01 July 2021 | ZebPay Trade-Desk
Bitcoin has had an interesting month. Bitcoin network fundamentals are reflecting mass mining migrations, and despite that BTC price is still making gains. Despite the negative press in the UK, and the mining ban in China, the latest BTC price action shows that the largest cryptocurrency by market capitalization is still making good headway upwards, back close to $35,000 levels. Nonetheless, the risk of a reversal still remains, as the overall sentiment is still bearish, and there is no real sign which shows that the market has truly bottomed out.
What the reaction to the mass offlining of Chinese miners will remain to be seen, and mining hash rates could see a significant decline, and this will most likely lead to a downward adjustment. However, in the longer-term what that means is the network would clear more blocks, hence, the remaining miners would become more profitable as they would need to sell fewer coins. This might drive the price upward, in turn inducing more mining as it would seem more attractive.
In addition to that, after El Salvador decided to use the asset as a legal tender, Paraguay seems to be keen on doing so as well, which further enhances the asset’s global reputation and reach. Lastly, there is much anticipation around when the Bitcoin Taproot Upgrade will take place, and since the code was finalised in early March 2021, many anticipate that it will go live in July 2021, though the roll might be done in phases. This, too, will most likely have a positive impact on BTC prices, as the upgrade is expected to improve Bitcoin’s scripts and allow smart contracts to take up less space on the network, making it more efficient and environmentally friendly as well. BTC market dominance is now closing in towards 50% which is a positive sign for the asset.
Over the course of the month, crypto markets have largely seen a downside as Bitcoin and Altcoins continue to ride the downward trend. Most analysts and traders continue to maintain a bearish stance across major assets. In fact, after the U.S. Federal Reserve updated their inflation expectations for this year from 2.4% in March to 3.4%, and indicated it is likely to revise rates again soon last week, gold prices hit 6-week lows, and the U.S equity markets also witnessed a downward spiral late last week, indicating that the short-term sentiment has turned bearish, and traders are closing their positions to hoard cash. This has in turn impacted BTC’s recovery journey, and the same can be implied among altcoins.
Moreover, BTC took a beating after China broadened a crackdown on its massive cryptocurrency mining industry across some key provinces a week back. However, at current levels, most major coins seem rather attractive, and whales have started to accumulate at these levels quite aggressively, as we have seen volumes across BTC, ETH and some of the other larger altcoins improve over the past 3 days, by more than 30%. The largest asset by market capitalization, BTC, of $640bn USD, has fallen by around 10% since the start of the month, and ETH, with a market capitalization of $240bn, has seen a dip of almost 20% since the start of the month, falling below the $2,000 mark, for the first time since the market rest last month.
BNB too has witnessed a fall of route 15% since the start of the month, and give that these three assets make up for roughly 70% of the entire crypto market capitalization of $1.4trillion, it is safe to assume that the week has started off in the red for this asset class. However, with the EIP-1559 upgrade likely to happen anytime now, BTC whales aggressively buying in, and the Binance exchange significantly crunching good volumes on its exchange, which in turn impacts BNB positively, there are signs that a recovery might set in soon.
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. While this month has seen the market witness a bearish stance, we anticipate markets to recover rather quickly and maintain a bullish view on BTC, ETH, and other major AltCoins.
June 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 DeFi liquidity pools, Polygon (MATIC) as an asset, since we launched a lending product for it on ZebPay, conducted an Altcoin Marketwatch, and covered the launch of EIP 1559 which is soon to come.
DeFi Liquidity Pools
Decentralized finance or DeFi liquidity pools are simply a collection of smart contracts that lock up tokens to make sure liquidity is available for those tokens on a decentralized exchange. The users who contribute tokens to the smart contract are known as liquidity providers. These liquidity pools surfaced as an innovative and automated method of resolving the liquidity problem on decentralized exchanges. They substituted the traditional order book model which was used by the centralized exchanges, which was just a blatant copy of how things were done in established financial markets.
Looking back over the last few years, certain tokens that helped power decentralized finance protocols all around the world, becoming increasingly popular. The example we discussed to understand the liquidity pools is a sample based on the UNISWAP model. Balancer, SushiSwap, Curve Fiance, and Balancer all operate liquidity pools. They all use the liquidity pool system to fuel their market. The largest curve pools are multi-token which focuses on stablecoins. These pools are a game-changer for the cryptocurrency market. And is trending all in 2021 quite a lot.
To read our in-depth report on DeFi liquidity pools please click here.
Polygon, previously known as Matic, is a systematic, user-friendly and thought-through platform for scaling and developing the Ethereum infrastructure. Popularly known as ‘Ethereuem’s internet’ it is a blockchain scalability platform, which originated in India. It was created to surpass the hurdles of Etheruem’s blockchain, namely, low transactions per second (TPS), heavy fees, and better user experience. Polygon ranks as the 15th largest cryptocurrency by market capitalization and rising fast in the crypto space.
