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Bitcoin in jeopardy, Ether briefly breaks records, Biden takes action: Hodler’s Digest, Jan. 17–23

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Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Three reasons Bitcoin tumbled below $30,000 in a surprise overnight correction

Intensifying sell pressure saw Bitcoin briefly plummet below $29,000 for the first time since Jan. 5. The fall from $37,000, which happened within 48 hours, resulted in the biggest daily candle ever.

There have been some signs of institutional investors taking profit, as bulls attempt to cement $32,000 as a new support level. Analysts at QCP Capital are seeing signs of “institutional exhaustion,” and they warned the rally could be in danger if appetite for BTC slows down.

Of course, some institutions are indefatigable… with MicroStrategy “buying the dip” and snapping up 314 BTC at an average cost of $31,808 — a total spend of $10 million.

Bitcoin has lost 14% of its value over the past seven days. But over this period, many major altcoins haven’t been suffering sell-offs to the same extent. Ether is down just 2.6% on the week, Polkadot is actually up 1.5%, and XRP has fallen by 5.6%.

BTC/USD is in a corrective phase since the rally became overextended above $40,000. The question now is when this will end. If the $30,000 area doesn’t hold, a further drop to $24,000 becomes likely — resulting in a retrace of 40% since recent highs.

Guggenheim CIO expects Bitcoin to drop to $20,000

Just a month ago, Guggenheim’s Scott Minerd was anticipating that $400,000 was in sight for Bitcoin. How times have changed.

Speaking to CNBC, Guggenheim’s chief investment officer argued that BTC is now poised to drop to $20,000 — and Bitcoin is unlikely to climb any higher than $42,000 until 2022.

He said: “I think for the time being, we probably put in the top for Bitcoin for the next year or so.”

ETH finally beats its 2018 all-time high, surpassing $1,428

It’s been a long time coming. This week, ETH finally reached new all-time highs against the dollar — surpassing $1,428 on Bitstamp. Unfortunately, the major altcoin didn’t spend much time in uncharted territory — falling as low as $1,050 in the days that followed.

Are Ether bulls now in trouble? Well, the large drop after the ATH has been linked to how the Ether futures market was extremely overheated, with open interest on ETH hitting a record high of $1.8 billion.

At one point, Vitalik Buterin’s main wallet saw the ETH in his wallet amount to over $470 million. That’s a stark contrast to Jan. 2020, when his ETH fortune stood at just $58 million.

Strategists at Fundstrat Global Advisors believe that 2021 could be a year to remember for ETH. According to its researchers, the second-largest cryptocurrency could climb more than sevenfold to $10,500.

President Biden freezes FinCEN’s proposed crypto wallet regulations

Joe Biden wasted little time in getting to work following his inauguration on Jan. 20. One of the first actions the new president took on his first day in office was to freeze the federal regulatory process — and this is good news for the crypto community.

The freeze means that the controversial regulations surrounding self-hosted crypto wallets, proposed by former Treasury Secretary Steven Mnuchin, are now on ice for 60 days.

Compound Finance’s general counsel Jake Chervinsky lauded the move, declaring: “We fought hard & earned the right to take a breath & reset. Janet Yellen isn’t Steve Mnuchin. I’m optimistic.”

It’s fair to say that Yellen isn’t wild about Bitcoin, though. During her confirmation hearing with the Senate Finance Committee, she stated that cryptocurrencies are being used “mainly for illicit financing” — and that she wanted to “curtail” their use. She later clarified that she only wanted to clamp down on cryptocurrencies being used illegally.

The former chair of the Federal Reserve is now one step closer to earning the nomination after the Senate Finance Committee voted unanimously in her favor, paving the way for a full Senate vote.

Ripple pins hopes on Biden administration as co-founder sells 28.6 million XRP

As it readies itself to face a lawsuit from the U.S. Securities and Exchange Commission, filed under Donald Trump’s administration, Ripple is hoping that Biden’s time in office will bring favorable changes in regulations.

Executives at the embattled company have predicted that Biden’s team will most likely “bring a renewed focus on regulation and enforcement in the crypto space.” The post said that fintech and blockchain players have been left “in a state of limbo” by the lack of a clear framework — and warned countries like the U.K. and Japan are “miles ahead.”

Ripple’s general counsel Stu Alderoty wrote: “Intelligent, well thought-out regulations communicated effectively and uniformly applied can help level the playing field and unleash innovation and further mainstream adoption here in the U.S.”

When Gary Gensler’s appointment as SEC chair was announced, Ripple CEO Brad Garlinghouse tweeted: “Congrats to Gary Gensler! We’re ready to work with SEC leadership and the broader Biden administration to chart a path forward for blockchain and crypto innovation in the US.”

