Newsletter Volume 13

Article-1. The Market This Week

Bitcoin and Ethereum prices are the talks of the town this week. The recent rate hike by the Federal Reserve has led to a 4% increase in the prices of both Bitcoin and Ethereum. With growing interest from investors seeking safe haven assets, it is expected that the prices of these cryptocurrencies will continue to rise. The market conditions and potential for further upside for BTC and ETH will be discussed in this article.

Fundamental Outlook of Cryptocurrency

This Week Bitcoin, the leading cryptocurrency, experienced a surge after the Federal Reserve raised interest rates. A growing number of institutional investors and progress in crypto legislation drove this. Ethereum also hit a high of $1,600, fueled by optimistic investor sentiment and recent comments from Jerome Powell regarding declining US inflation.

The Federal Reserve’s decision to hike rates as part of its fight against inflation was seen as a positive factor for the crypto market. Institutional investors have also played a significant role in supporting the crypto industry. The positive impact of progress in cryptocurrency legislation has also been noted.

However, miners face challenges as their profits have declined and the cost of power has increased. This may lead to pressure on miners to sell their shares, which could negatively impact the price of Bitcoin. On the other hand, retail investors are showing interest in Bitcoin as institutional interest in the Bitcoin futures market grows. According to Glassnode, there has been a rise in the number of addresses holding over 0.01 coins in the past month, indicating a boost in Bitcoin prices.

Bitcoin is bullish and has resistance at $24,250. A break above could lead to a push towards $24,800 and $25,250 due to the less-than-hawkish stance of the FOMC and Fed rate hike. On the other hand, technically, Ethereum broke an ascending triangle pattern near $1,660, potentially leading to a bullish increase to $1,725 as the initial target.

KEY METRICS

Total Crypto Market Cap$111 T

Bitcoin Market Cap $453.56 B

Ethereum Market Cap $198.61 B

ETH/BTC Ratio 0.07

Ethereum Gas Price 28 gwei

DeFi TVL $74.03 B

Fear and Greed Index 60 (Greed)

Federal Reserve Balance Sheet $8.43 T

Article 2 — Weekly Review of IC15

The IC15 Indice also referred to as the “Index of Cryptos,” is a rule-based, market capitalization-weighted index that tracks the performance of widely traded and liquid cryptocurrencies worldwide. This is a review of the top constituents of the IC15 index.

At 4 pm on February 1, 2023, the IC15 index, also known as the “Index of Cryptos,” saw a boost of 1548 points, bringing it to a level of 34,168. All the coins in the index were in positive territory, with Avalanche, Polygon, Uniswap, and Binance being the top performers, experiencing growth in the 7–15% range. However, a 5% pullback impacted the crypto market after the Federal Reserve increased interest rates by 25 basis points. The overall market capitalization of cryptocurrencies stands at $1.09 trillion.

According to a report by Crypto tax firm Recap, London has been named the “most crypto-ready city” and is a leading hub for cryptocurrencies, with the number of cryptocurrency businesses and ATMs being among the eight indicators analyzed. A South African grocery retailer, Pick n Pay, is testing the acceptance of Bitcoin in 39 of its 1628 locations for a three-month pilot phase. The Grand View Research report predicts the global blockchain messaging applications market will be valued at $536.5 million by 2030.

The IC15 index showed volatility the following day, fluctuating by nearly 700 points before settling at 32,620, a 51-point increase from 4 pm. Cardano, Litecoin, and XRP were the significant contributors to the Index gain, each seeing a 0–3% rise. Meanwhile, Avalanche, Chainlink, Polkadot, and Shiba Inu were the major losers in the index, experiencing a 1–3% drop. The value of Bitcoin is trading close to $23,000. The U.K. finance ministry is preparing new regulations for various aspects of the crypto sector in an effort to establish the country as a hub for crypto. The Hong Kong Monetary Authority (HKMA) proposes a licensing regime for stablecoin activities, which all regulated crypto entities operating in Hong Kong must obtain before 2024. Montenegro’s Prime Minister, Dritan Abazović, has announced the development of a digital currency in partnership with Ripple.

Article 3 — Battle of Bull and Bear

After a challenging year in 2022, the crypto market started 2023 with a surge as U.S. inflation moderated, leading to high demand for Bitcoin and other major cryptocurrencies. Despite the current market volatility, investors are interested in the latest and greatest in crypto. While AI is still capturing the attention of traditional market participants, crypto has a significant lead in terms of performance this year.

