Let’s start our communication of the week by thanking the many curious or passionate about cryptocurrency who joined us for the team’s very first 5 à 7 last Thursday at the Hôtel Bonaventure in Montreal. If there is one certainty after the success of the event and the pleasure shared by the guests, it is that it will be the first of a long series!
It was a particularly quiet week for news in the cryptocurrency industry, while the trend in the markets mirrored that of the past few months, with a strong correlation between bitcoin and US tech stocks.
After Canada, it will be Australia’s turn to introduce crypto-asset-backed exchange-traded funds directly next week. 21Shares and ETF Securities will launch the first spot-traded products on bitcoin and ether. The funds will hold bitcoins and ethers in cold storage, with Coinbase being the custodian. “Australian investors clearly want and deserve an affordable, easy and professional way to access the growing crypto asset class,” 21Shares CEO Hany Rashwan said in a press release. For his part, the director of VanEck Gabor Gurbacs took the opportunity to launch an arrow at the American SEC which, let us remember, is still opposed to the launch of such a product in the United States. He calls this conservative position of regulators a “big loss for investors”. L’Australian Financial Review reports that it could see up to $1 billion inflow into these new funds. Needless to say, these are driving demand for bitcoin reserves amid shrinking supply, which could be particularly positive for the markets.
The analysts ofInsider Intelligence estimate that the transaction value of crypto will increase by 70% in 2022 in the United States. Indeed, according to the firm’s most recent analysis, the number of Americans who will use cryptocurrencies to make purchases in 2022 will reach 3.6 million. Meanwhile, a survey by Gemini showed that new crypto investors nearly doubled in India, Brazil, and Hong Kong last year. More than half of survey participants within these countries mentioned that they started investing in crypto in 2021.
The beta launch of Coinbase’s non-fungible token marketplace is now complete. To date, it only supports tokens based on the Ethereum blockchain. The platform incorporates a social layer and currently requires a standalone wallet. This launch comes six months after the announcement of the project. The platform is now available for some users added from the waiting list, which has accumulated millions of potential members since October. According to the company, users will be added in the order they sign up, and the plan is to add everyone in the coming weeks. Coinbase’s platform will start with no additional transaction fees, although there are still standard fees for Ethereum gas. The marketplace will eventually introduce its own fees, which Coinbase VP of Products Sanchan Saxena described in a press briefing as “low single-digit fees.”
The marketplace has strong social network appearances. While some of this functionality – including comments – exists on Coinbase’s own centralized servers at launch, the company said it will gradually decentralize these features and move them to decentralized services in the future. At launch, Coinbase does not offer the ability to mint NFTs through the platform, but this feature will be available soon. Additionally, Coinbase also plans to welcome new NFT project repositories through the marketplace, including some created by its various launch partners.
Too volatile, cryptocurrencies? However, Netflix investors would certainly like to be there today! On the other hand, bitcoin’s 30-day volatility hits its lowest level in 17 months. The index, which measures the standard deviation of four-week daily returns, fell to 2.2%, the lowest since Nov. 5, 2020, according to data provided by Arcane Research.
This drop in volatility can be explained by various factors, including in particular the drop in options available for speculating on the high-margin market. The type of investor currently entering the market also possibly sees the nature of bitcoin differently. As Kaiko Research’s weekly letter mentions, “Bitcoin and Ethereum trading volumes have both declined significantly since December as investors de-risked their portfolios amid growing macroeconomic uncertainty.” This is a theme that will certainly resonate in the ears of those present at our presentation last Thursday!
For Ki Young Ju, CEO of on-chain analytics platform CryptoQuant, institutional buying of BTC could be the hot story in the crypto space once again. Ki highlighted figures from Coinbase Pro, the professional arm of the American exchange Coinbase, which confirms that large tranches of BTC continue to leave its books. These tranches totaled 30,000 BTC in a single day this week, and this event is not isolated, as March saw similar behavior. This shows that recent US government decision-making has not dampened institutional players in the market.
We often say that being long bitcoin is equivalent to being short US dollar. The continuation for the DXY index which this week crossed the 100 for the first time since March 2020 will be particularly interesting to observe. Will we see a continuation of the rebound in dollar strength or will this resistance lead to a trend reversal?
Either way, it remained particularly positive that the $40,000 cap held for bitcoin, especially as many analysts were expecting much lower support tests. It is the traditional 30- and 50-day moving averages that will now have to be tested to hope for a rise to the main resistance – refused at the start of the month – at $48,000.
The picture for 2022 is much less worrisome in current areas than it was in the most recent four-year cycle. This is so thanks to the lack of short-term holders, or those who use bitcoin as an entirely speculative tool. Even the most recent all-time highs of $69,000 in November 2021 were reached with relatively few speculative bets – in stark contrast to the all-time high reached during the last halving cycle in December 2017. Additionally, holders at long-termers who are hoping for a new price discovery are now the ones supporting the market, not the new speculators looking to “buy the dip”. In short, if the rise following the last halving was not as spectacular in percentage terms as in previous cycles, any subsequent correction could in parallel be much softer.
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Disclaimer: This column does not necessarily reflect the opinion of CryptonewsFR and does not constitute investment advice or trading instructions..
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