Is $1 billion a day in volume the “new normal” for Uniswap?

Uniswap is nearing an average of $1 billion a day in trading volumes during January.

It’s already surpassed the previous monthly trade volume record of $15.3 billion set in September during the DeFi boom.

Uniswap traders are spoiled for choice with 1,558 coins traded in more than 2,400 pairs, however, the majority tend to favor less risky trades. 

On one day this week, ETH pairings with stablecoins USD Coin, Tether and Dai made up 45% of the $1.1 billion traded.

Uniswap strategy lead Matteo Leibowitz has already declared that $1 billion volume a day is the new normal.

Winners and Losers

At the end of the week, Bitcoin is at $32,300.43, Ether at $1,250.90 and XRP at $0.27. The total market cap is at $944,648,313,957.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Enjin Coin, Curve DAO Token and Decentraland. The top three altcoin losers of the week are IOST, Zcash and Dash.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis

Most Memorable Quotations

“I think for the time being, we probably put in the top for Bitcoin for the next year or so. And we’re likely to see a full retracement back toward the 20,000 level.”

Scott Minerd, Guggenheim CIO

“Only by widening the playing field and facilitating more participation will crypto reach and maintain a market cap of $2 trillion and beyond.”

Aite Group

“Ethereum will continue to see demand outstrip supply as global adoption continues.”

Danny Ryan, Ethereum Foundation researcher

“We fought hard & earned the right to take a breath & reset. Janet Yellen isn’t Steve Mnuchin. I’m optimistic.”

Jake Chervinsky, Compound Finance general counsel

“We’ve obviously seen the price of Bitcoin rise quite a bit; we’ve seen a lot of activity in the DeFi space, and I think all of these things will provide a nice framework against which a new chairman can take a fresh look at questions across the board in the crypto space.”

“Crypto Mom” Hester Peirce, SEC commissioner

“I’m honestly loving how well $ETH is holding up in this climate.”

Neko, cryptocurrency trader

“There is an increasing amount of trader doubt that #Bitcoin will revisit $40,000. But according to address activity and trade volume, the long-term trend still looks plenty healthy. Keep a close eye on whether $BTC’s usage rate stays propped up.”

Santiment

“Congrats to Gary Gensler! We’re ready to work with SEC leadership and the broader Biden administration to chart a path forward for blockchain and crypto innovation in the U.S.”

Brad Garlinghouse, Ripple CEO

“Bitcoin is the best cryptocurrency suited for store of value. In terms of what the Bitcoin blockchain can currently handle from a latency and throughput point of view, Bitcoin is very strong.”

Konstantin Richter, Blockdaemon founder and CEO

“Grayscale were buying $251 million of #Bitcoin on avg per week in Q4 2020. Last week they did $700 million in one day… And today $590 million… Pay attention.”

Danny Scott, CoinCorner CEO

“The flow into the Grayscale Bitcoin Trust would likely need to sustain its US$100 million per day pace over the coming days and weeks for such a breakout to occur.”

JPMorgan

Prediction of the Week

Hedge fund predicts $115,000 Bitcoin price and the fall of “speculative” altcoins

New data from Pantera Capital this week suggested that Bitcoin’s current price action is closely following the stock-to-flow model’s trajectory.

The firm’s analysts believe BTC will have reached $115,212 by Aug. 1 and that its price will gain an average of more than $10,000 a month, hitting six figures in the early summer.

Pantera believes that a significant difference between this rally and 2017 is linked to the overall market composition and where value is located — with altcoins losing out.

Andy Yee, a public policy director for Visa in China, tweeted: “This rally is different. Massive shift from high-speculative, non-functioning tokens in 2017 to #Bitcoin and #Ethereum today.”

FUD of the Week 

More institutions will warm up to crypto once market cap hits $2 trillion, eToro says

Barriers are still hindering institutional adoption of crypto, a new report commissioned by eToro suggests.

Researchers at Aite Group said the crypto market could reach a $2-trillion market cap if more institutional players were to get on board amid more favorable conditions. These firms would be more likely to adopt crypto if there was less regulatory uncertainty, a developed market infrastructure, and less risk surrounding security.

Tomer Niv, head of business development at eToro, said: “Only by widening the playing field and facilitating more participation will crypto reach and maintain a market cap of $2 trillion and beyond.”

The report also warned that “technical complexity” is an issue that needs to be addressed, with Niv adding: “More needs to be done from a market infrastructure point of view to make this group of investors feel comfortable joining the crypto ecosystem.”

83% of cryptocurrencies that peaked in 2018 are still down by 90%

More than 80% of crypto assets that hit all-time highs in January 2018 are still down by at least 90%, according to data from Messari.

