In this video, we will look at the sequence of events that preceded the bitcoin price drop. We will then look into the argument that the bitcoin market found its bottom and this can be a potentially good point in time to accumulate the BTC portfolio. In the end, we will look at the top altcoin (Ethereum) and its set up for the potential growth within the month.
Last week, was just amazing in terms of the events which occurred in the previous week and the result of that. Not only the Bitcoin and other cryptocurrencies went down dramatically and, in this video, will try to understand what was the sequence of events which drag us to such a decrease in the cryptocurrency markets. We will also try to predict what to expect in the nearest future.
Based on the events which occurred.
So, let’s start with crude oil (Brent Crude Oil) today, because, from our perspective, this was the main thing which triggered the sequence of events that made the stock markets dropped so hard.
Brent Crude Oil Price Overview
On the daily graph, you can see that from December 2018, we were consolidating in the triangle. And on the January 24th through January 2020, there was a breakout of this triangle to the downside and then the retest of that area on the 24th February 2020. And this would be the very crucial point based on the technical analysis. You can see that while we were consolidating for quite a long time, there was a breakdown below the triangle. The retest of the triangle. And we should expect to further move down, especially starting from breaking all this low in particular. If we are breaking this low we are going down. And this is just purely based on the technical analysis. We were not looking at the news at this particular moment.
Stock Market Overview
So, what was happening during this time in the stock markets?
At the bottom, we have the S&P 500 and the Dow Jones Industrial Average Index (both stock market indices). We can observe that at the breakdown of this triangle, the S&P 500 was actually on a small increase while going through this recheck phase. See highlighted area. You can see that there was an increase in the S&P 500 index and a similar scenario was occurring on the Dow Jones index.
So, while the oil was rechecking information and preparing for the downward move, the S&P 500 was continuously growing, as well as the Dow Jones Industrial Index that was also continuously growing, not at the highest peak possible, but still, it was going up.
Then we broke below this lower point of $50 in the Brent oil price which happened at the beginning of March. And this is exactly where the market started to decrease dramatically.
The coronavirus (COVID-19) had its effect and a quite dramatic effect. And there is an interlink between the supply and demand for oil and the fact that coronavirus had on the macroeconomic environment of the countries. Taking into account all the news that the Saudi Arabians cited not to keep the supply of the oil on a steady output and they decided to increase it, the price of oil went down dramatically. At the same time, the event that is linked to the Coronavirus and the macro environment of the countries – the decrease of the supply because everyone went to a complete shutdown, especially in China in particular, who’s consuming quite a lot of the oil. Taking this into consideration, we see an increase in the supply and a decrease in the demand. Both of these factors are going in a similar direction in terms of the price of oil and it just dropped below the floor. You can see a significant decrease, a drop, which happened during just a couple of days.
At the same time, looking at the price of Gold we can see that up to the point of this breakdown of Oil price, the price of gold was acting according to the definition of being a diversified asset.
Gold Price Analysis
The gold prices were increasing slightly up to the point of the 9th of March because this is exactly the point when the Brent prices slammed and this is the panic stage. So, starting from there, on the one hand, the decrease in all of the assets is just a panic that everything is going down. But on the other hand, the gold is an asset for diversification, also known as a safe haven, which is quite crucial because the institutional investors will store some of the funds in gold.
And if you see such a huge decrease in the markets, almost 25-30 percent, you will have to take the money from somewhere to overcome the difficulties which occur when you are trading digital assets with leverage. When you are losing in your positions and you have to cover your costs somehow and this is exactly where you are going to be taking the money from, from your gold pot. As a result, Gold was crashing.
And this was the scenario which occurred through the last week and a very similar effect it had on the price of Bitcoin. So let’s switch to our typical Bitcoin charts, which are quite familiar to us.
Bitcoin Futures Price Overview
Let’s start with the CME’s Bitcoin Futures.
You can see that based on technical analysis, we were bouncing around the 50th moving average (MA) just slightly above it and then starting from the 9th of March we saw a dramatic decrease of 30 percent and just one huge candlestick over there, the RSI broke below 50 and we are still down here at the bottom based on the BTC futures.
On the daily chart, we can see a gap and we talking about it in the previous video where we mentioned that this gap will not be filled and this is exactly what happened. Price of bitcoin stayed three days below this gap and then a huge decrease of 23 percent in one single day. You can see the volume was spiking.
