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November Month-End Report

01  December 2020 | ZebPay Trade-Desk 

November Month-End Report 

The Bitcoin price gains this month are backed by strong fundamental metrics on the network. The price of bitcoin hit highs of $19,780. This took place after bitcoin’s price broke the $17,000 and then $18,000 levels within the same week. The market capitalization of bitcoin also hit its all-time high this week at about $340 billion. Analysts remain bullish, and claim that with retail on-ramp platforms including PayPal and CashApp being more prevalent in 2020 than 2017, bitcoin’s price could break $20,000. With more institutional investors entering the bitcoin market as well as miners not liquidating their positions, it appears likely that price will continue to trend positively over time.

November saw Bitcoin’s price reach new 2020 highs. The trend has been such since the month of October, after PayPal announced support for cryptocurrencies. BitCoin saw its price increase by ~25% The second-largest and third-largest assets up by market cap also saw upward movement, with Ethereum price up ~38% and the Ripple price increasing ~140%. Much of Ethereum’s rally can be attributed to the launch of Ethereum 2.0, and the anticipation of its success in revolutionizing the Ethereum blockchain. 

In terms of market capitalization, Bitcoin regained its momentum and continues to have a strong outlook. As of now, Bitcoin accounts for ~36% of the total crypto space.  If we combine Bitcoin, LiteCoin, Monero, Ethereum, and other significant cryptocurrencies, the total value comes to ~$310 billion, which accounts for ~62% of the total global crypto market which currently stands at ~ $500 billion. 

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. Covid-related money printing has also added a tailwind to crypto assets, especially Bitcoin. Large Fiat debasement is underway across all economies, adding new flows to Bitcoin. On the performance side, Bitcoin has outperformed key traditional assets for the month of November


November 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 November, here is everything you need to know about what has happened this month—from launches, to news updates, technical analysis and more.

November Fundamental Snapshot at ZebPay

The Launch of Binance Coin (BNB):

BNB was launched in 2017, a few days prior to the launch of the Binance cryptocurrency exchange. BNB is used as a payment method, a utility token to pay for fees on the Binance exchange, and for participation in token sales on the Binance launchpad. BNB also powers the Binance DEX (decentralized exchange).

To read our in-depth report on BNB, please click here.

The ZebPay trade desk also conducted research on broader, fundamental investment topics this month. We looked at how the launch of ETH 2.0 might impact crypto markets, the application of index funds in the crypto space, and why the dynamics of Bitcoin when pitted against AltCoins. Here’s a summary:

Ethereum 2.0 (ETH 2.0)

Ethereum 2.0 (Eth2) is essentially an upgrade to the current Ethereum public mainnet. It has been designed to further Ethereum’s usage as well as its adoption by improving its performance, and usability. The launch of Ethereum 2.0 is especially significant compared to past upgrades as the implementation will be a Proof of Stake consensus mechanism, moving the network away from its existing Proof of Work architecture. 

Ethereum 2.0 has been in the making for a few years now, and long-anticipated among those in the blockchain ecosystem. Proof of Stake (PoS) and sharding will bring considerable improvements to scalability, security, and accessibility. The Ethereum ecosystem will provide a host of different products and solutions, for those who wish to secure their own validators with 32 ETH, use a third party provider to stake their 32 ETH, or pool their funds with others. The development and surety of the beacon chain, in Phase 0 is the key to ETH’s 2.0 success. The beacon chain remains the core piece upon which the rest of the Ethereum 2.0 system, and its scalability and efficiency gains depend. 

To read our in-depth report on ETH 2.0, please click here.

Index Funds

An Index fund would need periodic rebalancing to closely follow the return of the index it tracks. That period is quarterly for most of the index funds. Our analysis here shows performance of index holding assets between Bitcoin (BTC) and Ethereum (ETH) and rebalancing the holdings proportion quarterly based on different indexation rules.

