26 February 2021 | ZebPay Trade-Desk
Bitcoin has gained significantly this month, supported by strong fundamental metrics on the network, and impressive institutional flows. Bitcoin has seen an upward rally, reaching an all-time high of $58,330, from the previous high of ~$42,000 last month. The market capitalization of Bitcoin also hit its all-time high this month, crossing $950 billion. Analysts continue to keep a bullish stance on the asset, despite the unprecedented rally, as institutional flows are contributing to great volumes, and adoption of the asset by FIs and HNIs continue to rise. Tesla’s buy-in, also with the Twitter CEO supporting BitCoin, the sentiment remains positive, hence fueling the rally even more. However, we remain cautious as corrections from time to time do seem likely, and accumulation on dips does remain an attractive strategy.
February saw Bitcoin’s price reach new highs, providing a positive start to the first quarter of 2021. The upward trend has been an ongoing affair since October 2020, since PayPal announced support for crypto assets. Bitcoin saw its price increase by ~230% in just under a month. The second-largest asset by market capitalization, Ethereum, also saw upward movement. It hit a new all-time high of $2,036. ETH saw an average increase of ~30% this month, compared to January. Much of Ethereum’s rally can be attributed to the launch of Ethereum 2.0, increasing investor confidence, and the rise of DeFi. The sentiment is bullish, as ETH has crossed a market cap of $185bn this month. As it is designed for DeFi Apps, Ethereum has gained significant traction among major industries, spiking investors’ interest in Ether.
In terms of market capitalization, Bitcoin regained its momentum and continues to have a strong outlook. As of now, Bitcoin accounts for ~73% of the total crypto space. If we combine Bitcoin, LiteCoin, Monero, Ethereum, and other significant cryptocurrencies, the total value comes to ~$1 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 a correction seems to be setting in. Ethereum is also an attractive asset, since a correction has already set in, and another 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 February.
February at ZebPay:
It’s been an exciting past month at ZebPay. Along with our daily trade analyses, we explored a range of topics to help our clients better understand the crypto space. In case you missed the action in February, here is everything you need to know about what has happened this month—from launches to news updates, technical analysis, and more.
February 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 what wrapped tokens are, namely WBTC. In addition, we also covered the launch of Stellar (XLM), and AAVE on Zebpay, providing some in-depth trade and investment analysis on these tokens. Here is a quick glance at what these reports entailed.
More on Wrapped Tokens and WBTC
A wrapped token is a cryptocurrency token that is pegged to the value of another token. The original asset is put in a ‘wrapper’, which is essentially a digital vault that allows the wrapped token to be created and be operated on another blockchain. As different blockchains have different functionalities, this allows the wrapped token to form links between different sets of blockchains. This feature of wrapped tokens is what makes it so special, as before the advent of such a token, no two blockchains could communicate with each other. Wrapped tokens are a way to circumvent this limitation and use non-native assets on a blockchain, for example, using BTC on the Ethereum blockchain, by adopting WBTC.
Wrapped Bitcoin (WBTC) is an ERC-20 token that is pegged to and represents Bitcoin (BTC) on the Ethereum blockchain. The key feature of WBTC is its integration into the world of Ethereum wallets, Dapps, and smart contracts. Through a WBTC partner, 1 BTC is converted to 1WBTC, and vice-versa. WBTC can then be used by BTC holders to participate in “DeFi” apps on Ethereum. When Bitcoin is wrapped, the cryptocurrency is held in a reserve by the BitGo Trust. In an aim to be fully transparent, the amount of WBTC in circulation is public, with proof that Bitcoin, the underlying asset, is being securely held in custody.
To read our in-depth report on Wrapped Tokens, please click here.
Launch of Stellar (XLM)
Stellar is built on an open network that allows money to be moved and stored safely. Since its inception in 2014, it has relentlessly served the purpose of boosting financial inclusion among participants through expanding the network’s global reach. Over time, as technology developed and the Stellar network shifted its focus towards helping financial firms and institutions connect with one another through active participation on the blockchain.
XLM (Lumens), is the native token of the Stellar network. Unlike Bitcoin or Ether, lumens aren’t mined or awarded by the protocol over time. Instead, 100bn lumens were created when the Stellar network went live. In late 2017, approximately 50bn XLM tokens were burned, hence, as of date, the total supply of XLM tokens stands at 50bn.
This network is highly sophisticated and secure. It uses the Stellar Consensus Protocol (SCP), to ensure decentralized control, low latency, flexible trust, and asymptotic security. The SCP is the backbone of the XLM token. The SCP whitepaper covers the functionality and technical architecture of this technology in incredible detail.
To read our in-depth report on Stellar, please click here.
Launch of AAVE
In early 2020, ETHLend was rebranded as Aave protocol with efficient solutions to address the liquidity problems faced by ETHLend. Along with the protocol, the team introduced the AAVE token, which is the backbone of governance and security collateral in the protocol. AAVE is the native token used by the Aave protocol.
AAVE started trading in late 2020, after opening at $52.87, the high it hit was $559.12 appreciating more than 950% within its first few months of launch. The lowest price it has witnessed is $25.97, which was below its ICO price. AAVE has generated a significant amount of interest in the DeFi and has become one of the leading DeFi assets soon after its launch.
To read our in-depth report on AAVE, please click here.
February Technical Analysis Snapshot – Results:
For the first week of February, we published a technical analysis on 4 coins, 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 4 coins; BTC, ETH, BAT, and USDT/INR; technical analysis led to a bullish view on BTC, ETH, and BAT. Even in the second-week report we were spot on with our analysis, with BTC, ETH, and BAT rallying and making new all-time highs and USDT/INR were in line with our calls as well
For the third week, we covered BTC, ETH, BAT, 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, ETH 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.
