In the short term, the crucial technical resistance level is $35,500. Throughout the past 24 hours, Bitcoin has continuously rejected at that level. When Bitcoin rose to around $35,500 on Binance earlier on Jan. 13, it saw an 8% drop shortly thereafter, indicating that there is strong selling pressure.
A pseudonymous trader known as “Byzantine General” outlined that there are additional sell orders on Coinbase in the $36,500–$37,000 range, saying “I’m still not taking bets” and adding that he is “casually buying dips with spot.” There is significant uncertainty in the market due to the large price swings between $31,000 and $35,000 with no breakouts or bearish invalidations. The trader also noted that Bitcoin is currently at “VWAP” resistance, with high selling pressure at key resistance levels.
The price of Bitcoin (BTC) is ranging between $32,000 and $35,000 after the big flush drop on Jan. 12. Traders remain mixed around BTC’s short-term trajectory due to various conflicting signals. Some are bullish because of the quick recovery from $30,500 and Grayscale reopening its products to new investors. Others are cautious due to the continuous rejection at the $35,000–$36,000 resistance range.
However, the overall sentiment around Bitcoin has been increasingly positive over the past 24 hours. The swift correction from $41,000 to $30,500 flushed a lot of overleveraged buyers and long contracts. Prior to the correction, the Bitcoin futures funding rate was hovering at over 0.1% most of the time, meaning that the market was significantly overleveraged and overwhelmingly long.
The futures funding rate is a mechanism that balances the market by rewarding buyers when the market is majority short and sellers when the market is majority long. In the Bitcoin futures market, the average funding rate is 0.01%. This means that long contract holders have to pay 0.01% of their position every eight hours to their short-seller counterparty. Because the market was overleveraged for such a long time, when the first big drop happened, the price of Bitcoin began to plummet as consecutive liquidations occurred.
Following the drop, the futures market has become significantly less heated, and most derivatives products have normalized after seeing a rise in interest. Although the Bitcoin futures market’s open interest still remains near its all-time high, the market is healthier than before. This increases the probability of a renewed rally in the foreseeable future.
Positive macro narratives surrounding Bitcoin
According to Ki Young Ju, CEO of trading data platform CryptoQuant, many institutional investors bought Bitcoin at around $30,000. As such, if the price of Bitcoin drops to the $30,000–$32,000 support range, institutions would likely protect that level with large buy orders. This is mainly why Bitcoin saw a large reaction from buyers on Coinbase and other major U.S. exchanges when it dropped to $30,500 on Jan. 12. “The Coinbase outflow on Jan 2nd was a three-year high,” wrote Ju. “Speculative guess, but if these guys are behind this bull-run, they’ll protect the 30k level. Even if we have a dip, it wouldn’t go down below 28k.”
Atop the likelihood of a prolonged whale accumulation at $30,000, there are two key macro narratives that could buoy the sentiment around Bitcoin. First, several mainstream media publications have reported that U.S. President-elect Joe Biden is expected to name Gary Gensler as the chairman of the Securities and Exchange Commission. Gensler previously taught a “Blockchain and Money” course, which has since been released for free on MIT OpenCourseWare. Considering this, Mechanism Capital partner Andrew Kang said that the “probability of #BTC ETF approval just went up significantly.”
If a Bitcoin exchange-traded fund is approved after years of rejection, it would lead to two things. First, it would further legitimize Bitcoin as an established asset class and a store of value. Second, it would enable accredited investors and institutions to reliably invest in Bitcoin. Currently, the Grayscale Bitcoin Trust and the Bitwise 10 Crypto Index Fund are some of the go-to institutional vehicles to invest in cryptocurrencies, including Bitcoin.
Grayscale has reported a significant increase in demand in recent months. On Jan. 12, Grayscale reopened its products to new investors, including investment in GBTC after closing it down in December 2020. If institutions were the main driver of the recent Bitcoin rally, new inflows into GBTC could result in a newfound uptrend in the near term. Coincidentally, it was during the period of the fund’s closure when BTC saw a relatively large correction.
What comes next?