Index funds give an easy for investors to gain exposure to crypto assets basis their requirement. For example an investor looking to gain exposure to only the most liquid assets can choose a market cap weighted index. Rule based indexation is a cheap way for investors to add crypto in a passive way to their portfolio. We summarise the year on year performance for the 5 years of the above index we analysed above, showing differences and similarities in rule based index’s performance.

Year\PerformanceMcap EOQMCAP AVGEqual weightedPrice weightedLow vol
201553%54%1%54%39%
2016117%126%462%131%380%
20171468%1408%4364%1334%3125%
2018-75%-76%-76%-72%-75%
201971%71%35%84%41%
2020 till Oct94%94%145%83%139%

To read our in-depth report on Index Funds, click here.

Dynamics of Bitcoin and Altcoins:

We showed both qualitatively and quantitatively the lag between rallies and historical correlation of alt coins with BTC, with this analysis we presented a model to view the move in alt coins with respect to move in the BTC. The lag alt coins display at the start of a bullish trend and breakdown in historical correlation and can make for a good tool in deciding for tactical asset allocation at different points in BTC rallies.

We conclude by pointing that the rolling correlations are still below their historical levels and alt coins look to rally with their correction towards trend.

vs Bitcoin (BTC)ETHBATLTCBCH
30 day rolling Average Price Correlation50.62%47.73%71.57%74.73%
30 day rolling Average Price beta for $100 move in BTC2.90.0030.998.7
30 day rolling Average return Correlation50.08%48.60%72.66%70.43%
30 day rolling Average return beta0.6100.8190.9961.154
All time price correlation73.59%46.21%75.75%41.93%
All time price beta for $100 move in BTC3.90.0010.957.0
All time return correlation38.92%49.66%57.66%41.20%
All time return beta0.7250.7900.8920.858

Note: Price beta tells how much alt coins move in price terms for $100 move in BTC and 5 return beta tells how much alt coins give returns over 5 days for 1% return on BTC over 5 days. 

To read our in-depth report on the Dynamics of Bitcoin and Altcoins, click here

November Technical Analysis Snapshot – Results: 

For the first week of November we published technical analysis on 6 coins, namelyBTC, ETH BAT, MATIC, BNB, USDT/INR. Based on our Analysis we were bullish on 5 coins except for BAT. Consistent with our Analysis BTC, ETH, BNB and MATiC rallied. BAT rallied, negating the analysis, USDT/INR was sideways.

For the second week, we covered 5 coins; BTC, ETH, BAT, XRP and USDt/INR; technical analysis led to a bullish  view on BTC, ETH and USDT/INR.  Our bearish calls on BAT and XRP failed to materialize for the week with BAT rallying. BTC and ETH along USDT/INR rallied as expected.

For the third week, we covered BTC, ETH, BAT, UNI, and USDT/INR. Our technical analysis was bullish on all 5.  BTC and rallied and then fell touching the resistance closing well above opening prices of the week, USDT and UNI rallied as well consistent with analysis.

For the fourth week we covered BTC, ETH, BAT, XRP and USDT/INR and we were bullish on all coins covered except for XRP and USDT/INR. BTC and ETH have rallied after a correction to trade near all-time highs , XRP is trading up while USDT/INR has sold off. BAT is mildly up from last week.

Out of 21 coin specific analysis over the month 17 analysis were strongly consistent with actual moves, market moves were opposite of 3 analysis.

Coins Covered Outcome AlignedOutcome OppositeAligned with Miniscule Deviation
Week 16420
Week 25410
Week 35500
Week 45410
Total211740

Weekly Technical Analysis: 

Cryptos have rallied after shaking off weaker players. The situation is positive and markets have touched all time highs in BTC, Alts are looking good as well, our technical analysis is largely in line with Friday’s report.

Bitcoin (BTC) Technical Analysis and Chart:

At the time of writing, Bitcoin is trading around $19,392 reflecting a loss of 5.07% approximately over the period of 24-hours.

Continuing on our bullish call after correction from $19,400, we see that consistent with our bullish call of Friday, BTC bounced back above $19,000. 

