30 April 2021 | ZebPay Trade-Desk
Bitcoin has continued to impress this month, supported by strong fundamental metrics on the network, and impressive institutional flows, holding up volumes. The asset has witnessed another rally this month, and hit its new all time high of $64,863, from the previous high of ~$61,000 last month. It has witnessed a correction since it hit the new ATH this month. The market capitalization of Bitcoin also hit its all-time high this month, crossing $ 1.1 trillion, the first cryptocurrency asset to do so. The community, as well as FI’s, and banks continue to keep a bullish stance on the asset. This is the result of banks, MNC’s and in some cases even governments recognising the potential of the asset. The sentiment remains positive, hence fueling the rally even more. Furthermore, as companies allocate BTC to their balance sheets, this is a positive reinforcement, proving that the asset class is going mainstream rather quickly.
Q1 2021 has been very fruitful for BTC. The upward trend has been an ongoing affair since October 2020, since PayPal announced support for crypto assets, with minor corrections setting in from time to time, but also new highs being attained almost every month, and this month is no different. The second-largest asset by market capitalization, Ethereum, has been witnessing an upward rally, especially in the latter part of this month. It hit a new all-time high of $2,797 in April. During the month, corrections and profit booking was seen from time to time, but the asset has always responded with a strong rally. ETH saw an average increase of ~20% this month, compared to March. The sentiment is bullish, as ETH has crossed a market cap of $310bn this month, for the first time. As the Ethereum blockchain fully supports DeFi Apps, Ethereum has gained significant traction among major industries, spiking investors’ interest in Ether. In addition to that, the blockchain is soon undergoing an upgrade, which will result in token burns, limiting the ETH supply in the long run, and this is likely to result in an upward price pressure of the asset, and hence a reason to watch out, and maintain a bullish stance.
In terms of market capitalization, Bitcoin regained its momentum and continues to have a strong outlook. As of now, Bitcoin accounts for ~75% of the total crypto space. If we combine Bitcoin, LiteCoin, Monero, Ethereum, and other significant cryptocurrencies, the total value comes to ~$1.6 trillion, which accounts for ~90% of the total global crypto marketplace.
On the Macro front, Bitcoin looks like an increasingly attractive asset to add to portfolios as it is among the few assets (including traditional) whose supply is limited, and demand has seen spikes, as the asset goes mainstream and is adopted by a larger set of people. Ethereum is also an attractive asset, as fundamentally it has a lot going for itself, especially in light of the upgrades it is likely to see, hence upon any correction another quick rally is anticipated. As FI’s interest continues to grow, and blockchain technology gives rise to new applications being formulated and implemented, the overall sentiment fundamentally is positive and likely to remain so for some time to come. On the performance side, both BTC and ETH have outperformed key traditional assets for the month of April.
April Fundamental Snapshot at ZebPay:
The ZebPay trade desk also conducted research on broader, fundamental investment topics and our weekly technical reports this month. We looked at the dynamics of 1Inch recently launched at ZebPay, the basics of DeFi Lending and Borrowing as well as Tokenomics, and also discussed how Dividend tokens work, and why they are important.
Launch of 1Inch at ZebPay
1inch was launched in 2019 with a goal of helping users find the best prices on assets across decentralized exchanges. Within 2 years, it became one of the widely used decentralized exchanges with over $290 million locked in their liquidity pool. Today, the 1inch network is a collection of decentralized protocols with a DeFi aggregator and an Automated Market Making protocol or AMM. 1inch went live on ZebPay’s platform earlier this month.
On its release date, Dec. 25, 2020, the circulating supply was ~6 percent of the total issuance and around 1 percent for the first week of the liquidity mining program. Today, the total supply of 1inch is 1.5 billion tokens, 30% is allocated to community incentives, and will be rolled out over the next 4 years or so, with the aim to create an incentive for community members to participate in the protocol’s governance. In these 4 years, ~14.5% of the total supply will form the protocol growth and development fund, which will be used to issue grants, attract developers and repay any users due to unforeseen circumstances.
To read our in-depth report on 1Inch, please click here.
DeFi Lending and Borrowing
Conceptually, lending and borrowing are terms that continue to hold the same definition and purpose, be it in the realm of traditional, centralized financial systems, or in the space of DeFI and digital currencies. In essence, it follows the act of one party providing monetary assets, that could be fiat or digital currencies, in exchange for a steady income stream for another party. When it comes to the digital space, the methodology in the cryptocurrency space is slightly different. Lending and borrowing can be facilitated in two ways, one through a centralized finance institution, such as BlockFi, or through the support of decentralized finance protocols such as Maker or Aave.
Less prone to failure and more efficient, decentralized financial systems have provided a considerable improvement over the more standardized way of engaging in lending and borrowing activities. The decentralized ecosystem is growing globally, especially since over the years they have become more affordable as the technology has evolved.
To read our in-depth report on DeFi Lending and Borrowing, please click here.
