Monday, January 24, 2022

First Mover Asia: Bitcoin Trading Near $ 47,000 Amid Low Volumes During Year-End Holiday

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(Edited by Greg Ahlstrand and James Rubin)

Hello. Here’s what’s going on:

Market movements: Bitcoin is trading near $ 48,000, as ALGO layer 1 token wins on incentive program news

Opinion of the technician (Editor’s note): Technician’s Take is taking a vacation break. In its place, First Mover Asia publishes an article in the Year-End Review series by CoinDesk reporter Damanick Dantes, who recaps this year’s most dramatic moments in the cryptocurrency markets.

Watch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analytics.

Prices

Bitcoin (BTC): $ 47,394 -0.3%

Ether (ETH): $ 3,742 -1.66%

Markets

S&P 500: 4,793 + 0.14%

DJIA: 36,488 + 0.25%

Nasdaq: 15,766 -0.98%

Gold: $ 1,803 -0.15%

The market is moving

Bitcoin continued to decline, trading at nearly $ 47,000 on Wednesday, after falling sharply more than 6% a day ago.

The # 1 cryptocurrency by market cap had another low daily volume on centralized exchanges due to the year-end holiday season. The center of the market is still at the expiration of the options contract on December 31st.

Credit: CoinDesk / CryptoCompare

A total of 124,700 options contracts worth nearly $ 6 billion are expected to expire on Friday, according to data provided by Skew. Options are hedging instruments that give the buyer the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date.

At the same time, algorand (ALGO) and near (NEAR) smart contract platform tokens led the biggest daily gains during U.S. trading hours on Wednesday. ALGO’s earnings have come after The Algorand Foundation announced a liquidity incentive program with Algorand’s first algorithmic money market and the Algofi stablecoin protocol.

End of year market

End-of-year market report: A large investment firm pocketed big profits by selling bitcoin near the top of the market in April before the price fell.

Bitcoin price events

Hello, Market Wrap readers! Over the last two weeks of 2021, we use this space to recap this year’s most dramatic moments in the cryptocurrency markets – and highlight key lessons from this rapidly evolving corner of global finance. In a series of eight posts starting December 20 and ending December 30, we’ll recap what rocked the crypto markets this year. (If you’re looking for today’s prices and news headlines, please scroll down.)

In a recent episode of this annual review series, we recapitulated the assault of fear, uncertainty and doubt – “FUD,” in crypto parlance, which really means any negative headline – that rocked the crypto markets in April and May. Mood moderators included the threat of an increase in capital gains taxes in the United States, China’s re-energized efforts to stamp out cryptocurrency trading and mining, and the potential damage to the environment due to the intensive use of electricity from the Bitcoin blockchain.

Today we are going to show additional reasons for the widespread sales that occurred in April and May. After the powerful bitcoin rally at the start of the year, fueled by fears of rapid inflation, some large investors worried about rampant speculation in the market for almost everything and slowing mass growth. global monetary policy. In fact, some indicators in the price charts were already suggesting that bitcoin was overvalued. By June, BTC had stabilized at around $ 30,000, and guess what happened then? Traders bought the decline.

Collection of funds

Bitcoin price roller coaster

Ruffer Investments, a UK-based asset management company, was one of the first large institutional investors to bet on bitcoin – from November 2020.

As prices skyrocketed in early 2021, Ruffer essentially rode the wave as other fund managers braced for crypto, drawn by its potential for high returns.

“Last November, we gained exposure to bitcoin. We saw it as an option on an emerging store of value with a very asymmetric and attractive risk / return profile, ”wrote Duncan MacInnes, chief investment officer at Ruffer Investments, in a commentary. blog post July 9.

But even Ruffer was taken aback by the ferocity of bitcoin’s price surge at the start of the year to a new all-time high of around $ 65,000. And Ruffer took it. The market seemed unsustainable.

“In 2021, the excitement is in cryptocurrencies and decentralized finance. The promise is real. But so does the increase in excess liquidity generated by ongoing fiscal stimulus and quantitative easing. The excess liquidity seemed to peak in April, ”MacInnes wrote.

The Sunday Times reported in June that Ruffer had made a $ 1.1 billion in profits in five months.