The crypto-related ETFs have shown strong growth in the year, with an average increase of 38.3%. This is a difference of 26% compared to the AI ETFs, which are up between 4% and 32%. The crypto ETFs have outperformed AI ETFs, with some seeing a rise of 9% to 64% year-to-date.

February holds some key events that could shape the future of the crypto market. The European Blockchain Convention from February 15–17 in Barcelona will have over 200 speakers discussing the future of blockchain, NFTs, decentralized finance, and Web 3. The tenth annual Blockchain Life forum will also occur in Dubai on February 27–28.

The crypto market has been sensitive to macroeconomic data and monetary policy decisions, and the Federal Open Market Committee (FOMC) raised interest rates by 25 basis points on February 1. The market could also see significant volatility with the release of the January consumer price index (CPI) inflation reading on February 14 and the January core personal consumption expenditures price index (PCE) inflation reading on February 24.

Shiba Inu (SHIB) is still pushing higher despite the broader crypto market pulling back on Thursday. The crypto token, built on the Ethereum blockchain, is the second-most popular meme coin after Dogecoin. It last traded 3.0% higher on the day, with a 9% increase since bouncing from its 21-Day Moving Average ahead of the Federal Reserve meeting.

As the crypto and blockchain industry enters 2023, it stands as a testament to its resilience, having endured four crypto winter periods. This year, the focus will be on promoting transparency and implementing regulations to increase confidence in crypto and blockchain projects. Legitimate projects and entrepreneurs are collaborating to eliminate the presence of bad actors and enhance the overall crypto environment. The emphasis will shift from established crypto companies to imaginative developers creating cutting-edge applications, leading towards widespread adoption.

Market Sentiments

Article 4— Weekly Spotlight

Crypto Investors May Benefit from Bitcoin and Ether’s Deviating Routes in 2023. The net position change of the largest two cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), on exchanges have split apart after having a solid correlation in 2022. The net position on exchanges, which is the difference between the deposits and withdrawals of an asset, shows that there’s a declining supply of BTC. In contrast, an increase in ETH’s net position on exchanges suggests a growing accumulation. This divergence could create a buying opportunity for investors.

Different Paths for Bitcoin and Ethereum in 2023 May Offer Investing Opportunities for Crypto Investors. The net position changes for the two largest cryptocurrencies in market capitalization have gone separate ways. This departure from previous correlations throughout 2022 could be a potential buying opportunity for investors. BTC’s declining net position on exchanges, a reflection of decreasing supply, contrasts ETH’s rising net position, signifying an increase in stockpiles on exchanges. Meanwhile, Bitcoin and the S&P 500 are close to hitting the golden cross, a bullish technical signal tracked by traders. The golden cross happens when a security’s 50-day simple moving average surpasses its 200-day SMA, creating a cross on the price chart. Though moving averages are lagging indicators, and the signal only shows that short-term gains have exceeded long-term gains, traders often view it as a prelude to long-term price increases.

The Next Two Weeks May Witness Bitcoin’s First Golden Cross Since 2021, TradingView Predicts. With the S&P 500’s averages poised to hit the golden cross on Thursday, Bitcoin could also see its golden cross in the coming week or two, according to charting platform TradingView. The simultaneous appearance of the golden cross on both Bitcoin and the S&P 500 may entice trend-following crypto traders to invest in the market. As Bitcoin has developed into a macro asset since early 2020, it tends to follow the movement of the S&P 500. However, traders should keep in mind that not every golden cross leads to a significant rally, even though Bitcoin’s major rallies usually begin with one.

TradingView data shows that Bitcoin has experienced eight golden crosses, out of which three — confirmed in February 2012, October 2015, and May 2020 — accurately foreshadowed a bull market lasting at least a year and resulting in price increases ranging from 100% to 350%. On the other hand, the golden crosses of July 2014, July 2015, and February 2020 proved to be false signals as the cryptocurrency soon entered a death cross, signifying a bearish shift in the long-term trend.

JPMorgan’s Latest E-Trading Trends Survey Offers Conflicting Messages about Institutional Traders’ Attitude Toward Crypto. Banking giant JPMorgan recently conducted an e-trading trends survey of 835 institutional traders to gauge their sentiment for the coming year. The results, however, could be more consistent, particularly regarding digital assets and trading.