This week has been another volatile period for crypto has Bitcoin experienced a sharp rejection from the range high at $52,000. After dropping to a low of $45,900 on Thursday, Bitcoin is now bouncing back, as it rallied almost 5% this morning to $48,400.
As mentioned in yesterday’s commentary, it is predicted that institutions may re-allocate to the crypto space in Q1 next year. Data from Coinglass suggests this is already happening, as almost 10,000 Bitcoin left Coinbase’s exchange over the past 24 hours – this occurs when long term investors (typically institutions) buy a large amount of Bitcoin, as they transfer the Bitcoin to a different storage location. Trading firm QCP Capital predict a “flippening” in the investor sphere from retail to institutional in 2022 with institutions having a much larger participation. I am not sure a flippening will happen as early as 2022, but I expect the tide to shift dramatically.
Layer 2 solutions for Ethereum have been top performers recently, particularly Polygon (MATIC). MATIC reached an all-time-high last week as it voted to integrated Uniswap, the largest decentralised exchange by trading volume. Uniswap is already deployed on other layer 2 solutions like Arbitrum ($62 million locked) and Optimism ($36 million locked).