Polygon has grown very rapidly and so has the value and market cap of its native token Matic. There are various reasons behind this substantial rise of Polygon. The growing fanfare around Polygon is because of investors’ interest in it. It includes the announcement of Polygon partnering with Infosys’s consulting wing. The collaboration is referred to as ‘M-setu’ which will help as an open-source bridge that allows firms to cross-operate via the ethereum. Another big breakthrough for Polygon happened on May 29th when it announced that it had completed an integration project with Google Cloud’s BigQuery with Google including them in the 1TB offering. This is great news for BigQuery’s users since they can run queries on Polygon and have access to different blockchain-related data sets on its network. Probably the biggest publicity Polygon received was when billionaire investor Mark Cuban revealed that he has invested in it and it’s visible in his company’s portfolio on their website. It acted as a catalyst and Polygon’s growth increased by many folds.
To read our in-depth report on Polygon (MATIC), please click here.
Bitcoin is the largest cryptocurrency by market capitalization and volumes, but there are over more than 5000 different cryptocurrencies currently in circulation. Various other cryptocurrencies have given higher returns than Bitcoin, in the recent past. Let’s take Ethereum as an example, it has risen by 750% since 2020, beating Bitcoin’s 600% returns during that same period. Many such digital currencies, known as altcoins, are now sharing the limelight alongside Bitcoin. The crypto space is a smorgasbord of groundbreaking and unconventional innovations in technology. Many altcoins with high functionality and utility are being introduced, and they are revolutionizing the crypto space.
To further understand what this might mean for some assets, namely UNI, LINK, and XRP, let’s have a look at some charts, and also understand what is fundamentally driving the interest investors have in the asset.
To read our in-depth report on these coins, please click here.
Ethereum Blockchain and EIP-1559
The Ethereum blockchain is soon due for another upgrade, which will fundamentally impact the way in which the ETH blockchain interacts with its users. The process has already begun. The first phase, which is the beacon chain, has been live since December 2020. The next phase of the merger is set to follow soon and is likely to happen in late June/early July. The vision of Ethereum has always been to serve humanity; and this upgrade is likely to make the protocol even more secure, scalable, and sustainable.
In simple words EIP (Ethereum Improvement Proposal) -1559 will be packaged with Ethereum London hard fork. With EIP 1559 the gas fees will be sent to the network called base fee as a sort of burn with only an optional tip paid to miners.
To further understand what the EIP-1559 is, please click here.
Weekly Technical Analysis:
Bitcoin is likely to have an interesting week. Bitcoin network fundamentals are reflecting mass mining migrations, and despite that BTC price is still making gains. Despite the negative press in the UK, and the mining ban in China, the latest BTC price action shows that the largest cryptocurrency by market capitalization is still making good headway upwards, back close to $35,000 levels. ETH’s EIP 1559 upgrade is due anytime now, and that will have interesting repercussions on its price action, but fundamentally the asset has started to witness better volumes over the past couple of days and is holding strong at current levels. BNB has taken a beating since UK regulators said that Binance Markets Limited “is not permitted to undertake any regulated activity in the country. BAT has been fairly range-bound the past weeks trading between $0.5-$0.6. Volumes, however, have not been as volatile, and have held up well.
Bitcoin (BTC) Technical Analysis and Chart:
At the time of writing, Bitcoin is trading around $34,250 reflecting a loss of about 3% approximately over the period of 24-hours.
Despite a positive week for BTC, the risk of a reversal still remains as the overall sentiment is still bearish, and there is no real sign which shows that the market has truly bottomed out. We might see a reaction to the mass offlining of Chinese miners and mining hash rates could see a significant decline, and this might most likely lead to a downward adjustment. However, in the longer-term what that means is the network would clear more blocks. Hence the remaining miners would become more profitable as they would need to sell fewer coins driving the price upward, in turn inducing more mining as it would seem more attractive.
Bitcoin last week, post making the low of $28,800 showed signs of recovery and rallied almost 23.5% up to $35,500. The asset faced resistance and yet again witnessed a sell-off over the weekend. However, it did not test the recent lows and reversed from $30,173. Technically, the candles are making lower longer shadows around $30k indicating buying at these levels. BTC is facing stiff resistance around $36,500, once this level is breached with good volumes we can expect the asset to rally up to the $40k mark.
Ethereum (ETH) Technical Analysis and Chart:
At the time of writing, Ethereum is trading around $2,200 reflecting a gain of about 4% approximately over the period of 24-hours.
ETH has witnessed an upward trend towards the latter part of this week after it was in the red for most of the previous week. The asset currently trades at $2,200 levels. While some of this rally can be attributed to the fact that at these levels the asset looks attractive, hence investors’ buy-in, another crucial factor is the Ethereum blockchain upgrade which is likely to occur anytime now. This upgrade will cramp the supply availability of ETH, which is likely to create upward pressure on prices, the start of which can be seen in small proportion now itself, and another rally can be soon anticipated.
