Ethereum, Whales and Chainlink #83
Market Meditations | January 25, 2021
Weekend price action summarised and delivered in an actionable way for traders and investors
Dear Meditators
For today’s article, we take a look at Ethereum’s price action over the weekend and discuss the current divergence with Bitcoin ?
After discussing price, we zoom in on the underlying fundamentals.
We end the article by taking a look at some altcoins and celebrating Chainlink making another all-time high ?
As always, if you enjoyed this article, remember to share it with your network. Let’s all grow richer together.
Cryptocurrency Makes World Economic Forum’s Davos Agenda ?
The World Economic Forum’s Davos Agenda features two separate sessions on cryptocurrency, offering another compelling sign that digital assets have permeated mainstream consciousness. The sessions, titled Resetting Digital Currencies, will be held on Monday and Thursday. The first session will feature five public speakers, including Bank of England Governor Andrew Bailey and Hikmet Ersek, president and CEO of Western Union. Thursday’s group features four speakers, including Tharman Shanmugaratnam, a senior minister for the government of Singapore, and Zhu Min, chairman of the Beijing-based National Institute of Financial Research. Read More.Michael Saylor Believes That The Tether Fud Can’t Stop Bitcoin ?
MicroStrategy CEO Michael Saylor maintains his strong belief towards Bitcoin. In a recent interview, he said that Tether was “totally irrelevant” due to how corporate investment in bitcoin actually works. “I have talked to hundred-billion-dollar entities. I know at least ten of them that have bought at least 500 million or more bitcoin. They all wired cash into regulated exchanges. They buy the bitcoin, then it goes into cold storage.” Read more.China to Give Away $4.6M in Digital Yuan ??
According to a recent media report by mobile payment network Mpaypass, the capital of the Chinese province of Sichuan, Chengdu, will be the next area, which will test the efficiency of China’s digital yuan. Following recent tryouts in Shenzhen and Suzhou, the country’s central bank digital currency (CBDC) trial will start at the beginning of this year. During the initiative, the government will supply citizens with 30 million digital yuan, worth $4.6 million. Read more.Rothschild Investment Corporation Increases Stake in GBTC ?
Rothschild Investment Corporation, a leading Chicago-based financial institution founded in 1908, has invested heavily in Grayscale’s Bitcoin Trust, according to a Monday morning filing with the United States Securities and Exchange Commission, or SEC. Rothschild reported owning 30,454 shares of GBTC as of Dec. 31, 2020, according to Form 13F-HR, also known as the institutional manager holdings report. In its October filing, the firm reportedly owned 24,500 shares. Read more.BoE Governor Insists Digital Payments (but Not Crypto) Will Last ?
Bank of England Governor Andrew Bailey held the central banker’s line against cryptocurrency proliferation at the Davos conference Monday. At the same time, Bailey, a panelist at Davos’ digital currency talk, stressed that digital innovation in payments is here to stay. It’s just a matter of finding the right design and governance model for a “lasting digital currency,” he said.“I don’t think we’re there yet,” said Bailey, adding, “Honestly, I don’t think cryptocurrencies as originally formulated are it.” Read more.
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Ethereum Playing Catch-up: Time For New All Time Highs?
Those who were craving a quiet weekend in cryptoland were disappointed once again.
Now that Ethereum is dragging the whole market up, altcoins finished another weekend with spectacular price action.
Those related to the decentralized finance (DeFi) sector saw the strongest performance, with many of them bouncing 30-70% of the lows in under 48 hours.
Barely 3 days ago, some briefly thought that the bull market was over after bitcoin broke down and Ethereum and altcoins went through a short-term capitulation event.
Bouncing from the lows this strongly indicates that the uptrend is still alive and demand is growing.
Higher lows immediately followed by higher highs is a sign of strength that is hard to ignore and should lead us to expect that prices are going higher.
Ethereum Leads The Dance
One of the most significant developments over the weekend was Ethereum breaking out of a 2-year old range relative to bitcoin, continuing its uptrend we’ve been writing about for weeks.
With the weekly close confirming the breakout above ~0.042BTC, Ethereum is signaling that it is ready for much higher prices if bitcoin doesn’t see another major correction in the meantime.