Tokenomics studies how cryptocurrencies work within the larger cryptocurrency ecosystem. It looks at things like token distribution and how it can be used to incentivize positive behaviour in the network. So, basically, tokenomics aims to understand and articulate the supply and demand characteristics of cryptocurrencies. But before we deep dive into tokenomics itself, it’s important to understand the difference between a token and a coin. In simple terms, coins are native to their blockchain, whilst tokens have been built on top of another blockchain, like Ethereum, an ERC-20 token is a good example of this.
Blockchain technology has enabled projects to create micro-economies, by making them self-sustaining, and by allowing their developers to figure out how tokens should operate within their ecosystem. There can be ‘no one size fits all’ attitude when it comes to tokenization, and its best practices.
To read our in-depth report on Tokenomics, please click here.
Dividend tokens are designed to offer their holders the opportunity to earn passive income through the investment made in a certain project and gain from the value appreciation it may experience. Alternatively, by mining or getting regular dividends from the issuer. These tokens offer a share of the profit of its issuing organization.
In general, regulations in the cryptocurrency space aren’t particularly stringent and are still in their development phase. However, when it comes to dividend tokens, things get a little tricky. While many geographies do not have regulation around them yet, the US treats dividend tokens as securities, and they are overlooked by the SEC. In the recent past, however, different jurisdictions have started to take efforts to establish a basic framework around such tokens.
To read our in-depth report on Dividend Tokens, please click here.
April Technical Analysis Snapshot – Results:
For the first week of April, we published a technical analysis on 4 crypto assets, namely BTC, ETH, BAT, and USDT/INR. Based on our analysis we were bullish on 3 coins except for USDT/INR. Consistent with our analysis BTC, ETH, BAT and rallied, while USDT continued to remain range-bound.
For the second week, we covered 5 crypto assets; BTC, ETH, BAT, BNB and USDT/INR; technical analysis led to a bullish view on BAT and ETH. Even in the second-week report we were spot on with our analysis, with ETH and BAT rallying and making new all-time highs. BNB,ETH and USDT/INR were in line with our calls as well
For the third week, we covered BTC, ETH, BAT, BNB and USDT/INR. Our technical analysis suggested we should remain cautious at higher levels and we expected corrections on all except USDT/INR. We saw the sharp corrections on BTC, and BAT but after making new all time highs, we had suggested that Usdt would be in a range but it broke the resistance and started trading at higher levels.
For the fourth week, we covered BTC, ETH, BAT, BNB and USDT/INR. Our technical analysis suggested that BTC, ETH and BAT can bounce from the important support levels. We saw the upward movement on BTC, ETH and BAT after taking support at mentioned levels, we had suggested that Usdt would be trading in an uptrend but it broke the support and started trading at lower levels. We also mentioned BNB to be in a broad range.
Out of 16 asset-specific analyses over the month, 11 analyses were strongly consistent with actual moves, market moves were opposite of 2 analyses, and 3 were aligned with minuscule deviation.
|Assets Covered||Outcome Aligned||Outcome Opposite||Aligned with Miniscule Deviation|
Weekly Technical Analysis:
Bitcoin crossed the $64,000 mark this month, and hit its new ATH of $64,863, and its largest crypto asset by market capitalization continues to surpass its all-time high from time to time. Since then it has seen a correction set in. Ether hit its ATH this month,and continues to gain momentum, and is following an upward trend even now. Institutional flows remain positive, and volumes have also shown good resilience. Altcoins have also been performing well, but BAT has also seen a correction ~35%, currently at $1.2 levels, with volumes significantly higher than the previous month.
Bitcoin (BTC) Technical Analysis and Chart:
At the time of writing, Bitcoin is trading around $54,500 reflecting a loss of about 1% approximately over the period of 24-hours.
Bitcoin has witnessed a correction this month, and hit $54,000 this week. The week saw a slight spike first then witnessed a correction later, and after some profit booking is also seen. However, the largest asset by market capitalization continues to see strong inflows, and volumes have held up, showing that the asset has good promise and investor confidence is at its peak.
As we mentioned in our previous report, BITCOIN was trying to take support at 100 EMA (Exponential Moving Average). As per the daily chart above, it took the advantage of this support level and made the weekly high of $56,476, surging almost 20%. Technically, the asset has made a ‘Hammer’ (Single day bullish reversal pattern) in downtrend, where the longer lower shadow indicates buying at lower levels. However it being a ‘Red Body Hammer’, the reversal may not be stronger as compared to a green body hammer. BTC has a minor resistance at $57,225 and we may see further upside one the resistance is broken convincingly.
Ethereum (ETH) Technical Analysis and Chart:
At the time of writing, Ethereum is trading around $2,750 reflecting a gain of about 2% approximately over the period of 24-hours.
ETH has witnessed an upward trend towards the latter part of this week, as it hit a new ATH of $2,797 as well, and is currently trading at $2,750 levels. This comes after the asset saw a correction last week, as we mentioned in our previous report. While some of this rally can be attributed to that, another crucial factor is the Ethereum blockchain upgrade which is likely to occur soon. This upgrade will crunch the supply availability of ETH, which likely to create an upward pressure on prices, the start of which can be seen in small proportion now itself.