Bitcoin Price and Global Money Supply

Extreme bullish feeling

As for the market reversal, it certainly didn’t help that several cryptocurrency market indicators showed signs of excessive buying activity in the month leading up to Bitcoin’s April. price spike. For example, around the month of March, Alternative.me‘s Crypto fear and greed index reached the highest level since June 2019, which preceded a sell off of nearly 60% of the BTC price.

There were other warning signs in the blockchain data and price charts. (See the chart below, which examines technical indicators of bitcoin’s ‘market to realized value’ ratio, a blockchain-based market metric known as MVRV.)

Crypto Industry Responds to ESG Concerns

As lingering environmental concerns over bitcoin’s environmental footprint continued to weigh on the market, crypto industry executives took steps to respond.

Elon Musk – the billionaire CEO of Tesla whose tweets in the market earlier this year revealed a recurring bitcoin craze – sounded a new openness to the crypto industry’s dialogue about using the Bitcoin blockchain electricity. Towards the end of May, Musk tweeted that he had spoken with bitcoin miners about the use of renewable energy resources. He wasn’t completely turning his back on bitcoin, which gave discouraged bulls a bit of hope.

The announcement, on May 24, of the Bitcoin Mining Council, which brought together miners and large investors, including MicroStrategy CEO Michael Saylor, sent BTC immediately higher by almost 12%. At this point, the market panic following the April sell-off started to subside and some traders started to buy lower.

The price of BTC finally stabilized at around $ 30,000 in June as the extreme selling pressure began to ease. The graph below shows the price drop of almost 50% between April and June. And then, during the months of July and August, bitcoin mostly traded sideways, establishing a new price range, with some technical indicators suggesting that the price of BTC was oversold.

The question in the minds of crypto traders was whether the new market environment represented a pause on the descent or the basis for a new head start.

Daily Bitcoin Price Table

Price movements were much less volatile than they had been in recent months, and it seemed that many investors still believed in bitcoin’s potential as a long-term store of value. Bitcoin miners claims looking for ways to reduce or mitigate their environmental footprint, and most of the network’s mining power has been relocated away from crypto-hostile China.

In addition, traders weren’t using as much leverage and market conditions seemed to calm down markedly. In other words, there wasn’t a lot of foam.

A key point to remember was that, despite what suddenly seemed like a relentless onslaught of negative headlines for the bitcoin market, the price was holding up remarkably well on a historical basis: as was the 2020 low of around $ 3. $ 850.

Speculation was still intense in other areas of the crypto market. In the next episode, we will show how some traders have flocked to alternative cryptocurrencies and non-fungible tokens (NFT) while bitcoin traded sideways.

Important events

5 p.m. HGT / SGT (9 a.m. UTC): M3 money supply of the European Central Bank (3 mos./YoY/Nov.)

5 p.m. HGT / SGT (9 a.m. UTC): Private loans from the European Central Bank (Nov./annual)

9:30 p.m. HGT / SGT (1:30 p.m. UTC) Preliminary U.S. Merchandise Trade Balance (Nov)

11 p.m. HGT / SGT (3 p.m. UTC): pending home sales in the United States (MoM / YoY Nov.)

CoinDesk TV

In case you missed it, here are the most recent episodes of “First mover” to CoinDesk TV:

Legendary investor Bill Tai on NFTs, the metaverse and the future of blockchain

In this special episode of “First Mover”, host Christine Lee met Bill Tai, co-founder and president of “NFT for social good platform”, Metagood. Venture capital legend, startup mentor, prodigious networker, kitesurfer and avid environmentalist explained the social potential and possible risks of NFTs. He also shared his thoughts on metaverse, tokenization, and the broader perspectives of blockchain technology.

Latest titles

Marathon Digital named top mining choice heading into 2022 by DA Davidson: The miner’s shares have upside potential after a recent sell off within the group, the investment bank said.

Newly created Bitcoin Miner gem mining achieves a hash rate of 1.25 EH / s: Gem mining power now accounts for around 1% of the total Bitcoin network.

Longer readings

10 great novels about money (and crypto): An overview of books to read for Culture Week.

Today’s crypto explicator: What is ether?

Other voices: Asia Summitt: Continuing Crypto Chronicles

Said and heard

“The new guidelines reflect a growing reality that we are going to have to learn to live with covid as a persistent risk, and we cannot let it shut down society.” (Scott Gottlieb, Pfizer board member and former Food and Drug Administration commissioner, in a Washington Post article)



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