The data set included 410 assets that posted record prices during 2017 or later, with 2018’s 157 star coins performing the worst with an average of -90.71% since the previous ATH. 

2017’s top cryptos have since crashed by 82% on average, while 2019’s crop is down 72%, and 2020’s standouts have shed 53%.

CMT Digital analyst Matt Casto, who spotted the data, tweeted: “Holding assets that hit high marks +3 years ago is proving to be a massive lost opportunity cost for deploying capital.”

Armed robbers steal $450,000 from Hong Kong crypto trader

A manhunt is underway after robbers posing as crypto buyers stole $450,000 from a woman in Hong Kong.

One member of the gang completed multiple transactions with the victim to win their trust, and an investigation has uncovered there were three previous deals ranging between $77,000 and $90,000.

On the day of the robbery, the other members of the gang rushed to the scene as soon as their colleague received the Tether tokens in exchange for the $450,000 payment.

Armed with knives, they proceeded to lock the woman in the office where the deal took place but not before snatching her iPhone and the cash.

According to The South China Morning Post, the woman was able to use her second phone to inform her husband, who contacted the police. Detectives said that the woman’s uncle, who chaperoned her to the meeting place, reportedly saw four men fleeing the scene.

Luckily, the woman was unhurt in the attack, unlike other victims who have suffered physical injuries and even death at the hands of bandits looking to steal cryptocurrencies.

Best Cointelegraph Features

Believing, not seeing: Institutions still predict $100,000 Bitcoin price

Even though Bitcoin has struggled to reclaim its recent high of $42,000, Shiraz Jagati says projections of BTC reaching $100,000 still seem achievable to some.

Access denied: Banks seem prone to cryptophobia despite growing adoption

Banks in many countries continue to either outrightly deny or limit their services to crypto exchanges.

Bitcoin as a last resort? Murmurs of crypto as a reserve currency abound

Could Bitcoin fulfill the key functions of a reserve currency? Andrew Singer talks to experts as he aims to find out whether BTC can find a new and unexpected role for itself.

Source: https://cointelegraph.com/magazine/2021/01/23/btc-danger-eth-record-biden-action-011723

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Coinbase Decentralization Claim Draws Fury From its Customers

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In a blog post on Feb. 25 titled “Coinbase is a decentralized company, with no headquarters”, CEO Brian Armstrong stated that the firm has moved to a ‘remote first environment’.

No HQ = Decentralized?

He added that 52% of their employees have joined the company in a ‘post-office world’ and 95% of them have the option to work from home. Originally based in San Francisco, many company employees have dispersed across the globe since the beginning of 2020.

“It has helped us attract top talent. One of the best parts about being a decentralized company is that we can hire more of the best people.”

This does not make the company decentralized in crypto terms, as the respondents to the tweet pointed out.

Despite being one of the largest fiat to crypto onramps in the world, Coinbase has garnered a reputation for terrible customer service, higher than industry average fees, and questionable reliability when markets are volatile.

Coinbase Customers Lash Out

The barrage of comments came thick and fast and took aim at everything from customer support to the now predictable service outages during large crypto asset price movements.

“Also you have zero customer support (automated copy paste emails do not count), I guess you can call that decentralised too.”

Another Coinbase customer claimed that he had lost almost a thousand dollars in trading fees with just an $8,000 investment.

Someone else questioned the suspension of XRP stating that the company is still very centralized in the United States. Another disgruntled user stated;

“Coinbase [has come] a long way since 2011 in [the] crypto world. Unfortunately, [its] reputation [has become] tarnished due to unacceptable level of customer service and ignoring your most valuable asset – [the] customer.”

The majority of the complaints were regarding unanswered email and customer support inquiries though there were plenty of mentions of the frequent service outages;

“No headquarters. No customer service. No service at all when the market moves… Good for you coinbase.”

One respondent pointed out it was just a ploy to use a popular word at the moment just like the last bull run when companies added blockchain to their names.

At the time of writing, around 12 hours after the blog post was published, there were too many replies to read, and the vast majority of them were negative. It appears that Coinbase, which still has a number of whale investors, has also decentralized itself from its customers.

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Source: https://cryptopotato.com/coinbase-decentralization-claim-draws-fury-from-its-customers/

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What Bitcoin price levels will invalidate the short-term bearish scenario?

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The price of Bitcoin (BTC) is continuing to range between $48,000 and $51,000, unable to break out of the $51,600 resistance level.

If Bitcoin struggles to surpass the $51,600 resistance area in the near term, technical analysts say the probability of a correction rises.

BTC/USDT 4-hour price chart (Binance). Source: TradingView

$51,600 is the key level to watch

According to Josh Olszewicz, a cryptocurrency trader and technical analyst, the $51,600 level is currently acting as a strong resistance level.

