10 November 2021| ZebPay Trade-Desk
Bitcoin, the world’s most famous and largest cryptocurrency has finally caught the lift to achieve a new all-time high. The asset’s current dominance is around 43.6% on the crypto market creating a new ATH of $68,530 yesterday.
Data shows that BTC whales are holding about 10,000 BTC to 100,000 BTC in their wallets and are buying quite aggressively in the last few days. The whales have apparently added 92,000 BTC in the past month out of which 46.7% have been purchased in the last five days. Even the miners have been holding onto their stash and except for a few exceptions. The data shows that the outflow of the asset from the miner wallets has mostly remained flat or stagnant.
The BTC rally was caused by a lot of fundamental factors including the launch of the first Exchange Traded Fund (ETF) which linked it to the asset futures prices on the New York Stock Exchange (NYSE) which started trading last month provided it the much-needed boost. The other reason is that the Bitcoin network is to implement Taproot Upgrade in the upcoming week which is going to improve BTC’s efficiency and the much-awaited smart contract capabilities.
Another key reason for the new ATH is news that the Australian Securities and Investments Commission (ASIC) approved the spot exchange-traded funds in Bitcoin as well as Ethereum and also provided the best-practice guidelines and requirements for issuers. Investors have placed their hope that new funds will be able to enter the crypto market via this newly regulated financial product.
Ethereum, the second-largest cryptocurrency launched in the summer of 2015 to expand the horizon of blockchain technology, broke its old-time high and created a new one of $4,837 on Tuesday. Ether is dominating the crypto market holding 19.3% of its total market capitalization under its sleeves. With the launch of the first Bitcoin ETF on New York Exchange, ETH had experienced a rally of about 59% and finally touched the $4,800 markt yesterday.
There has also been a recent decline in the number of potential Ethereum 2.0 validators and it’s coinciding with the steady increase in the asset price. Potential validators are defined as Ethereum addresses with a balance of 32 or more ETH because it’s required 32 ETH for the user to deposit in the designated smart contract to become a full node validator. This could be due to the fact that locking up 32 Eth for one-year returns have an APY of 5.42% while holding spot ETH positions have returned approximately 1000% returns in the last 12 months assuming the flexibility of profit-taking against potential downside risks.
The great rally of the asset over the past month and now a new ATH is creating a lot of buzz around the crypto space. The fundamental reason behind this could be the first of the Australian regulators approving Ethereum spot ETFs. As well as the new emerging trend of DeFi, which is Decentralized Finance – a blockchain-based type of finance that does not have a central financial intermediary like in banking or regulation. And the Ethereum network is one of its prime users.
We can also give some credit to NFTs for the surge in ETH prices. NFTs are basically digital receipts of items like digital art. These NFTs are compatible with everything built using the Ethereum network and have recently seen a boom in the activity with one token selling for as high as $69 Million in March at Christie’s. With crypto being criticized by the likes of Elon Musk for their massive energy consumption, Ethereum is on the way to becoming faster, cleaner, and friendlier environmentally. With the Altair upgrade launched last month, it is also planning to change fully to the PoS model next year which is preferable for our environment as compared to PoW which uses a huge amount of energy to solve complex puzzles on the computer.
Among altcoins, the rally through the week was broad, though not even, with L1s leading the way. Ethereum clipped a new ATH ($4.8K), while competitors AVAX (+11.4%), ALGO (+4.8%) and FTM (+7.7%) kept pace. SOL has found some weakness (-3.0%) as breakpoint kicks kicked off after seemingly only going higher for the past two weeks. DOT is flat starting the week post-crowd loan launch. Following Monday’s announcement that the Brave browser will integrate itself with Solana, the native token BAT surged more than 25%.
BTC futures OI is moving higher on volume. Perp funding rates have remained in the +3-5bps range, which indicates that the rise in OI is being influenced by long and short positions. CME OI has jumped higher for the first time since 10/27 and the venue’s short-term basis has picked up and is at 14.6% for November contracts.
ETH futures OI is up moderaly as well on 1/3rd higher volume than yesterday. ETH perps are currently operating at a pretty neutral +1.5-3.5bps funding rate. BTC options OI is up sharply too. 1wk and 1mo 25d skew is getting punched lower on stable ATM IV. Volume is getting more expensive across the term structure.
Over the past day, there has been an increase in demand for Dec-31 $95k and Nov-19 $70k calls, though there has been some notable activity on short-term $61-62k struck puts, resulting in a stable put-call ratio. ETH options OI is also up higher on heavier volume. ETH 25d skew is stable but ATM IV is falling slightly for 1wk expires.
There have been notable put-spread buying with traders selling Nov-26 $3k contracts to buy closer-to-the-money strikes. On the whole, futures traders are getting a little more greedy, but not at an alarming rate, while options traders are short-to-intermediate term bullish on BTC and slightly cautious on ETH.
Bitcoin, post consolidating in a range, has finally given a breakout on the upside and has made an all-time high of $68,568. The volumes, 20-day moving average, and RSI indicate that the buyers have the upper hand. BTC can face resistance around $70k-$75k, once these levels are breached we can expect the asset to further rally whereas the $64k-$60k will act as a crucial support zone. A break below this will lead the asset to slide further down.
ETH has surged almost by 73% within two months and has made an all-time high of $4,839. The asset can face resistance around the psychological level of $5,000. Once the prices trade and close above this, then we may expect a good rally. ETH has very strong support at $4,350. If the prices break the support then we can expect some correction.
Disclaimer : 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