On the Technical front, the picture is still positive as we have pointed out in our previous reports, after a strong rally RSI becomes an important indicator, on a daily chart RSI is still on neutral levels, unlike Wednesday last week when it was flashing overbought before the correction.

We remain cautiously bullish on BTC this week as well, with BTC looking to breach $20,000 levels.

Ethereum (ETH) Technical Analysis and Chart:

At the time of writing, Ethereum is trading around $611.9 reflecting a profit of 3.39% approximately over the period of 24-hours.

As our analysis pointed to in Friday’s report, the dip turned out to be a good entry point for ETH, with price currently 20% up from lows of last week. 

On the technical side, just like BTC, the price levels here looks better supported technically, with MACD flashing green both MACD line and histogram front and RSI below overbought levels despite a 20% rally over the past 3 days, telling there’s more fuel left in the rally.

We lean on a bullish front on ETH, with any dips from these levels very good price for accumulation. 

Basic Attention Token (BAT) Technical Analysis and Chart:

At the time of writing, BAT is trading around $0.25560 reflecting a profit of about 7.5% approximately over the period of 24-hours.

After breaking out from the bearish channel as our technical analysis pointed out BAT has rallied forming both higher highs and lows. 

The technical front picture has improved significantly, with the MACD line and histogram in positive territory, RSI neutral despite a strong rally. After breaching the resistance at $0.25 levels, price is supported here in the near term.

We continue to lean on the bullish side with BAT, with next resistance at around $0.30 levels. On the downside if price falls below the bearish channel, analysis will be negated. 

Monthly Trade Summary Sheet: 

Monthly Price Analysis:

USD ($)OctoberNovemberPrevious MonthCurrent Month
CloseClose% ChangeHighLowHighLow
BTC$13,780.99$19,625.8442.41%$14,028.21$10,416.69$19,749.26$13,243.16
ETH$386.59$614.8459.04%$420.14$334.55$621.17$371.31
BAT$0.18$0.2431.74%$0.2464$0.1786$0.2867$0.1748
ATOM$4.62$5.4317.53%$6.270$4.350$6.460$4.220
XRP$0.24$0.66177.10%$0.2635$0.2298$0.7680$0.2288
MKR$523.31$559.096.84%$602.96$495.50$613.13$493.99
UNI$2.41$3.5547.30%$4.51$2.27$4.48$1.76
COMP$92.12$110.5319.98%$140.19$88.59$139.56$81.36

Monthly Volume Analysis:

Cryptocurrency1w – % Vol. Change (Global)
Bitcoin (BTC)7.49%
Ethereum (ETH)20.87%
Basic Attention Token (BAT)-29.04%
Cosmos (ATOM)-15.17%
Ripple (XRP)348.95%
Maker (MKR)22.75%
Uniswap (UNI)47.06%
Compound (COMP)48.76%

Monthly Price Pointers:

Resistance 2$24,000$684$0.3350$6.70$0.8250$645.00$4.87$138.00
Resistance 1$19,800$635$0.2850$6.14$0.7430$605.00$4.21$119.30
USDBTCETHBATATOMXRPMKRUNICOMP
Support 1$19,000$540$0.2330$5.24$0.5260$532.00$3.31$108.30
Support 2$18,400$484$0.1950$5.02$0.3880$475.00$2.97$97.20

Market Updates and Key Events: 

The Crypto space has had an interesting month, thus far. Here are a couple of events that caught our attention, and left a significant impact in the crypto marketplace.

OkEx Exchange Woes Continue:

Major cryptocurrency exchange OKEx resumed all withdrawals at 8:00 am UTC on Nov. 26, but users already appear to be pulling out their funds, fast. As reported, OKEx had suspended withdrawals on Oct. 16 while one of the holders of the exchange’s private keys cooperated with an investigation led by authorities and was therefore unable to authorize transactions within the hot wallet system. 

The exchange has maintained it was not involved in any illegal activities, although there have been reports that its founder, Star Xu, had been questioned by police that same week.