Speaking of the cryptocurrency market in general, there was another issue which triggered such a huge decrease. And this is the liquidation of futures and margin cryptocurrency trading positions. The top figure in terms of the liquidation in four major cryptocurrency derivative exchanges: the BitMex, Binance and FTX futures, they were over a billion USD. So that was a huge, huge decrease. One of the key drivers in that decrease is liquidation positions.
There was a huge decrease all over the place in terms of not only the bitcoin but also the altcoins. That’s why we can see that during the past week, nothing was happening in terms of the dominance. Everything was simply crashing.
Not much of a change was here, but we can see the huge volatility. However, at the same time, the markets are going in a similar direction. So, when the bitcoin was dropping, the altcoins was dropping as well, when the bitcoin was rising to some extent today the altcoins were rising as well. It just depends on the speed of those drops and increases.
This flat chart is just representing the idea that neither BTC or Altcoins were dominating on the market.
Bitcoin Price Analysis on Bitstamp
Let’s go to the Bistamp exchange. And here we can see a very interesting scenario. So, let me just remind you of what was going on. We were expecting to go to the upper of the downward trend (green line). We didn’t manage it and the price started to decrease. We saw a small divergence right here on the top between the 9th and the 14th of February. So, while the price was increasing, we saw a decrease in the RSI index. At the same time on the 26th of February, we broke below the 50 MA on the daily timeframe. And this was one of the crucial points when we rechecked and we carried on with the downward movement. And again, this was done when the gap in the futures market was formed. So, this 9th of March we saw a huge decrease during the 8th of March, on Sunday.
We stood in this region for about three days and then a massive drop which was going below the floor. Again, this was primarily linked to the idea of position liquidations, the massive drop of almost 40 percent in one single day. So that was a huge decrease. However, what was quite interesting is that when we were analyzing the price during the December, we were thinking that there is a possibility that the price will go down straight and start consolidation in the bottom triangle because this is the bottom of the previous triangle in 2018 and to create the panic, you’ll need to go below this level of support.
Quite surprisingly, the price went below it straight away. And it can’t go above it in the immediate return, which is also an important factor. It means that the market is trying to find the local bottom price, which will be relevant for the market at this particular moment. Looking at the lower timeframes, at this particular moment, we are trying to bounce between the 5000 BTC/USD and 5500 BTC/USD. In that region, the volume is quite good. We can see when the prices go below the 5000 BTC/USD, there is a spike in volume. We see that the 50 MA of this coming towards this area of 6000 BTC/USD to act as a resistance.
In the long-term, it will be quite good to see the consolidation in this particular area. It can last maybe two or three months and only afterwards starts to pick up and to increase in terms of the price.
But again, the most important thing is that if we are accumulating and we are assuming that we are starting the accumulation, then we could compare it to the previous accumulation phase of 2019 which took us 130 days, almost four months of consolidation. This time the speed can be higher. We may accumulate during the two months taken into account the high volatility and how the price action was developing. However, we’ll need to see some good fundamentals for that.
Bitcoin Price Analysis on Binance Exchange
Now let’s go to the Binance exchange where we trade and here is what we expect.
Right now, you can see that we’re trying to build up the volume in the price area of 5000 BTC/USDT to 5500 BTC/USDT.
Another important fact is that a very similar amount of bitcoin was changing hands. So, this price of 8500 BTC/USDT and 9000 BTC/USDT was exactly the time when the long-term investors were trying to get out of their hands and probably went into the short positions.
Now that a certain proportion of cryptocurrency traders are buying bitcoin back, we need to see a longer consolidation in the area of 5000 BTC/USDT. We need to have moving averages coming towards the price of 5500 BTC/USDT.
Also, we need to see several interceptions with this particular level, touch it several times before we can actually break it and go up. It seems like the bulls are just starting to prepare for the long-term game, gain in the positions around 5000 BTC/USDT. And it seems like a good point to buy bitcoin over here. We’re not suggesting that this is the actual bottom. However, if you are a long-term investor, if you prefer to see the gains in one or two years, this is not a bad price to start building up your portfolio and start investing in bitcoin today.
Ethereum Price Analysis
Let’s look now at the Ethereum because over here we have a very clear picture of what’s going on.
Here we use the volume to represent the clusters, which are quite important. So once again, here is the line at 220 ETH/USDT, which represents the maximum volume traded in February. After the price was going down from 277 ETH/USDT, there was a bit of a consolidation around the price area of 220 ETH/USDT and the total volume was 5994k ETH, which is five million of Ether.
