GB Market Commentary 25/08/2021
by Alex Clark
After a period of extreme bullish sentiment, the cryptocurrency market has fallen lower, with Bitcoin currently sitting at $47,321. Breaking above $50,000 on Monday for the first time in three months, bitcoin has since slipped below $48,000 and is down about 5% over the past 24 hours. Prior to bitcoin’s decline, the fear and greed index had inched into ‘extreme greed’ territory, signalling the market was due for a correction, although support is nearby according to technical charts. Bitcoin’s simple and exponential moving averages give strong buy signals and the relatively low funding rates in the asset’s futures market indicate the rally was driven by spot traders rather than leveraged speculators. Not only that but MicroStrategy continues to grow its Bitcoin portfolio with the company acquiring a further 3,907 BTC yesterday, at an average price of $45,294 per BTC. This support could stabilize the pullback and maintain the breakout move above $45,000.
Although, a report by Glassnode shows that the proportion of old bitcoins being spent on the network has once again increased as long-term holders take advantage of the currently high prices to realize profits. Further to this, there has been a slight uptick in inflows to exchanges, which indicates that traders and investors are capitalising on market strength and taking profits.
Whilst uncertainty remains for bitcoin in the short-term, its long-term future is clear, with professionals and academics stating that bitcoin, and digital assets more generally, will replace fiat currencies over the next five to ten years. Many institutions are already scrambling to adopt crypto and blockchain technology in a bid to retain competitive advantage.
Citigroup is the latest bank to venture into the crypto space as it prepares to offer Bitcoin futures. This comes after accelerating interest in the new asset class from institutional clients since August 2020, although the firm has been clear that it will only begin offering products once it has received regulatory approval for a crypto trading desk in the UK.
In a similar vein, Europe’s first Bitcoin futures product is due to be launched on Eurex on September 13th, which will allow European investors to trade Bitcoin futures contracts on a crypto exchange-traded product (ETP) for the first time. This is important news for the industry and will allow institutional players to track Bitcoin price developments through a regulated environment.
Bitcoin adoption intensifies as United Wholesale Mortgage, the second-largest mortgage lender in the U.S, reveals plans to embrace crypto payments before the end of the year. This comes after the launch of PayPal’s Checkout with Crypto feature in the U.S, which enables users to spend their crypto when making purchases with online merchants, as well as Tesla’s decision to allow customers to transact with dogecoin. Whilst it is not yet clear when UK adoption will catch up with that of the U.S, the cryptocurrency payment space has been warming up for some time and there is no doubt that digital currencies are shaping the future of global finance and commerce.
Earlier today, ADA was finally approved for listing on Japanese crypto exchanges, making investment in the asset easier for Japan’s 126 million residents. Japan has extremely strict rules for crypto exchange listings, meaning that only a small number of tokens can be listed in Japan. Not only is this development important for Japan in marking its progress within the digital asset space but it is also significant for ADA, with many comparing it to ADA finally getting listed on Coinbase back in March this year. As a result, we could witness a corresponding price pump as the token is made available to millions more.