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Utkarsh Gupta

Chainlink reaches ATH of $24; Is Grayscale taking notice?

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Chainlink has registered an astounding turnaround over the past 30-day period. The asset breached its all-time high yet again over the past 24-hours, completing a position above $24 in the chart. The resilience displayed by the token has been nothing short of incredible.

LINK
Source: Trading View

Between 23rd December and 23rd January, LINK has surged by 208%, exhibiting its credentials as one of the strongest performers in the crypto industry. However, it is important to note that its current bullish momentum came at the back of a massive pullback as 24-hours ago, LINK had dropped down to a key support range at $18. While many expected further correction to long-term support at $15, bulls started to charge in Chainlink’s market.

Chainlink Active Addresses maintaining rise

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Source: Twitter

According to Santiment analytics, LINK has maintained positive on-chain metrics as well over the past 3-months. As identified in the above chart, LINK’s network has consistently added active addresses to its network over the course of the rally, with over 5,301 new addresses since November 2020. The rate of increase is 143% but the number almost reached 10k on 16th January.

Another major factor that might have continued Chainlink’s bullish emergence is the chart is the positive sentiment of its investors. According to popular Holders Distribution data, whales continued to hold more than 100k LINKs under their belt, while the number of addresses holding between 100-100k consistently rose in the market.

During its previous all-time high, it was also noticed that the ratio of LINK supply currently moved off-exchange wallets had improved as the LINK exchange supply neared a one-year low. This is indicative of the fact that people are moving their assets off-exchange with the idea of hodling over a long-term.

Is Grayscale preparing to support LINK?

Source: Twitter

According to a popular Chainlink proponent of Twitter, Grayscale might be getting ready to expand their support for Chainlink over the coming weeks. The initial speculation started to spread in mid-December after XRP’s dismay warranted a situation where Grayscale might end up switching their support for Chainlink from XRP.

While the backlash on XRP has cooled down over the past couple of weeks, Chainlink getting introduced by Grayscale Trust could be a massive step towards introducing institutional investors to the LINK ecosystem. At the time of press, Grayscale had over $25.5 billion cryptos in Assets Under Management (AUM).

Bitcoin reaches $29k ‘floor-price’; Where is the next rally headed?

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Bitcoin reached its new-all time high of $42,000 on the 8th of January. The exhilaration associated with the massive bullish was high and certain proponents expected the price to move above $55,000 by the end of Q1 2020. However, after its 2nd re-test at $40,000 on the 14th of January, BTC dropped all the way down below $30,000 over the past day. While the prices may have gone the $30k margin at press time, Bitcoin might be entertaining a radical shift in the market.

Bitcoin loses $36.5k and $33k resistance

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Source: Trading View

According to the analysis, BTC dropped down to $28,880, leading to a 31% drop since the new all-time high value. In doing so, Bitcoin failed to uphold its position over a couple of important support/resistance.

During the past week, BTC struggled to position itself above $36.5k, and over the past 48-hours, the asset has dropped below $33k as well. After dropping down to $29,000, many expected the price to attain another bullish rally, but it is far from certain as on-chain metrics indicated a different scenario.

Willy Woo suggested $29,000 as Bitcoin floor price

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Source: Twitter

Last week, popular on-chain analyst Willy Woo suggested that the reset for the Bitcoin SOPR chart is likely to be followed by a price correction that will shake out weak hands off the market. In terms of finding a bottom, Woo indicated that the worst-case scenario would entertain BTC at a ‘floor price’ of $29,000.

His prediction has held true at press time, but Woo added that even after the asset drops down to $29,000, Bitcoin will rally right back up. Capital injection from HODLers has been strong, considering it has been a Whale Cycle.

Is the bottom definitely in?

According to the CryptoQuant CEO, it might not be the case. In a recent Twitter thread, Ki-Young Ju brought attention to the current Coinbase Premium. The analyst believed that whenever BTC has breached a fundamental resistance like $20k or $30k in the past, huge spot inflows from high net individuals have been observed.

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Source: Twitter

Right now, the investors appeared to under a selling spree and there was not enough premium at press time. It is also important to consider that, Bitcoin’s longs and shorts contract have largely neutralized, indicating a drop in interest from the derivatives market.

