02 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 $61,683, from the previous high of ~$58,000 last 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. Analysts and traders alike, continue to remain bullish on this asset, ever since Tesla’s buy-in, also with the Twitter CEO supporting Bitcoin, and more FI’s, governments and banks 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.
March saw Bitcoin’s price reach new highs, which makes Q1 2021 very fruitful for the asset. 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. The second-largest asset by market capitalization, Ethereum, has been fairly range bound this month. It hit a new all-time high of $2,036 in February, after which it witnessed a correction and has been trading around $ 1,850 level toward the later part of the month. ETH saw an average decrease of ~30% this month, compared to February. The sentiment however, is bullish, as ETH has crossed a market cap of $220bn this month. 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 ~$1.5 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, 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 March.
March 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 March, here is everything you need to know about what has happened this month—from launches to news updates, technical analysis, and more.
March 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 Maker DAO, the basics of token burning (PoB) as well as staking, and also discussed SushiSwap to facilitate its launch on our exchange.
More on MAKER DAO
The Maker (MKR) protocol essentially imbibes a bundle of smart contracts and is built on the Ethereum blockchain. Its most crucial purpose is to monitor, support and strengthen the value of the stable coin, DAI. Maker DAO is one of the most well-known, and first of its kind projects in the DeFi space. As a decentralized lending platform, Maker makes it possible to borrow and lend, in a much simpler, efficient, and organized manner, when compared to traditional financing alternatives. Its stated goal is to facilitate “financial freedom without volatility.”
Two tokens reside at the heart of this protocol, DAI, and MKR. DAI is a stable coin and is pegged to the US dollar, and its operations are driven by supply and demand. We have covered DAI in detail in our previous report, where we explain the MKR DAI dynamics in detail. Meanwhile, the MKR token is used to provide liquidity to ensure that the system can deal with the accumulation of bad debts. The Maker Protocol’s loan functionality depends on smart contracts on the Ethereum network, technically termed collateralized debt positions (CDP), or in this case Maker Vaults.
To read our in-depth report on Maker DAO, please click here.
Token Burning, and PoB
Burning is a technique unique to the cryptocurrency ecosystem. Traditional and fiat currencies do not engage in any such form of control, as they are entirely managed by central banks across the world, and are highly centralized, thus regulated. Probably, the most direct comparison could be that of a traditional share buy among publicly listed companies. When PLC’s initiate a share buyback, they regain more control, but also limit the number of shares available to the public. In that sense, when tokens are burned, the circulation of it reduces, leaving less for the general public to buy, which in turn drives premiums.
While we have covered the larger picture, as to why token burns are valuable, there are a few more innate mechanisms that some project developers employ. One such popular mechanism that has recently gained traction is the proof-of-burn (PoB) consensus, which allows users to destroy their tokens in exchange for mining rights. However, this consumes a significant amount of energy, it is also very expensive. PoB controls this by limiting the amount of tokens that can be burned, and hence limiting the potential for mining activity to take place. PoB is similar to PoS (proof of stake), as both require users to lock their existing assets to gain the privilege of mining. Unlike PoB though, stakers can take their coins with them if they choose to stop mining. To ensure that early adopters do not have an unfair advantage, the PoB system has implemented a mechanism that only allows the periodic burning of coins to maintain mining power.
To read our in-depth report on Token Burning, please click here.
Launch of SushiSwap
SushiSwap is essentially an automated market maker (AMM). AMM’s act as decentralized exchanges, and use smart contracts to make markets for a given number of pairs of token, and this depends on how the AMM’s are designed and configured. SushiSwap was launched as recently as September 2020 as a fork of Uniswap, which is arguably the most popular and AMM in the DeFi space presently. Many industry experts believe that SushiSwap will serve as a derivative of Uniswap, providing enhanced features such as increased rewards for network participants via its in-house token, SUSHI.
SushiSwap’s in-house token is SUSHI. It’s created at a rate of 100 tokens per block. The supply of the token depends on the block rate. Currently at approximately 6,500/day, and there will be an estimated 326 million SUSHI tokens in circulation by Q3 of this year, which is approximately a year after SushiSwap was first launched. SUSHI did not have any premine, and was minted on the Ethereum block number 10,750,000 and hence began with a supply of zero tokens.
To read our in-depth report on SushiSwap, please click here.
Basics of Staking
In simple terms, it is safe to say that Staking creates a new means through which existing token holders can earn a return on their cryptocurrencies, in the form of even more tokens. As the industry has matured, blockchains have evolved, from being based on Proof of Work (PoW) to Proof of Stake (PoS) concepts. In essence, this means that the validity of transactions in PoS blockchains is determined by the people who lock a certain predefined amount of the cryptocurrency in the protocol. This process, called “staking” allows holders of the token to earn a ‘staking reward’ for participating in the network. Staking is becoming an increasingly popular tool in the crypto community. In fact, more than $1bn dollars worth of crypto has been staked in Kraken’s platform alone, while Binance, Huobi, and other major exchanges also hold upwards of $700mn in staked crypto assets. Meanwhile, the total assets staked in DeFi platforms amount to ~$23bn in January 2021.
