The Internet Computer for Geeks,” a new white paper that explains the fundamentals of how the blockchain uses smart contracts to power an emerging decentralized ecosystem of interoperable Web3 dapps, DeFi platforms, games, NFTs, social media, and metaverse projects.


Russian finance ministry official calls for crypto regulation, not restriction

  • In surprising comments made by the Russian director for financial policy, Russia could be softening its stance toward crypto. Ivan Chebeskov, a director within the Ministry of Finance, has come out in support of regulating crypto rather than banning it.
  • His support is a response to the Russian central bank proposing a blanket ban on crypto mining and trading.
  • According to Chebeskov, banning cryptocurrency operations and mining will lead to the country lagging behind the worldwide tech industry. The minister instead suggested that cryptocurrencies should be regulated:
  • ​​“We need to give these technologies the opportunity to develop. In this regard, the Ministry of Finance is actively involved in the development of legislative initiatives in terms of regulating this market.”

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