Verdict

From a market structure prespective, for Bitcoin to maintain a bullish momentum, its consolidation above $31.5k-$32k would be essential in the next 48 hours. However, failure to do so would improve the possibility for another bearish leg down, as Bitcoin may retrace down to $25,000 in the charts.

Over $37.8 Billion Turnover Registered by Bitcoin, Ethereum Options

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During the month of November, the derivatives platform of cryptocurrency heralded towards news heights in the industry. Firstly, CME’s Open-Interest reached an Open-Interest near $1 billion and it completely opened the institutional path in Bitcoin’s market.

With institutional interest reaching a commendable high, Deribit’s recent institutional newsletter suggested a new monthly notional turnover record of over $14.3 billion; a new daily BTC options record. Over 25,000 Bitcoin contracts were registered as the platform’s open-interest ranged over $4.5 billion.

Bitcoin Volume Highs and price nears New ATH

Screenshot 2020-12-01 at 16.01.32

Bitcoin’s price has played an important role in the OI splurge on Deribit but Ethereum Options were able to draw significant attention as well. Over the month of November alone, Bitcoin’s value improved by 40% but Ethereum exhibited returns close to 56%. However, the sustainability of this rally was much higher in comparison to 2017.

In terms of number, Total turnover in USD was close to $37.8 billion in November, which was a whopping 123% above October 2020. The report added,

“750,123BTC options contracts were traded in November 2020, up 77% versus October 2020. 3,270,065ETH options contracts were traded in November 2020, up 95% versus October 2020.”

Increasing Volatility promoted interest, but dropping atm?

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While November clocked in the best Option Contracts volume for BTC and ETH on Deribit, now both the set of digital assets were leading towards its largest expiry. Close to 31% of Bitcoin OI will expire before 2021, and for Ethereum the value was above 44%.

This particular sentiment may lead to the sudden decline of expected volatility. As reported, volatility nearly doubled in November(reaching 84% from 49%), the recent at the money volatility structure exhibited a drop.

Screenshot 2020-12-01 at 15.30.16

Can the price drop with respect to dropping OI?

Temporarily yes. The Open-Interest execution would indicate that people will be cashing on their profits or losses over the course of December and short-term high liquidations may cause a little stir in the valuation.

However, the price of Bitcoin has been extremely stable during bouts of liquidation in 2020, as selling pressure has always been absorbed by rising buying pressure.

Hence, the price impact can be expected to be minimal, as Bitcoin and the collective market entertains another rally early next year.

Ethereum With High Implied Volatility May Push Price Above $800

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Ethereum will be attaining a new yearly high for 2020 above $600 very soon. Currently, at $590, the performance is off the charts and the largest altcoin coin is starting the current week on the right foot. However, keeping price aside, ETH’s on-chain properties were taking a divisive turn as well.

Ethereum is No-Longer driven by Whale Wallets

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Santiment, a cryptocurrency analysis platform reported over the past day that Ether’s present price hike is coupling with an increase in supply distribution.

As indicated in the chart above, The percentage of Ether held by the top 10 whale addresses has decreased down to its 11-month low. A couple of months ago, the number of Ether held by the top 10 whale wallets was close to 18.6% but at press time, it has dropped down to 12.1%.

Additionally, it was also mentioned the miner balance has held less than 80,000 ETH since July, which meant circulation has remained consistent.

Over the past couple of months, Ethereum has really taken a massive bullish turn and the fact it was not down to whale traders, meant more and more users were entering Ethereum’s ecosystem.

Another particular factor that is important to note is that ETH continues to have better on-chain exchange flow than Bitcoin, indicating a better organic market for the asset.

Implied Volatility is on the rise

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With an increasing valuation at the moment, Ether is currently exhibiting a period of high implied volatility as well. Implied Volatility pertains to the range at which the price might fluctuate in the chart over the next few days, and with the looks of it, Ethereum has a green-signal at a new yearly high.

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Its correlation with Bitcoin pictured a similar sentiment. While Bitcoin’s price has raised itself in value too, ETH can be observed to take a jump above BTC at the moment. If the market chart is broken down to Ethereum’s immediate daily resistance, it lies above the $800 mark.