ETH last week, post making the low of $1,711.4 rallied almost 20% up to $2,045. The asset faced resistance around the $ 2k mark and witnessed another correction over the weekend. However, it did not test the recent lows and reversed from $1,717.2 and started moving in an uptrend making a ‘Higher Top Higher Bottom’ pattern. ETH may face stiff resistance of around $2,270. Hence, to further rally the asset needs to trade and close above $2,270.
Basic Attention Token (BAT) Technical Analysis and Chart:
At the time of writing, BAT is trading around $0.6 reflecting a gain of about 4% approximately over the period of 24-hours.
Basic Attention Token (BAT) has been fairly range-bound the past weeks trading between $0.5-$0.6. Volumes, however, have not been as volatile, and have held up well. BAT’s underlying asset is the Brave browser which has seen better mass adoption among both retailers and publishers over the past few months. This coupled with the fact that BAT is still relatively undervalued given its utility, acquiring the asset at these levels seems to look like a highly attractive proposition for long-term investors. In addition, as the ERC-20 and DeFi space continue to grow, BAT is poised for success. 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.
BAT was trading in a downtrend over a few weeks and last week it made a low of $0.425. The asset took the support at lower levels and showed signs of recovery. This week Bat has started moving upwards making a ‘Higher Top Higher Bottom’ pattern surging almost by 45% from the recent low. Bat has an immediate resistance at 0.63, once this is broken we expect the asset to rally up to the next resistance level which is at 0.725.
Binance Coin (BNB) Technical Analysis and Chart:
At the time of writing, BNB is trading around $292 reflecting a loss of about 1% approximately over the period of 24-hours.
BNB has seen a downtrend this week. It is now trading in a large range of $280 – $200 and is the native token for cryptocurrency exchange Binance. This is primarily to the UK, having a crackdown on the exchange. BNB is the third-largest cryptocurrency by market capitalization, which is probably why volumes have held up alright, given the spike in interest within the crypto community for this asset. As Binance as an exchange continues to grow and remains the leading exchange globally, BNB’s appreciation seems justified, and in the long run, this could be a key driver of BNB’s ROI portfolio
BNB was consolidating and was trading in a range from $380 to $320. Last week the asset gave a breakout on the downside and witnessed a sharp fall by 30% making the low of $225.42. The asset took the support near the previous low of $211 and has shown good signs of recovery. Currently, the asset is facing stiff resistance around $320 (the baseline of the previous range) and is currently consolidating around $300. Once these levels are breached with good volumes then we can expect BNB to rally up to the next resistance level which is at $380.
Monthly Trade Summary Sheet:
Monthly Price Analysis:
|May||June||Previous Month||Current Month|
Monthly Volume Analysis:
|Cryptocurrency||1m – % Vol. Change (Global)|
|Basic Attention Token (BAT)||-53.93%|
|Binance Coin (BNB)||-44.40%|
Support and Resistance Levels:
- A U.S. congressman has called for a law that allows the government to identify cryptocurrency users and reverse crypto transactions.
- South Korea doesn’t want to ban cryptocurrencies, but it does want strict regulation in place.
- Bitcoin’s value tumbled last week after China’s central bank urged banks and payment firms in the country to crack down harder on cryptocurrency trading.
- After El Salvador’s historic move to adopt Bitcoin as legal tender (rendering it full currency status), things are looking brighter back home in India for crypto-enthusiasts.
- Britain’s Financial Conduct Authority said that Binance Markets Limited “is not permitted to undertake any regulated activity in the U.K.”
The overall sentiment has been a little bearish this month. Markets were very volatile, but given that, we believe that the sentiment is gradually changing for both BTC and ETH, as well as the major altcoins. In the month of July, we expect our favorite asset BTC to see attractive volumes and growth, as, at these levels, accumulation is likely. Volumes have sustained throughout the year, and June was no exception. Along with BTC and ETH, the majority of other altcoins also witnessed a similar trend, as BNB and BAT both fell by more than 30%, defeating our expectations post the fall, then recovered slightly. We anticipate $1 levels for BAT again soon, and $400 for BNB, over the next couple of weeks.
As Banks, FIs, 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. With countries now starting to consider cryptos as legal tenders, the outlook is even more positive. Additionally, the ETH EIP 1559 upgrade is due anytime now, coupled with the news of the Bitcoin Taproot update too in July, which will surely lead to further interest in these assets.
Lastly, we expect July to be a positive month and anticipate a good recovery to set in. 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. Given that, we remain bullish on both BTC as well as ETH and feel positively towards altcoins, especially those operating in the DeFi ecosystem, and also BNB the native token of Binance Exchange.
This concludes our ZebPay June 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 outcomes 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.