Monday, 7 February 2022

Market Summary

Market Summary 7 February 2022

Bitcoin Price: US$ 42,380.87 (+2.41%)
Ethereum Price: US$ 3,055.00 (+1.41%)


The Fight Against The Resistance – Market Insights #4

  • We still believe a BTC macro trend reversal is still a ways away. The current compression of the short term grouping off of the $34K support is an encouraging sign, but there is still a lack of penetration into the longer term grouping that typically signals a strong reversal is underway. The longer term grouping is also yet to experience any compression, which could be a sign of potential consolidation ahead of a reversal.
  • $39K-$41K — As previously noted this area has several factors that make it an attractive supply/resistance zone. First, this is the prior range low. Second, the 2022 yearly VWAP is located around $39.2K. This area has already acted as the heavy resistance zone, with price being almost instantly rejected on first return post breakdown.
  • Bitcoin’s MVRV ratio is currently hovering around 1.5, which does leave some room for it to fall further. Historical lows around ~0.75-1.0 have typically served as solid long-term entry points, though MVRV has fallen to the same level we saw last summer before BTC reversed course and broke to new ATHs.
  • The last few months have been telling as correlations between BTC and traditional market indices (e.g. SPX, NDX, RTY) have been steadily rising amid these turbulent conditions. To reiterate, this is to be expected. In our last section we mentioned that correlations of risk assets approach 1 during periods of market distress. 


Axie Infinity token AXS gains 40% after taking steps to avoid ‘permanent economic collapse’

  • The price of the Axie Infinity (AXS) token has surged by nearly 40% in three days. AXS rallied to over $65, its best level in more than two weeks, as Axie Infinity revealed a revamped reward structure for its player-vs-player (PVP) competition round.
  • In detail, the play-to-earn startup expanded its number of leaderboard slots to 300,000 and boosted the amount of AXS rewards to 117,676 from the earlier 3,000 for the next season.
  • “This will supercharge the competitive Axie scene and create more demand for quality Axie teams in the ecosystem,” Axie Infinity explained, adding that their move would create a $6 million worth of prize pool for Season 20.


All eyes on Asia — Crypto’s new chapter post-China

  • China’s stance on crypto is not unexpected, given the country’s long-standing policy of capital control. While the pace of recent enforcement took many in our industry by surprise, players have — to their credit — adapted swiftly. Miners resettled in Kazakhstan and the United States, with exchanges and traders settling in Singapore and Hong Kong.
  • Singapore, already a global financial service and wealth management hub, is a clear frontrunner — crypto has been regulated since 2019 under new legislation. With that said, a high bar has certainly been set, with many players reportedly struggling to meet the stringent requirements of the Monetary Authority of Singapore.
  • Outside of Singapore, Thailand has been buzzing with active participation from crypto startups and traditional financial institutions alike. Thailand’s fourth-largest bank — Kasikornbank — started experimenting with DeFi, on top of introducing recently its own nonfungible token (NFT) marketplace. The country’s oldest lender Siam Commercial Bank has also entered the game, having acquired a majority stake in Thailand’s largest digital asset exchange Bitkub. Meanwhile, the state-owned Tourism Authority of Thailand is exploring utility tokens, part of a payment ecosystem that negates the need for cash-based transactions.
  • Indonesia, with more than 66% of its population remaining unbanked, is an Asian market ripe for new use cases of crypto. Crypto transaction volume exploded by ten times, surging from nearly $4.5 billion to around $50 billion in October 2021. There are now more crypto traders than stock investors on the Indonesia Stock Exchange. Retail investors are attracted by the ease of trading crypto in the country, where all one needs is a smartphone with internet access, and approximately $.75.
  • Signals from the Indonesian authorities have been mixed, banning crypto payments but legalizing trading, with plans for a national crypto exchange. The Central Bank of Indonesia is also exploring a national digital rupiah to “fight” against cryptocurrencies, hoping that users would find central bank digital currencies (CBDC) safer and more legitimate. As Southeast Asia’s largest economy, we can expect local conglomerates to participate in the development of crypto through partnerships with global incumbents.


Jack Dorsey on UBI: Bitcoin encourages transparency, long-term thinking

  • Twitter co-founder and Block (previously Square) CEO Jack Dorsey discussed the implications of a Bitcoin (BTC)-powered universal basic income (UBI) strategy with US congressional candidate and a full-time elementary school teacher, Aarika Rhodes. 
  • “Obscurity of information forces and incentivizes people to negative (financial) behaviors that don’t work for them, their community or family,” said Dorsey while pointing out the lack of transparency within the existing centralized financial system.
  • “If there’s one thing to focus on in Bitcoin — the operations are transparent, the code is transparent, the policy is transparent.”
  • This base foundation of BTC is what Dorsey believes has the potential to solve numerous use cases and problems as a direct result of using fiat currency. Through business initiatives including Start Small, the entrepreneur has invested over $55 million across the United States and overseas to experiment on UBI.


Ted Cruz buys the Bitcoin dip

  • Rafael ‘Ted’ Cruz, the junior Republican senator from Texas, is putting his money where his mouth is.
  • According to a financial disclosure filed on Friday 4th Feb, Cruz bought between $15k and $50k worth of Bitcoin (BTC) on January 25th, using the River brokerage.
  • At the time, Bitcoin was trading between $36k and $37k, and over the subsequent days it has risen to a current price of around $41,600. Assuming he hasn’t sold his bitcoins and incurred any short term capital gains taxes, his current profit on the transaction is in the region of  $2,000 – $6,850.


SEC again delays decision on Grayscale’s Bitcoin ETF

  • The United States Securities and Exchange Commission (SEC) has once again delayed its ruling on whether to approve Grayscale’s application for a Bitcoin (BTC) exchange-traded fund (ETF), citing familiar concerns around manipulation, liquidity and transparency. 
  • In a notice published Friday afternoon, the SEC expressed concerns about how the digital asset manager intends to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF. Namely, the regulator wasn’t convinced that Grayscale’s proposal was designed to prevent alleged fraud and manipulation in the Bitcoin market. The SEC has invited the public to comment on these issues, giving interested parties 21 days to respond in writing.

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