As we can see from the daily chart above, ETH is trading in an uptrend and every dip in the prices is seen as an accumulating opportunity.This week too, the asset has made ‘Higher Top Higher Bottom’ pattern and rallied almost 20% making the new all time high of $2,796. Although we continue to remain bullish on the asset, investors should remain cautious as we anticipate a minor correction or profit booking at higher levels. $2,925 will act as crucial resistance for ETH.
Basic Attention Token (BAT) Technical Analysis and Chart:
At the time of writing, BAT is trading around $1.2 reflecting a gain of about 2% approximately over the period of 24-hours.
BAT has been on a bull run, ever since it marked the $1bn market capitalization milestone. After making the peak of $1.65 this month the asset saw a correction of ~ 35%, and now trades at $1.2 levels. On the volume front, the asset has continually impressed the crypto community, as its constantly attracting more and more interest from investors. As we mentioned earlier, BAT derives its core attributes and purpose from the well established Brave Browser, which tries to solve some of the fundamental problems that exist today in digital advertising, and attempts to make browsing a safer practice.
We mentioned in our previous report that we may see a pull back in prices if the asset sustains the support level of $0.924. This week we saw an upward movement and BAT rallied almost 25% from last week and made the weekly high of $1.2817. On a technical front, the asset is trying to make a small flag pattern where currently the prices are consolidating between $0.924 to $1.31 and breakout will occur once the upper range will be broken and the asset will close above this range with high volumes.
Monthly Trade Summary Sheet:
Monthly Price Analysis:
|March||April||Previous Month||Current Month|
Monthly Volume Analysis:
|Cryptocurrency||1m – % Vol. Change (Global)|
|Basic Attention Token (BAT)||23.39%|
Monthly Price Analysis:
- Gaming-focused venture capital fund Bitkraft Ventures has partnered with crypto industry research firm Delphi Digital in order to invest in related projects.
- A public-private task force has submitted a report to the Biden administration that includes recommendations to tighten the regulation of cryptocurrencies
- Cryptocurrency exchange Coinbase now allows its U.S. customers to buy cryptocurrencies with Paypal.
- In a possible decentralized finance (DeFi) first, Inverse Finance’s governance has approved today a proposal to buyout Tonic Finance in a $1.6 million-dollar deal that will bring Tonic under Inverse’s umbrella.
The overall sentiment continues to remain positive, and we maintain a bullish stance on both BTC and ETH. The month of May, our favorite asset BTC continues to seem attractive despite the volatility the asset has shown in the month of April, we anticipate the upward trend to continue. Volumes have sustained throughout the year thus far, and May seems to be no exception. Along with BTC and ETH, the majority of other altcoins continue to impress, with BNB and BAT leading the pack, and surpassing all expectations, which is probably why they have been continually beating traditional assets. We anticipate $1.5 levels for BAT again soon, and $700 for BNB, over the next couple of weeks.
As Banks, FI’s, Governments and MNCs continue to adopt digital assets, coupled with the ever so increasing coverage this asset class has been witnessing among institutions and research papers, the macroeconomic outlook is strong. As mainstream, more credible fund managers and economists start investing and holding BTC as well as ETH, we expect others to follow suit, further instilling belief in the asset class, and pumping up volumes. The month’s highlights have been the Coinbase IPO, US tax reforms for crypto asset holders, Turkey’s ban on using BTC as a means of exchange, the upcoming ETH blockchain upgrade, and the fact that BTC is being adopted more and more by other MNC’s. In addition, the fact that RBI has been publicly speaking about the need to explore the need of a digital fiat currency, and the acceptance of the need for further investigation in this space, has further enhanced confidence in the community, and is likely to result in a positive sentiment among investors.
Lastly, we expect May to be a month similar to what we have seen in April. Though volatility seems to be a given, fundamentally BTC and ETH, the largest assets by market cap, continue to hold a strong footing in the marketplace. While some correction seems likely in ETH, we still remain bullish on both BTC as well as ETH, and feel positively towards altcoins, especially those operating in the DeFi ecosystem.
This concludes our ZebPay April Monthly Analysis report. The report aims to provide its readers with some insight into what the month has been like for us at ZebPay, and dive into some outcome as a future approach on what we expect to happen next. The trade desk has put together a snapshot for our investors to understand both the fundamental and technical analysis for better trading and investment decisions, coupled with some market updates and key events that readers can refer to to get a glimpse of the key developments taking place in the crypto world and how this is shaping markets.
Happy Trading with ZebPay!
*Sources of charts: https://cryptowat.ch
This report is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company has prepared this report based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. This report is preliminary and subject to change; the Company undertakes no obligation to update or revise the reports to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Trading & Investments in cryptocurrencies viz. Bitcoin, Bitcoin Cash, Ethereum etc.are very speculative and are subject to market risks. The analysis by Author is for informational purposes only and should not be treated as investment advice.