Don’t sell the skin till you have caught the bear, but a new all time-high for Ethereum vs. USD now only seems like a matter of time.
Needless to say, this continues to be bullish for altcoins in general.
As long as bitcoin consolidates, altcoins will very likely continue to outperform bitcoin.
We’ll continue to pay attention to this indicator to know when it’s time to de-risk our altcoin exposure, as bitcoin breaking $34,000 is a first sign of strength in a while that could potentially weaken the altcoin uptrend that we’ve seen over the last few weeks.
Whales Bought The Dip
On-chain data indicates that investors with deep pockets have continued to accumulate rather than selling their Ethereum positions the last few weeks.
Data from Glassnode, a blockchain analytics firm, shows that the number of whale-addresses (Balances > 10k ETH) is growing steadily while price continues to climb and attracts more institutional attention.
DeFi, almost completely built on Ethereum continues to make new highs while the underlying governance coins are going up without remorse as the industry goes through a rerating of the underlying fundamentals.
At some point, there will be another strong correction as parabolic price action is generally not sustainable. Until then, enjoy the show!
Chainlink Breaches $25
It’s no secret that I believe in the underlying fundamentals of Chainlink. (Now this tweet definitely involved me having some fun and by no means a price prediction)
It’s a fantastic asset to trade because of its liquidity profile, but as the most popular oracle it also performs an essential function within the growing DeFi sector.
After a strong rejection on the first attempt, LINK is now officially at all time highs and given the strong bounce from the 0.382 level earlier this week, I expect continuation.
Last time LINK broke its ATH, it went up 300% and never revisited its prior ATH again. Suddenly, $100 LINK doesn’t sound as silly…
Conclusion
As long as bitcoin consolidates, altcoins will very likely continue to outperform bitcoin. We have seen this for Ethereum, DeFi and Chainlink. On-chain data indicates that investors with deep pockets have continued to accumulate rather than selling their Ethereum positions the last few weeks. After a strong rejection on the first attempt, LINK is now officially in price discovery after a brief correction towards the 0.618 fibonacci retracement level earlier this week. We’ll keep you updated with regards to when it’s time to de-risk our altcoin exposure.
On Mondays, our ‘Scan The Week’ section is designed to show our community what events and headlines we will be keeping an eye on.
Monday, 25th January
World Economic Forum Begins ?
2,000+ leaders will join the virtual Davos Agenda under the theme of “A Crucial Year to Rebuild Trust” from 25 – 29 January. On the Agenda are 2 cryptocurrency sessions. For more on this, check out the Market Briefing section ☝️Senate Vote for Treasury Secretary ??
The Senate is voting late Monday afternoon on Janet Yellen’s confirmation to be treasury secretary. If confirmed, she’ll be the first woman to lead the department in its more than 230-year history.
Tuesday, 26th January
Verge (XVG) Block Reward Halving ?
Miners are rewarded a certain amount of Verge coins whenever a block is produced (approximately every 34 seconds). As of now, the block reward is 200 coins per block and will decrease to 100 coins per block post halving.Market Meditations Podcast ?
Ryan Adams: The Future of Ethereum
Wednesday, 27th January
Tesla Financial Statements ?
This week more than 20% of S&P companies will be releasing their Q4 financial results. This includes: Apple, Facebook, Microsoft and Tesla.
Thursday, 28th January
The North American Bitcoin Conference (Jan 28-29) ?
The 2021 conference program will cover: Global adoption of blockchain technology, Institutional investment (inc. Grayscale, Microstrategy, ETFs), Geopolitical threats and opportunities in blockchain (inc. regulatory sandboxes, restrictions), Decentralized finance (inc. DeFi, “Ethereum killers”, yield farming), Central bank digital currencies (inc. Stablecoins, Tether) and much much more.Stratis Strax Airdrop ?
Distribution to the winners of the December airdrop will happen on January 28th.Market Meditations Podcast ?
Matteo Franceschetti: Power of Sleep
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Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. I am not a financial advisor. Every investment and trading move involves risk. Do your own research when making a decision.