For Bitcoin to retest the all-time high at $58,000 and initiate a potential rally towards $62,000, it needs to cleanly move past $51,600, he explained. 

Hence, a rally beyond $51,600 is the clear invalidation point for any short-term bearish scenario for Bitcoin.

The failure to break out in the near term could result in a bearish test of lower support areas, found at around $42,000. He said:

“If 4h breaks down, be prepared for some uber bearish calls to start popping at 36.7k meanwhile, I’ll be bidding the daily Kijun at 42k. Alternatively, if $BTC breaks above 4h Cloud at 51.6k, I like ATH retest at 58k, R3 yearly pivot test at 62k, macro PF diag test at 70k, R4 yearly pivot test at 80K. Seasonality suggests we go neutral/sideways through March and then reach for those higher targets in Q2.”

The $42,000 support area is a key level because it marks the top of the previous rally. On Jan. 8, the price of Bitcoin peaked at $42,085 on Binance, seeing a steep correction afterwards.

Bitcoin dropping to $42,000 to retest the previous top as a support area would not be necessarily bearish beyond the short term, however. 

Whale clusters show similar levels of support

Moreover, analysts at Whalemap noted large inflows to whale wallets at $48,500 and $46,500, which they say should provide BTC with some support. 

“The current situation looks similar to the one we had at 29K,” they explained. What’s more, the $46,532 level may now be “the new $29,000,” which held as support during the previous correction in January before the rally continued. They added: 

The $55,400 is an important level to keep an eye on as well. Getting back above it will be a good sign

Whale cluster levels. Source: Twitter/@whale_map

The most compelling argument for a short-term Bitcoin drop

Bitcoin tends to seek liquidity after a prolonged consolidation, which means it can drop down to fill buy orders at lower support areas that can ultimately fuel a new rally.

A pseudonymous trader known as “Salsa Tekila” echoed this sentiment. He said that there is a big support area at $41,000, followed by resistance at $54,000. He wrote:

“My current take on $BTC mid term: 1) Support around $41K. 2) Resistance around $54K. Depending on context, I might trigger swings around those two vicinities. Likely just scalp until then, unless major events come to fruition.”

Bitcoin tested the $44,800 support level in the past 72 hours, but it was not enough to propel BTC above $51,600.

This trend could cause the price of Bitcoin to drop back to the $44,800 level or to a lower support level, at $42,000.

The ideal scenario would be for Bitcoin to hold onto the $44,800 support area if it drops again, stabilize it as a macro support level, and move back up.

Source: https://cointelegraph.com/news/what-bitcoin-price-levels-will-invalidate-the-short-term-bear-scenario

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Nvidia supply shortage won’t stop $50M Q1 crypto miner sales, says CFO

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Nvidia’s ongoing supply problems won’t stop the company from selling $50 million worth of its new CMP chip range in the first quarter of 2021, the company’s chief financial officer Colette Kress forecasted on Feb. 24.

Nvidia failed to meet demand from its core gaming customer base in 2020, and the trend looks set to continue into 2021. Added demand from a horde of cryptocurrency enthusiasts keen to direct Nvidia’s new RTX 30 series GPU to Ether (ETH) mining initially appeared to pile pressure on the company.

But the firm’s CFO expects the recently announced Cryptocurrency Mining Processor product line to hit $50 million in sales in the first quarter of the year. The CMP range is designed specifically for Ether mining, and its introduction was part of an attempt to allocate more units of its RTX 30 range to gamers.

Despite supply problems, Nvidia hit record revenues of $5 billion in the last quarter of 2020, while its stock price soared to all-time highs. This is a near-exact repeat of the market conditions present in 2018, when increased demand amid supply shortages pushed the stock price to the highest level in its history up to that time.

On Wednesday, United States President Joe Biden signed an executive order to address the shortage of semiconductors and microchips. A critical review will investigate the country’s failing supply lines, which have been shown to rely too much on Chinese manufacturing, highlighted by the COVID-19 pandemic.

The chip shortage boosted the value of the PHLX Semiconductor Index, which tracks the value of chip-related stocks, with the index gaining 70% in the past 12 months.

JPMorgan analyst Harlan Sur expects the pump to continue, even though the supply shortage won’t be corrected for some time. 

Sur recently told MarketWatch, “We believe semi companies are shipping 10% to 30% BELOW current demand levels and it will take at least 3-4 quarters for supply to catch up with demand and then another 1-2 quarters for inventories at customers/distribution channels to be replenished back to normal levels.” 

Sur said the previous quarter was the first in which every chip maker JPMorgan tracked actually exceeded forecasted earnings.

Source: https://cointelegraph.com/news/nvidia-supply-shortage-won-t-stop-50m-q1-crypto-miner-sales-says-cfo

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