Will Ethereum touch $800 by December-end?

While the jury is open for discussion, the collective market may see a period correction before that. At the moment, Bitcoin is under its longest bullish period in 2020, entering its 7th bullish week on the trot.

Such a parabolic rise is bound to blow up some time, leaving the rest of the market a little under the weather as well.

Bitcoin Price Prediction: Is BTC passing $20k this week?

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Bitcoin is currently undergoing a rich performance period, as the King’s coin has overtaken multiple key levels in the past few weeks. Between October and November, Bitcoin was above 80 percent, currently valued just above $18,500. lIt was pretty obvious that Bitcoin was closing on its all-time high valuation of $20,000, but what are the chances that this might happen over the following week? Let’s find out.

Bitcoin hourly chart

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The short-term chart was under a strong bearish cycle over the past 24-hours. Bitcoin first dropped down to $17,610 and then re-test again at $18,000 after rising to $18,300. With respect to the charts, the asset is currently exhibiting a rising wedge pattern which is extremely bearish. At the moment, the immediate support is position at $18,000 and $17610. Ideally, the price should drop but we need to note that BTC has nullified other bearish patterns over the past couple of months.

Relative Strength Index or RSI suggested that the price may pump again over the next few hours, taking the valuation close to the last resistance at $19,350. MACD exhibited a present bullish trend as well.

Bitcoin hourly chart

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The long-term was more bullish than the short-term at the moment. Indicating the formation of a bullish flag, the pattern seems like it is approaching its last bullish breakout before ascending to a new high above $20,000. The long-term remained at $17,500, which was tested over the past 24 hours.

The position of Awesome Oscillator was still bearish though. As pictured, the bullish momentum seemed to be taking a bearish shift in the charts at the moment, but the collective market remained positive.

Verdict

It is hard to bet against Bitcoin after the asset has reached this high in the last couple of months. While the price charts scream of a depreciating run at the moment, the retail momentum may possibly take it above $20,000 over the current week. A quick re-test will be definitely one of the outcomes, but the largest asset will attain $20,000 for the 2nd time in its history.

The Arrival and Introduction of Bitcoin Institutional Investors: Part 2

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In Part 1 of this article, we discussed the factors that led to the arrival of Institutional Investors in Bitcoin. With the relative improvement of sentiment over the past three years, it is time to understand whether there is real steel to this market ingenuity for BTC.

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Data from Skew again suggested that in terms of Google trends, Bitcoin is only fractionally as popular as it was in 2017. On the other hand, CME BTC futures reached an Open-Interest of $1 billion for the first time last week. This is monumental development from an institutional point of view since CME caters to only high net worth and accredited traders.

Interest went up as attention followed Bitcoin

While the Open-Interest was a key indicator, eyes started to turn when popular investors started to throw in their hat for Bitcoin. The trend started with Paul Tudor Jones, Billionaire Hedge Fund Manager, commenting,

“I came to the conclusion that #btc was going to be the best of the inflation trades-the defensive trades. Bitcoin has a lot of characteristics of being an early investor in a tech company…it’s like investing with Steve Jobs and Apple.”

Such high praise coming from a personality who has spent over 40 years in the investment sector spoke volumes for the digital asset. After Jones’ remark, other people started to opine on this matter, and recently Stanley Druckenmiller, former chairman of Duquesne Capital, stated,

“Also, unlike gold which is the third-highest reserve assets that central banks own, I can’t imagine central banks, big Institutional investors, businesses, or multinational companies using it.”

Now, many of BTC’s critics often question the Gold-comparison because of its difference in market cap. However, institutional investors were in the mix and running, because of its genuine similarity, and to a certain degree, they noticed an improved version in Bitcoin.

Bitcoin-Gold: Numbers and Time don’t lie

To understand the comparison at a root level, we need to go back 50 years into the financial landscape. In the 1970s, Gold became a favored investment hedge. This was due to large economic uncertainty at that time, and other factors included,

  • CPI Inflation was high, 7% hike per year
  • Weak US dollar
  • Oil prices jumped from $20 to $120 per barrel

In conclusion, investors did not trust holdings in cash and they moved their sights to gold. Hence, Gold turned into a popular ‘store of value’ and its price went up 24 times between 1970 and 1981.