In the foreseeable future, the bullish and bearish scenarios of Bitcoin revolve around two key levels: $30,000 and $35,500. As long as Bitcoin maintains $30,000 as a strong support area, the probability of a breakout above $35,500 increases. A clean move above $35,500 would likely mean a continuation of the rally, which could result in a new leg upward beyond its current all-time high.
Traders and technical analysts say that the current price trend of Bitcoin is quite similar to when Bitcoin dropped to around $16,000 in late November 2020. At that time, Bitcoin consolidated for two weeks before finally breaking out and rallying to $20,000. The BTC price could see a similar trend where it bounces off of the $30,000 support and attempts to break the $35,500–$36,000 resistance range in the near term.
A pseudonymous trader known as “Neko” said that Bitcoin’s rebound has been encouraging thus far. He anticipates BTC to retest $36,000 soon, which would leave the path open for a potential rally back to all-time highs above $42,000: “Very impressive buy backs shown. I’m really liking those wicks on the bottom side of those h4 candles. I think we have found the local bottom for now.”
Another variable to consider in the short term is that the so-called “Kimchi premium” in South Korea has started to decline. When Bitcoin saw trading over $40,000, the premium was consistently hovering over 5%. Ever since the drop, the premium has been hovering at around 2% to 3%. This could indicate that the retail demand for cryptocurrencies in the South Korean market has cooled down slightly following the correction.
Bitcoin has been trading lower on Coinbase as well, which is unusual, as it has been consistently higher than Binance throughout the rally. Coinbase also naturally has a higher BTC price than other major exchanges that use Tether (USDT), due to the minor difference between Tether and the U.S. dollar in the exchange market. Ideally, for the bull trend to resume, the premium on both South Korean exchanges and Coinbase would have to return.
Facebook’s Diem Unveils Its Latest Stablecoin Plans and Strategic Move to the United States
Diem, the cryptocurrency project headed by Facebook originally known as Libra, recently announced its plans to launch a stablecoin with its focus scaled back to the United States.
The company stated earlier this year that it would be relocating its primary operations from Switzerland back to the United States, and would withdraw its payment system license application from Switzerland’s financial regulators. “Diem is simplifying its plans for [its] USD stablecoin issuance by shifting its main operations from Switzerland to the United States,” they said.
Stablecoins are digital currencies pegged to a fiat currency, with Tether (USDT) and USD Coin (USDC) being two prominent examples. California-based Silvergate Bank will become the sole issuer of the Diem USD, while also managing its dollar reserves.
1/5 Exciting day @DiemAssociation! We are pleased to announce a partnership with @silvergatebank. @silvergatebank will become the exclusive issuer of the ≋USD stablecoin and will manage the ≋USD reserve.
— Christian Catalini (@ccatalini) May 12, 2021
Diem to Launch Wholly New Subsidiary Diem Networks US Alongside Crypto Bank Silvergate
In a strategic partnership, the two firms have created a new subsidiary called Diem Networks US — which will run the Diem Payment Network (DPN) to facilitate transactions of Diem stablecoins within its network.
“Silvergate is a leader in financial innovation and an ideal partner for Diem as we move forward with a blockchain-based payment system that protects consumers and enhances the integrity of the financial system,” said Stuart Levey, chief executive officer of Diem.
“We are committed to a payment system that is safe for consumers and businesses, makes payments faster and cheaper, and takes advantage of blockchain technology to bring the benefits of the financial system to more people around the world. We look forward to working with Silvergate to realize this shared vision.”
Diem’s strategic shift to the United States comes at a time of a rapidly evolving regulatory environment for cryptocurrencies and blockchain technology.
Some municipalities and states such as Miami and Wisconsin have embraced the recent innovation, whereas regulators such as the newly-appointed SEC Chair Gary Gensler have critiqued the autonomy of the crypto industry.
With crypto ETFs and related financial products under intense scrutiny by the SEC, it remains to be seen whether Diem’s decision to relocate back to the United States will bear any fruit.
Featured image from ShutterStock
Coinsmart. Beste Bitcoin-Börse in Europa
Crypto Research Firm Delphi Digital Launches Latest NFT Fund
Delphi Digital, a New York-based crypto research and venture firm, recently launched its latest on-chain fund to invest in non-fungible token (NFT) projects.