To read our in-depth report on Staking, please click here.
March Technical Analysis Snapshot – Results:
For the first week of March, 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 4 crypto assets; BTC, ETH, BAT, and USDT/INR; technical analysis led to a bullish view on BTC and BAT. Even in the second-week report we were spot on with our analysis, with BTC and BAT rallying and making new all-time highs. ETH 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.
For the fourth week, we covered BTC, ETH, BAT, 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.
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 $60,000 mark this month, and hit its new ATH of $61,683, and its largest crypto asset by market capitalization continues to surpass its all-time high from time to time. Ether hit its ATH last month, since then saw a correction in early March, and has again gained momentum, and is following an upward trend. Institutional flows remain positive, and volumes have also shown good resilience. Altcoins have also been performing impressively, especially BAT, appreciating ~20%, currently at $1 levels, with volumes significantly higher than the previous month.
Bitcoin (BTC) Technical Analysis and Chart:
At the time of writing, Bitcoin is trading around $59,600 reflecting a gain of about 2% approximately over the period of 24-hours.
Bitcoin has witnessed a rally this week, and hit $60,00 this week. The week saw a spike first after a small correction took place earlier this month, and after some profit booking. 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 last week’s report that post correction from the peak, BTC has taken support at a very crucial level of $50,150 ( 61.8% Fibonacci retracement level) and as we rightly anticipated, it made a bullish engulfing pattern at this level which in turn helped the asset to make “higher high-higher low” formation and it surged up to a weekly high of $60,055 ($185 rise from last week low). On a technical front, BTC is trading in an uptrend and is currently consolidating near the resistance of $60,600 and $61,788. For further upside the asset needs to break and sustain above these levels.
Ethereum (ETH) Technical Analysis and Chart:
At the time of writing, Ethereum is trading around $2,000 reflecting a gain of about 5% approximately over the period of 24-hours.
ETH has witnessed an upward trend towards the latter part of this week, and is currently trading at $2,000 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 mentioned in our last week’s report, ETH post consolidation had given a breakdown, however it made a DOJI pattern at a crucial level of $1,543 (61.8% Fibonacci retracement level) which indicated uncertainty for the breakdown to continue. This week the pattern worked wonders and the bulls were back in action which helped the asset surge to weekly high og $2,010 giving a massive return of almost 25% in a week. On a technical front, ETH is making “higher top – higher bottom” formation and is trading near it’s all time high of $2,036.8. A breakout and sustainability above this level shall see further upside in the asset.
Basic Attention Token (BAT) Technical Analysis and Chart:
At the time of writing, BAT is trading around $1.16 reflecting a gain of about 8% 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 $1.38 the asset saw a correction of ~ 30%, before it resurfaced and then witnessed another rally. 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 hence remains an asset one should keep a close eye on.
As we can see from the chart above, post correction from its peak, the asset has taken support at $0.92 ( 50% Fibonacci retracement level) and bounced to make a weekly high of $1.29. Technically, BAT is consolidating and trading in a range forming a Triangle Pattern where a breakout on either side will decide further trend of the asset.
We continue to lean on the bullish side with BAT. On the downside, if the asset trades and sustains below $0.92 levels, we may see some downward movement.
Monthly Trade Summary Sheet:
Monthly Price Analysis:
|February||March||Previous Month||Current Month|
Monthly Volume Analysis:
|Cryptocurrency||1m – % Vol. Change (Global)|
|Basic Attention Token (BAT)||58.49%|
Monthly Price Analysis:
- The filing from the regulatory body comes after BlackRock chief investment officer Rick Rieder said the firm had “started to dabble” in crypto.
- Bakkt believes its new crypto payments app will unlock more than $1 trillion worth of digital assets for commerce.
- Coinbase, a cryptocurrency exchange, has announced that it will open a business presence in India.
- Not just Bitcoin, Visa’s move to crypto-based settlements triggers price jump for Ethereum, Bitcoin Cash.
The overall sentiment continues to remain positive, and we maintain a bullish stance on both BTC and ETH. Specifically for our favorite inflation hedge BTC in the month of April, despite the volatility the asset has shown in the month of March, we anticipate the upward trend to continue. Volumes have sustained throughout the year, and April seems to be no exception. Along with BTC and ETH, the majority of other AltCoins, continue to impress, with BAT leadid the pack, and surpassing all expectations, which is probably why they have been continually beating traditional assets. We anticipate $1.5 levels for BAT soon, 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 like Guggenheim Partners and Eric Peters start investing and holding BTC, we expect others to follow suit, further instilling belief in the asset class, and pumping up volumes. The month’s highlight has been the announcement of the Ethereum blockchain upgrade, and Tesla’s introduction of BTC as a means of payment of its cars. In addition, the fact that RBI has been publicly speaking about the need to explore the need of a digital fiat currency, and the statement made by the Indian FM that cryptocurrencies which will hold some merit, has further enhanced confidence in the community, and is likely to result in a positive sentiment among investors.
Lastly, we expect April to be a month similar to what we have seen in March. 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 BTC, 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 March 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.