The econometrics chart below explains Gold’s trajectory properly.

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So, if an investor had bought Gold in 1970, and held it until now, they would experience a 55 times growth, which is very impressive.

However, let’s shift our focus to Bitcoin now.

Now, in 2020 the situation was a little too similar to the 1970s.

  • There is a fear of inflation and debasement of fiat currencies
  • China vs US internal struggles were not stable, or ideal
  • Coronavirus spread is creating a major economic crisis

Now, the old school traders were looking at Gold again during this time, but BTC made a better case for itself.

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Since its first halving in 2012, BTC has risen by a whopping 1400 times in less than 10 years, and continued to rise in 2020, amidst immense financial instability. There is no doubt about which asset had more momentum, and in terms of accessibility, Bitcoin took all the brownie points.

BTC is nowhere close to Gold’s market cap most definitely, but at the speed at which it is growing, the bridge will only get smaller with time.

Ignorance is not Bliss..at least with BTC

There is no doubt that institutional investors will continue to flow capital in BTC. According to a recent Citigroup, report, there is also a possible discussion now that Bitcoin may reach $300,000 by the end of 2021. The figure is absurd because it is another 1527% hike from the present valuation, in less than 24 months.

However, the investors are here to stay and we are at the beginning of a new chapter for Bitcoin.

The Arrival and Introduction of Bitcoin Institutional Investors: Part 1

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Bitcoin’s present is reminiscent of its 2017’s action. However, it is still completely different. The dynamics around Bitcoin has massively changed. There is a sense of stability surrounding the digital asset, which was largely absent three years back.   At press time, Bitcoin is just below $19,000 under its final resistance range.

After the inevitable step above, we’d be turning a new chapter in Bitcoin’s financial history. In order to understand the present and future interests, we will divide the explanation into two parts, in order to achieve a better market lucidity.

Bitcoin in 2020: Liquidity and Derivatives

Between 2017 and 2020, there are two clear distinctions. First, the supply of Bitcoin has increased from 16.77 million in January 2018 to 18.55 million at press time. That is an influx of 1.78 million BTC, currently valued at $32.28 billion. That is higher than every crypto asset’s market cap other than Ethereum.

The liquidity brought in by such a significant supply has led to the current explosive trading volume between on-ramp platforms. According to Skew’s recent data set, Bitcoin spot trades north of $500 million against the U.S dollar on exchanges like Coinbase, Kraken, Bitstamp, Gemini, LMAX Digital, and ItBit.

5fb67605d2e38a6e69241f14 skew btc spot aggregated daily volumes%20(23)

This brings us to the 2nd difference, which is self-explanatory after the above example; higher liquidity.

Another financial product associated with Bitcoin is BTC futures traded with high leverage on offshore platforms. The report added,

“It’s common to see days where they trade in total north of $10bln. CME bitcoin futures traded on average $500mln notional a day in the last three months. Most bitcoin futures contracts are cash-settled using BTCUSD and BTCUSDT spot indices.”

It is important to note that its market was completed non-existent in 2017 and developed above the existent spot market as well.

The Origin of Institutional Investors

The major inference that can be drawn from the above-mentioned rising interest is organic growth in this particular market. And here in the last few years, the institutional interest has begun to move at a rather real pace.

CME can be appreciated for its major role. Many high net-worth individuals have identified this parabolic incline in BTC futures, attracting high levels of cash and carry strategies, on its sport and futures platform.

However, this has definitely led to institutions whose capital is solely dependent on crypto assets, and they are basically “cash poor”. Since banks have been completely absent in this market, there has often been US dollar scarcity since 2017.

The next part of this article will describe the possible expectation of Institutional Investors on BTC and what possibly lies in the future. End of Part 1.

Here’s how Bitcoin Short-Term &; Long-Term HODLers are Reacting to $18K!

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Bitcoin surpassed a legitimate milestone over the past 24-hours. Other than the fact that the king coin breached above $18,000, BTC also clocked in its largest market cap valuation at $350 billion. There is palpable unrest at the moment with people speculating on BTC’s next price range. While the $20,000 valuation is within touching distance for Bitcoin, according to a recent glassnode study, the price action of BTC is inflicting a reaction from the HODLers as well.