— Delphi Digital (@Delphi_Digital) May 14, 2021
The fund, referred to as Delphi InfiNFT, is based on decentralized finance (DeFi) investing protocol Syndicate. “It will enable automation of deposits, cap table, distributions, fund management, reporting, etc.” said Anil Lulla, co-founder of Delphi Digital.
“NFT’s are changing digital ownership rights, as well as how creators are interacting with their communities. Along with the growth of the NFT space, there is supporting infrastructure that needs to be built alongside it. The goal of this fund is to find the protocols that are moving the NFT space forward and building the infrastructure that is needed.”
Delphi Digital has partnered with NFT investor Gmoney for its NFT fund, who famously purchased a CryptoPunk NFT for a record price of 140 Ethereum worth approximately $180,000 at the time. Gmoney and Delphi will co-manage the fund together.
— gmoney.eth (@gmoneyNFT) May 14, 2021
According to their website, the fund will look to create an investment portfolio consisting of 20 protocols through InfiNFT. “We plan to deploy at least 80% of the fund’s capital in the first 6 – 9 months as we find protocols that fit with our thesis,” the team report read.
“We will identify and select leading NFT networks through our networks and communities. We’ll be working directly with the teams we invest in to help them become a core piece of the NFT ecosystem long-term.
Delphi’s InfiNFT is backed by IDEO CoLab Ventures, Divergence Ventures, Axie Infinity, Compound Finance, and Fractional, among others.
The recent steep Ethereum selloff led to massive losses in market cap across the NFT markets. According to NFT Valuations, Cryptopunks’ total market valuation dropped $600 million this past week — representing over a 66% loss. In spite of the recent volatility, investors like Delphi Digital appear to be confident in the long-term prospects of the non-fungible token space.
Featured image from UnSplash
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Cardano, Uniswap, Chainlink Price Analysis: 16 May
Cardano introduced some target levels at $2.53 and $2.69 via the Fibonacci Extension tool. Uniswap needed to garner bullish strength for a break above $43-$45 resistance. Lastly, a descending triangle breakdown on Chainlink could see a 7.5% retracement towards its 50-SMA
If buyers were looking to make profits on large-cap alts during the recent turbulent broader market, Cardano was a must inclusion in every portfolio. Weekly gains of 36% were the highest among the top 10 coins by market cap and underlined ADA’s independence from broader market sentiment. Fibonacci Extension tool was used to identify potential target points for the current rally. The 372.2% and $361.8% extension levels stood at $2.53 and $2.69, respectively. With buying pressure still on the rise according to Awesome Oscillator, ADA made a strong case for an extended rally.
In case of pullbacks, these extension levels can also act as support lines. RSI’s overbought territory indicated the need for stabilization and a dip in volumes could mean some southbound action. Nevertheless, key factors could allow ADA to sustain higher levels moving forward.
A descending triangle breakdown showed losses of 8% from the bottom trendline, but buyers stepped in at $35.6-support. In fact, this support has been under the spotlight during recent dips and only reinforced the area as a buffer against extended losses. On the 4-hour timeframe, OBV’s sharp fall was an interesting development which explained why bulls have failed to topple $43-$45 resistance. Considering the dearth of constant buying pressure, Uniswap could trade between $44.4 and $35.6 over the coming days.
A breakout above $44.4 on high volumes would result in a bullish trend but the market was not yet ready for such a swing. Awesome Oscillator’s wavy trajectory suggested that neither side had been fully able to assert dominance.
While Chainlink did see losses over the last 24 hours, the bulls held on to $41.2-support – an important development. A descending triangle was prominent on the daily timeframe and a breakdown could see a sell-off between $35.7-39.1. Those hoping to trade on a breakdown can observe the 4-hour timeframe for more sensitive price action.
Awesome Oscillator registered a series of red bars as selling momentum dragged LINK from a high of $61.9 to a low of $39.7 during the present downtrend. MACD also confirmed a bearish presence in the market. To negate LINK’s pattern, buyers would need to target a rise above $45.6-resistance.
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