GB Market Commentary 09/08/2021
by Marcus Sotiriou
Bitcoin rallied over the weekend, reaching a high of around $45,300, despite concerns about regulations impeding the industry in the US. Bitcoin broke out of a 4 month downtrend dating all the way back to the previous all-time-high (as shown below). The hash ribbon indicator has indicated a buy-signal - the last time this happened was on December 2nd, following which Bitcoin went up +258%. It has been rejected from the strong resistance at the 200 daily moving average at around $45,000, as it fell to a low this morning of around $42,800. However, Bitcoin has since bounced back to around $45,500, and has closed a third consecutive day above the high of the 80-day range.
The market has, so far, shown resilience against the negative news of the proposed infrastructure bill in the US. If the bill goes through as it is, there’s many provisions that would from an attack on cryptocurrency industry in the United States. Cryptocurrency regulations in an infrastructure bill, including legislation for bridges and roads, may come as a surprise. It is apparent that Janet Yellen, secretary of the treasury, and the treasury department, wrote up the legislation and handed it to an elected politician who included it in the bill. This would make the average staker have to act like a broker, which is very hard for regular users to do, and would also impede the mining industry in a similar way. People would therefore be pushed to use Wall-Street based products. Senators Wyden, Lummis and Toomey, who have been working in the cryptocurrency industry for years and have a deep understanding of the asset class, have proposed amendments to the bill. The amendment would change the bill’s definition of a broker, allowing many players in the crypto space to avoid the additional reporting requirements. The amendment initially received support from major figures in the crypto space including Senator Rob Portman, one of the lead Republican voices for negotiations behind the bill. Nonetheless, Senator Chuck Schumer has said there will be no votes on any amendments and President Biden has come out strongly in favour of Janet Yellen’s proposals, hence seeming as though the original bill will be passed. Pending the vote in the Senate, the bill will go through congress. In my opinion, the US are in danger of costing themselves by forcing innovation out of the United States and pushing out an economic opportunity as big as the internet.
Further regulatory pressure comes to the industry as the SEC has said that every ICO is a security,
and that many exchanges are likely selling at least some securities which they are not allowed to do. Gary Gensler, SEC chairman, has hinted at a potential Bitcoin ETF but in the form of CME futures. These are paper backed products that would give more power to Wall-Street institutions (like the infrastructure bill) acting as the seller. Binance was also shut down in Malaysia last week.
The NFT mania has heightened as many collectibles are being bought for millions of dollars. The largest NFT platform, OpenSea, which is valued at $1.5 billion, has seen sales skyrocket over the past month (shown on the right). As some investors are yielding up to 1000x returns in such a short amount of time, I feel that the pick and shovel tokens are a surer long term investment. An example would be Ethernity, which is an NFT platform who have partnered with players in a series of industries, including music, technology, and sports. The digital marketplace has issued NFTs of football legend Pele and recently issued NFTs of the Copa America Final, where Messi’s Argentina raised the Cup. The picture which Messi posted holding the cup was the most liked picture posted by an athlete in recorded history. Messi will soon be launching his own collection of NFTs, which will be called the ‘Messiverse’, available on August 20th on the Ethernity platform. The ERN token has performed well recently, rising around 50% in the past week from $8 to $12, but has not seen as much gains as other NFT platforms.