Bitcoin Short-Term and Long-Term HODlLers are moving

According to a recent report by the Glassnode Founder, Rafael Schultze-Kraft, the current Long-Term Holder Supply for Bitcoin is at 12.3 million i.e 66% of the total circulating supply.

While it indicates an impressive number in terms of BTC hodled by long-term investors, here is the key difference taking place at the present moment.

lth supply

The amount of Bitcoin held by Long-Term Holders has declined over the last few weeks as BTC’s price continued to improve. This is completely opposite to the common narrative that is doing the rounds. Earlier reports suggested that HODLers were barely moving during the current rally and that BTC accumulation is reaching new heights.

Technically, the above statement is not wrong because accumulation is definitely taking place, but it is taking over within the Short-Term Holders.

sth supply

According to data, as Long-Term Hodlers released their BTC holdings into the exchange, Short-Term Hodlers were taking advantage of the situation. It said,

“Over the course of the past month, the amount of STH supply has increased by more than 500,000 BTC and sits currently at around 3.7 million BTC  – 20% of the circulating supply.”

Why such a change in the HODLing narrative?

In order to have more clarification on the present HODLing sentiment, it is important to look at the state of profitability for the LTH and STH supply. Data suggested that 12 million Bitcoin under Long-Term holders are at 97% profit and Short-Term holders with 3.5 million under accumulation indicated the same result, i.e 97% profitability.

Screenshot 2020 11 12 at 14.05.56

The key inference that can be drawn from such statistics is the fact that it did not matter whether accumulation was taking place from LTH or STH end. At the moment, people involved in BTC were looking to book profits and in order to do that, Long-Term Holders were cashing on their assets at the moment, and Short-Term holders were forming the next leg for the bullish rally.

At present time, the general sentiment surrounding Bitcoin was extremely positive hence it did not make a difference whether users were under the Short-Term or Long-Term holders. For Bitcoin, it was a win-win situation for both sides.

Can Bitcoin climb up to $20k under the current momentum?

Under the current market structure and bullish sentiment, anything can happen at the moment. The fact that the present rally is completely different from 2017, makes all the difference. During the last major bull run, Bitcoin did not have a massive institutional interest. At the current moment, BTC has a legitimate involvement from high-net-worth individuals and this leads to absorption of liquidity when the whales may sell-out at the top.

Here is another important example.

valleys loss

As indicated earlier, the amount of Bitcoin under profit held by both Short-Term and Long-Term Hodlers is completely nullifying the loss percentage in the charts. The supply storage has created an organic demand for the asset which is currently unmatched in the space.

With the overall sentiment bullish on all front, it allows BTC to have a greater probability of attaining $20,000 and beyond. The chances of a sudden slump is also reduced since the wealth distribution is much higher in the current timeline than in 2017.

For Bitcoin, it can be the beginning of a rally that might take the valuation to a New All-Time High.

Crypto IPO: A $4 billion IPO can meet Barry Silbert’s DCG future

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When we talk of public-tradable companies in the digital asset industry, very few organizations will come to mind. These organizations are small businesses, and none of the multi-billion dollar corporations has taken a step into the Crypto IPO.

Over the past few years, there have been talks about Coinbase and BlockFi taking the big step forward but nothing constructive has manifested from either side till now. Now, According to Messari, a third party might also soon throw their hat into the Crypto IPO mix, which happens to be Barry Silbert’s Digital Currency Group.

Digital Currency Group or DCG is a venture capital company that has several established crypto businesses under its administration. The organization has been around for over 5 years, and it has developed corporations such as Genesis Global Trading and Grayscale Investments. Additionally, DCG also controlled CoinDesk and Internation retail exchange, Luno, under its wing.

While discussions over a Crypto IPO have not been raised publicly for DCG’s end, the report crunched down some numbers, which indicated that DCG would present a strong case for a successful IPO.