Then we saw that the price went up to take some of the stops and went down dramatically as it has broken every single level of support. Currently, we are right at the bottom at 111 ETH/USDT. And this line at 80 ETH/USDT over here is representing the bottom of 2018, which was the lowest price of 2018.
So, what we expect here is a similar scenario to the bitcoin taking into account the dominance chart, the strong correlation and that now it’s a good price to start building the portfolio.
The price will bounce in that region. And then towards the end of the March, it would be nice to see the break below this area, maybe even a kind of closing below 100 ETH/USDT, because this will be the idea that the price is going down here. We can take all the stops and then start increasing towards the next big levels. And we would probably see another cross, the death cross on the daily chart.
So, that’s the idea of building the portfolio while we’re at the local bottoms and then averaging out if we go even further down and then see the increase in April or even maybe in May, we might see the delay due to the overall economic situation worldwide which may lead to a global economic crisis and recession.
World’s First Bitcoin ETF Now Holds More Than 10,000 BTC
The world’s first Bitcoin exchange-traded fund (ETF) has seen massive success in its first week. It has now surpassed the 10,000 BTC milestone for the first time as data from Glassnode shows. The on-chain data analytics firm has the ETF at 10,064 BTC at press time.
Canadian firm Purpose Investment Inc. became the first company to launch a Bitcoin ETF in the North American market. The ETF trades under the ticker symbol ‘BTCC’ and is trading at the Toronto Stock Exchange. It was an instant hit, recording close to $400 million on its first day. This ranked it as one of the top five ETF debuts in the North American market.
The great demand for Purpose’ BTC ETF is proof of pent-up demand in the market, the company’s chief investment officer believes. Speaking to Yahoo Finance, Greg Taylor claimed his company has an edge as it’s open to ordinary investors. Other similar products, including Grayscale’s Bitcoin Trust, are closed-end, only serving institutional investors.
He stated, “A lot of people have wanted to get exposure to bitcoin but they haven’t really wanted to go through the hoops of opening up their own accounts or their own wallet to do so or trading some of the other closed-end funds. Having the ETF option I think has always been the holy grail out there and we’re happy to have it trading and we’re seeing some of the results of that pent-up demand.”
Taylor further revealed that the demand for BTCC is spread across jurisdictions. “It’s hard with an ETF to figure out exactly where the inflows are coming from, but we’ve had a lot of people reach out from around the world that want to get access to this product,” he remarked.
First Bitcoin ETF Causing Ripples in the Market
Purpose’s Bitcoin ETF has already started causing ripples in the market, despite being around for just a week. One of the effects has been the cooldown in interest for Grayscale’s Bitcoin Trust. For the first time in five years, shares of the Trust traded at a discount.
GBTC shares plunged by 22% yesterday to close the day 3.8% below the value of the Trust’s underlying holdings. The shares have been trading at a premium since its launch in 2013. This premium shot up to 132% in May 2017 at its peak. As recently as mid-2020, this premium was as high as 40%.
Nate Geraci, the president of the advisory firm ETF Store believes this is due to the rise of competing products. He told Bloomberg, “Since the beginning of the year, we’ve seen the launch of multiple competing products. The unpleasant truth for GBTC investors is that competition erodes demand for the product, which can lead to a collapsing premium or even a discount.”
In Canada, the Purpose Bitcoin ETF’s popularity is forcing its rivals to drop their fees to compete. Evolve Funds Group was the second company to launch a Bitcoin ETF, with its product debuting just a day after that of Purpose. However, as Purpose has soared to over $600 million, Evolve Funds is at a mere $28 million. The latter has turned to lower the fees to attract investors.
Evolve lowered the management fee from 1% to 0.75%. Raj Lala, the CEO commented, “We are very pleased to provide investors with the most cost-effective bitcoin ETF today. Our bitcoin ETF allows investors to access physical bitcoin in a fully-regulated manner in their brokerage account.”
Token-based commodities DEX Mettalex launches on Binance Smart Chain and Ethereum
Mettalex, a DEX focused on token-based commodities trading, announced today the launch of its decentralized commodities exchange on Binance Smart Chain and Ethereum’s Kovan testnet; with 20 available markets for traders to take tokenized long or short positions in using USDT.