The sudden withdrawal suspension in mid-October caused significant volatility in the markets at the time, prompting a dip of 3% in Bitcoin’s (BTC) trading price. 

To read the in-depth report on how OKEx’s exchange issues , please click here.

Positive Crypto Landscape in India:

Amid bitcoin touching a record high, crypto exchanges continue to bet big on India, and are working out expansion plans and strategies to increase awareness among investors. Crypto exchanges have smelled opportunity in the air and ramped up operations.Signs of yet another boom in the space have already resulted in adventurous capital pouring into India, in the form of global exchanges buying Indian ones and via private equity (PE) investments. In the wider world, a longer-term view is already leading to a regulatory thaw and a renaissance of sorts for crypto. The soundness of the underlying technology—particularly for international money transfers and for enforcing contractual payments—is resulting in wider adoption. 

To read the in-depth report on what India has in store for the cryptocurrency space, please click here.

A Blockchain Alternative in the Making

Sygnum, a digital asset finance firm with a Swiss banking license, has launched what it says is a blockchain-based alternative to listing shares on a stock exchange. The solution will provide issuers a way to raise capital, grow liquidity, transfer ownership and manage corporate actions, Sygnum said. It will also bring investors access to tokenized assets, with targeted markets being venture capital, “mid cap” companies, real estate, and art and collectibles.With distributed-ledger technology underlying the solution, Sygnum claims instant settlement around the clock and seven days a week, as well as reduced counterparty risks with the platform powered by its own Swiss franc-linked stablecoin, Digital CHF (DCHF).

To read more on this asset Sygnum is developing, and its implications, please click here.

Physically Backed Bitcoin Exchange Traded Note

On November 25, the asset manager Vaneck announced the launch of an exchange-traded product (ETP) called the “Vaneck Vector Bitcoin ETN.” The exchange-traded note is physically-backed by bitcoin and listed on the trading exchange Deutsche Böerse Xetra. The newly listed Vaneck bitcoin ETN provides investors with the opportunity to buy and sell the ETN, and participate directly in the performance of bitcoin without actually purchasing the crypto asset.

All of the bitcoin held custodially for the Vaneck Vector Bitcoin ETN will be held in cold storage the company notes. Bank Frick has dedicated time to the integration of cryptocurrencies into the regulated banking environment, the firm’s executive Raphael Haldner detailed.

To know more about what this note is all about, and its functionality, please click here.

Key Events in December: 

DateCountryEventRegistration Link
09 Dec 2020Paris, FranceParis Blockchain Week Summithttps://www.pbwsummit.com/
10 Dec 2020Shenzhen, ChinaBlockchain World Forum China 2020http://sz.thebwf.com/

December Outlook: 

Bullish run has continued for cryptos, especially our favorite inflation hedge BTC in the month of November, which is likely to continue in December as well. We expect strong institutional flow to get even stronger over the near future. With Crypto assets especially BTC not only competing and beating equity but also  Gold on the performance front. 

Crypto’s mainstream adoption is accelerating with Wall Street banks coming up with research reports on cryptos especially BTC. With credible fund managers and economists like Druckenmiller and Tudor Jones coming out with commentary about BTC’s capabilities on hedge against, we expect inflows to continue. Speaking of which Guggenheim’s macro fund is allocating 10% capital of its macro fund ($5.8 Billion fund) to cryptos via grayscale funds is another sign of things to come.

Lastly we expect, corporate actions that of Square, MicroStrategy and Stone Ridge of allotting part of balance sheet to BTC to further encourage flows to crypto assets as a store of value, and moves like that of Paypal to further the use of crypto assets as a medium of exchange.

Conclusion: 

This concludes our ZebPay November 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!

References:

https://news.Bitcoin.com/
https://coinmarketcap.com/
https://zebpay.com/trading/
https://www.investopedia.com/
https://www.coindesk.com/
https://www.livemint.com/
https://cointelegraph.com/
https://news.bitcoin.com/

*Sources of charts: https://cryptowat.ch

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.

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