Barry Silbert and his numbers game with Genesis, Grayscale

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According to the report, Genesis recently revealed its quarterly report for Q3 2020. Genesis Global Trading, an OTC crypto trading desk, and crypto lending/borrowing platform, registered loans which surpassed $5 billion on the quarter. The total active loans were estimated to be $2.1 billion which would bring is $42 million annual revenue at the moment.

Additionally, on the trading aside, Genesis registered over $1 billion in derivatives trading and $4.5 billion in spot volumes, where estimated trading revenue is expected to be around $8.8 million.

These are extremely impressive numbers and with respect to Grayscale, the crypto industry already had an idea. Grayscale’s flagship product, GBTC has continued to aggressively accumulate BTC in 2020, currently occupying close to 2% of total circulation. Grayscale was bringing in close to $159 million in revenue per year. The report added,

“With Genesis and Grayscale generating an estimated $50M and $123M a year, that still leaves Coindesk and Luno. On top of that, DCG also has a sizeable investment arm, consisting of both liquid and VC investments that would bring their total valuation to around $4.3 billion.”

DCG’s added advantage for its Crypto IPO

The $4.3 billion valuation of DCG is impressive. It is impressive enough to take the IPO step but Barry Silbert’s organization had an added advantage. One of the key fundamentals before going public is to attain a list of clients that come from an institutional background and high net worth individuals. A retail heavy clientele does not attract that right kind of people to undertake the proceeding of an IPO. For Genesis and Grayscale, it has been their major source of revenue. Genesis trading strictly caters to the demands of institutional investors and in 2019, it facilitated the crypto-fiat lending system due to immense institutional demand.

Grayscale’s stance in the public eye is already clear as day, with the investment wing catering to institutions trying to attain exposure to digital assets. Hence, with Digital Currency Group, a Crypto IPO can be manifested in a matter of months, if Barry Silbert decides to take the company public.

Over 500K Bitcoin outflows in 2020; BTC Hodling Re-Defined?

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2020 has been an exceptional year for Bitcoin, but there have been some drastic changes over time. Data collected from Arcane Research indicated that between 15 March and 5 November, 560,428 BTCs had exited exchanges, resulting in the largest net outflow for collective platforms.

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The aggregated BTC exchange balance has decreased by 2.4 million for the first time since August 2018. While the circulating supply in the industry has increased by 1.3 million since 2018, more and more users are currently taking their assets out of these centralized platforms. The report added,

“The exchange balance is currently at its lowest since February 4th 2018.”

Strong Price Action and Impact on Bitcoin Hodling

The first incident of high exchange outflow was witnessed back in March 2020, when BTC’s price collapsed below $4000. While the price has recovered significantly over the past few months, the net outflow has only increased. The popular inference drawn from such a drastic turnaround has been that users are currently unwilling to sell their assets. Bitcoin‘s price performance after a difficult economic period during the pandemic has re-ignited a sense of trust in the asset.

Bitcoin hodlers and the holding sentiment has only improved with the increasing valuation, and it was speculated that users were possibly moving their assets to cold storage or maybe shifting them to Ethereum.

According to Willy-Woo, the reasons for high BTC outflows went beyond the simple case of Hodling. The analyst had suggested that Bitcoin’s safe haven narrative had received a new wave of interest.

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During the economic uncertainty in mid-year, investors were moving into BTC and it led to the increased in NVT, which is Bitcoin’s network value. The investment velocity also picked up the pace and suddenly traders were accumulating even after it had crossed the $10,000 mark in May. Woo stated,

“The fundamentals of BTC became visibly bullish over the COVID correction, this was hidden by traders freaking out and being liquidated. Bitcoin is only now reflecting its organic valuation.”

Massive Institutional BTC Open-Interest paved higher HODLing sentiment

During last month’s rally, CME‘s OI registered its all-time high Open-Interest which indicated that rising involvement of institutions as well. With retail already jumping on the bandwagon, institutions were becoming more forthcoming with Bitcoin as well, and MicroStrategy’s $426 million investment is a great example.

With the sentiment surrounding BTC becoming inevitably bullish for 2021, we might see HODLing increase for the next few months. Such levels of accumulation have not been witnessed before in Bitcoin’s history and it truly marks the start of a new generation of wealth distribution with Bitcoin.