Javelin Global Commodities, a leading trading firm of bulk commodities, will be among the first clients to use Mettalex’s platform to manage risk on commodities exposure.
“We understand firsthand the value that Mettalex can provide to derivatives trading in commodities. Mettalex provides a platform to bring transparency and liquidity to these markets which can be used by participants across the commodity value chain.”
– Peter Bradley, CEO of Javelin Global Commodities
On the Mettalex DEX, traders can use stablecoin collateral to open and close positions across eleven commodity markets, seven spread markets, Forex markets, and the top 100 publicly traded companies from the Financial Times Stock Exchange (FTSE) index.
With data-feeds powered by Chainlink and Fetch.ai oracles in addition to the Davis Index, Mettalex ensures that its position tokens track the most accurate reference price in a long (L) or short (S) exposure at settlement.
“The ability to hedge the numerous recyclables grades and specialty finished products that make for most of the infrastructure around us has long been a need in our industry. The current system provides the industry with less than a handful of instruments and the basis risk and costs are just unworkable for most companies. Mettalex is finally answering the call for a decentralized exchange that can list any commodity. We look forward to providing our price benchmarks on the Mettalex platform to give the manufacturing, demolition, and alloy producing sectors the precise hedging instruments they need.”
– Sean Davidson, CEO of Davis Index
All trades on Mettalex happen within a predetermined price band based on the asset’s historical volatility. The band allows getting exposure at only a fraction of the cost of the traded asset, effectively enabling leverage. Unlike other exchanges, on Mettalex, users can create the markets they need.
The prerequisite is a reliable oracle that the platform plans to make fully customizable. At present, the reference asset price is periodically fed into the system from multiple reference exchanges, including 1,400 proprietary price indexes for free-market recyclable metals and secondary alloys will be made accessible to commodity market participants for the first time.
“A critical byproduct of the Mettalex platform is the transparency it will bring to the pricing data around the world’s most valuable commodities. By making this type of market intelligence and the ability to trade more readily accessible, Mettalex aims to bring one of the oldest forms of trade in human history into the present century. With Mettalex we aim to align the incentives of traders, stablecoin liquidity providers, and physical commodity holders to create a one-of-the-kind tool that is accessible to anyone on this planet, 24/7/365.”
– Mettalex CEO, Humayun Sheikh
The markets now on dex.mettalex.com include:
- Commodities (butter, steel, copper, iron, aluminum, gold, silver, zinc)
- The Financial Times Stock Exchange (FTSE) index
- Synthetic CeFi/DeFi index
- Synthetic AAVE/COMP and LINK/BAND
- Crypto and traditional baskets like BTC/TSLA and BTC/XAU
Why Etsy will not accept Bitcoin as payment ‘right now’
Etsy Inc., which reported a strong revenue growth last year, alongside a surge in e-commerce amid the pandemic, does not intend to accept Bitcoin as payments on the leading e-commerce website, at least for now. According to President and CEO of Etsy, Josh Silverman until more people buy and also use the digital currency, he does not think that the Bitcoin payment integration will be very useful for the website.
However, the chief executive who admitted that he has held Bitcoin for the past six to seven years, believed that the asset can be “an interesting” store of value. In a recent interview with CNBC Squawk Box, Silverman explained his stance on the asset:
I’ve held Bitcoin for 6-7 years now on the theory that I think it can be an interesting stored value.
It could be an interesting tender some day. We need a whole lot more people to buy it and own it before I think it’s really useful
Although Etsy does not accept Bitcoins currently, users seem to have found a way around to accept crypto payments. A popular crypto influencer pointed out how some users make use of the ‘Other’ payment method as means to connect with users who will accept Bitcoin. Customers usually mention in a note that they prefer to pay in BTC and contact the customer directly with a Bitcoin payment address and amount.
This goes to show that if the company were to integrate the asset as a payment option on its website, it could tap into a new market.
Moreover, the user base of cryptocurrencies is only growing, with 106 million global crypto users as of January 2021. A surge in crypto adoption has already influenced some institutions to integrate the payment network. As in the case of one Massachusetts-based hospital that set up a Bitcoin wallet to receive a donation of $800,000 BTC recently.
In fact, many believe that firms like Tesla, MasterCard and the BNY Mellon Bank, which have already pushed Bitcoin toward mainstream adoption will attract others to mirror the firms’ BTC investment strategies.
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