Out of 12 coin-specific analyses over the month, 8 analyses were strongly consistent with actual moves, market moves were opposite of 1 analysis, and 3 were aligned with minuscule deviation.
|Coins Covered||Outcome Aligned||Outcome Opposite||Aligned with Miniscule Deviation|
Weekly Technical Analysis:
It may be time for Bitcoin to set its eye on crossing the $60,000 mark, as the largest crypto asset by market capitalization continues to surpass its all-time high from time to time. Ether is following suit, hitting a new all-time high this week of $2,036. Institutional flows remain positive, and volumes reflect the same. Altcoins have also been performing in an impressive fashion, meaning that overall the sentiment stays positive. Let’s have a look at what some of these assets have in store for us.
Bitcoin (BTC) Technical Analysis and Chart:
At the time of writing, Bitcoin is trading around $46,000 reflecting a loss of about 3% approximately over the period of 24-hours.
Bitcoin has seen a further correction this week. The week saw a spike first and a correction of about 20% over the previous week. However, the largest asset by market capitalization continues to see strong inflows, and volumes have seen an improvement over the week, up by approximately 7%.
As we mentioned in our last report that BTC may see some corrections and it did so from its peak of $58,367 and plunged to $44,888, giving a 23% plunge last week itself. On the technical front on a weekly chart, BTC post making higher top higher bottom formation for three consecutive weeks has now started showing weakness as it’s trying to make a ‘BEARISH BELT HOLD’ pattern and breaking the previous lower levels. On the daily chart as per the Fibonacci retracement, $43,761 (50% retracement) and $40,314 ( 61.8% retracement) levels will act as key support and if broken we may see more downfall. Moreover, institutional flows have continued to impress, hence the picture over the long term is fairly positive.
Ethereum (ETH) Technical Analysis and Chart:
At the time of writing, Ethereum is trading around $1,500 reflecting a loss of about 2% approximately over the period of 24-hours.
Last week ETH, after making the all time high 0f $2,036.8 made a weekly low of $1,360 giving almost 33% correction. As we can see in the chart, ETH, for the first time in the last two months has broken and is trading below the ascending uptrend line.As we have been mentioning in our previous reports that $1,424 and $1,365 are important support levels for the asset, it did bounce back from those levels. We may see further downside if the above mentioned support levels are broken. Upside can only be confirmed once resistance at $1,760 is broken and sustained.
ETH continues to benefit from good institutional flows, as well as good commitments from investors contributing to good volumes. As the DeFi space continues to expand, and the era of ETH 2.0 is streamlined further, over the longer term the picture for ETH seems to be very positive.
Basic Attention Token (BAT) Technical Analysis and Chart:
At the time of writing, BAT is trading around $0.47 reflecting a loss of about 5% approximately over the period of 24-hours.
As we can see on weekly charts, BAT has witnessed sharp selling at higher levels. From last week’s high of $0.64 it corrected almost 38% making a weekly low of $0.395 It has just started making lower top lower bottom formation yet trading above the support levels of $0.4 and $0.37 . Moreover it has exactly bounced from 61.8% Fibonacci retracement level as shown in the chart.Hence we conclude that unless the support levels are broken, we expect prices to go up.
We continue to lean on the bullish side with BAT. On the downside if price falls below $0.37, analysis will be negated.
Monthly Trade Summary Sheet:
Monthly Price Analysis:
|January||February||Previous Month||Current Month|
Monthly Volume Analysis:
|Cryptocurrency||1m – % Vol. Change (Global)|
|Basic Attention Token (BAT)||55.02%|
Monthly Price Analysis:
- India’s largest cryptocurrency exchange will use Unstoppable Domains to create and host blockchain-based URLs, despite the nation’s impending Bitcoin ban.
- Thailand seeks to introduce a new set of rules for retail crypto investors, specifically targeting those who want to open accounts. The Thai financial watchdog could require domestic crypto exchanges to ask traders for proof of income.
- Ethereum’s quarterly settlement value is on course to increase by 1,280% year-over-year.
- DEX trading volumes on Ethereum hit $63 billion in January, smashing the sector’s previous record of $28 billion.
- The Reserve Bank of India (RBI) is concerned over the impact cryptocurrencies may have on the financial stability in the economy and has conveyed the same to the government, Governor Shaktikanta Das said on Wednesday.
The overall sentiment continues to remain positive, and a bullish stance is only expected , especially for our favorite inflation hedge BTC in the month of March, and is likely to remain so over the next few weeks to follow, despite a correction that came in early this week. We expect strong institutional flow to get even stronger over the near future. In terms of C and ETH, along with the majority of other AltCoins, continue to impress, and surpass expectations, which is probably why they have been continually beating traditional assets.
As Wall Street banks have been increasing coverage and exposure to crypto assets, and institutional flows have also been witnessing an upward trend, we expect the positive sentiment to only get stronger. With credible fund managers and economists like Druckenmiller ,Tudor Jones, Massmutual, Guggenheim partners, Eric peters etc investing and holding BTC, we expect inflows to continue. The month’s highlight has been Musk’s and Dorsey’s buy in to crypto assets, namely BTC, which has further strengthened the community’s belief in the space. In addition, the fact that RBI has been publicly speaking about the need to explore the need of a digital fiat currency, has further enhanced confidence in the community, and is likely to result in a positive sentiment among investors.
Lastly, we expect March to be a month similar to what we have seen in February. 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, 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 February 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.