October Month-End Report

30  October 2020 | ZebPay Trade Desk

The Bitcoin price gains this month are backed by strong fundamental metrics on the network. Bitcoin hashrate hit a new all-time high, touching 17,000 exahashes for the first time on its hourly chart. Hashrate rose ~40% since the Bitcoin halving which drastically cut miner revenues. Onchain analysis firm Glass Node also reports that the number of whales (or entities holding at least 1000 BTC) has increased substantially suggesting confidence from large investors that the price of BTC is set to rise. 

October saw Bitcoin’s price reach new 2020 highs after PayPal announced support for cryptocurrencies. Corporations like Square, MicroStrategy and Stone Ridge allotted part of their balance sheets to BTC to further encourage flows to crypto assets as a store of value. Bitcoin’s price also trended upwards by ~23%, much of it due to the reasons mentioned above. The second-largest and third-largest assets up by market cap also saw upward movement, with Ethereum price up ~7% and the Ripple price increasing ~4%.

In terms of market capitalization, Bitcoin regained its momentum and continues to have a strong outlook, though much depends on the November U.S. election results. 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 ~$252 billion, which accounts for ~62% of the total global crypto market which currently stands at ~ $400 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 October.

October at ZebPay:

It’s been an exciting past month at ZebPay. We launched two coins. 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 October, here is everything you need to know about what has happened this month—from launches, to news updates, technical analysis and more.

October Snapshot at Zebpay:

The Launch of DAI:

Like USDT, DAI too is a Stablecoin. Essentially, a stablecoin  attempts to offer price stability and is backed by a reserve underlying asset. It offers the best of both worlds—the instant processing and security or privacy of payments of cryptocurrencies, and the volatility-free stable valuations of fiat currencies.

DAI vs USDT – Summary (at the time of writing):

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

The Launch of Compound (COMP):

Compound is a DeFi loan platform where you can borrow and lend ERC20 tokens. These include ETH, BAT, DAI, UNI, USDT, and 0x among others.

Compound possesses other important hallmarks of DeFi: Since there is no central party that controls its functioning, it is nearly impossible to shut down. It also operates entirely through smart contracts built on Ethereum, which makes it non-custodial. This is extremely important for the security of the asset. Moreover, the Compound protocol is also completely free and open-source.

Compound (COMP) Snapshot (at the time of writing):

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

The ZebPay trade desk also conducted research on broader, fundamental investment topics this month. We looked at how forex and crypto markets differ from each other as well as the types of crypto wallets available. Here’s a summary:

Forex vs Crypto Markets

Crypto finds a place in trading and investment books both as a medium of exchange or capital and store of value. While a forex pair drives its value from macroeconomics and geopolitical factors, a crypto asset can drive it’s value from a few other factors along with these. For instance, USDT (tether) will be affected by factors affecting USD as well as crypto-specific factors.

The Foreign Exchange (FX) market transacts in government-issued currencies. It is operational 24 hours a day (excluding CFD FX market), five days a week.

A peculiar aspect, as well as a USP of this market is that most of the Forex market is over-the-counter (OTC),  unlike stocks which are primarily traded on exchanges. The FX market is known to be volatile and very fast paced. More often than not, this volatility provides opportunities for a lot of money to be made. 

The Crypto market is quite young, but has seen a lot of traction over the past decade. It exclusively deals with digital assets. It operates 24 hours a day, seven days a week. In this case, much of the trade is done through exchanges, though OTC is fast developing.

The digital assets marketplace is known for its volatility, and the scope for manipulation. However, just like the Forex market, volatility is seen as an opportunity by many. While the market is susceptible to industry news and scams, in general, cryptocurrency markets are less affected by global events or traditional financial markets. 

To read our in-depth report on Forex vs Crypto Markets, click here.

Crypto Wallets 101:

A Crypto wallet is a software program in which assets and tokens are stored. Technically, Bitcoin is not stored anywhere. For anyone that owns a cryptocurrency wallet, there is a private key (unique number) corresponding to the assets address of that wallet. These wallets facilitate the sending and receiving of cryptocurrencies and give ownership of its balance to the user. 

Cryptocurrency wallets can broadly be categorized into hot wallets and cold wallets. There are several ways of storing Bitcoins, or other cryptocurrencies using – Exchange or Service Providers, Online Wallets, Mobile or Desktop Wallets, Paper Wallets, or Hardware Wallets. 

To read our in-depth report on Crypto Wallets and how they work, please click here.

October Technical Analysis Snapshot – Results:

For the first week of October we published technical analysis on 4 coins, namely MKR, BTC, ETH and BAT. Based on our Analysis we were bullish on 3 coins except for ETH. Consistent with our Analysis MKR touched resistance over the week, BTC rallied and ETH remained under pressure. BAT sold off further breaking the support negating our analysis.

For the second week, we covered 5 coins; BTC, ETH, BAT, ATOM and MKR, technical analysis lead to bearish view on BTC, ETH and BAT targeting near term supports bullish on MKR and ATOM.  Our bearish calls on BTC and ETH failed to materialize for the week with BAT testing support as expected, ATOM and MKR both rallied as our analysis predicted

For the third week, we covered BTC, ETH, UNI, ATOM, BAT and COMP. Our technical analysis was bearish on COMP, bullish on BTC, ATOM and UNI, the analysis was largely neutral on ETH with bearish near resistance levels. BTC, ETH, UNI and COMP price action was largely consistent with analysis with ATOM sold of contrary to analysis 

For the fourth week we covered BTC, ETH, BAT, XRP and COMP, we were bullish on all coins covered except for BAT and COMP. BTC and ETH have rallied, XRP was largely sideways, BAT was under pressure consistent with our analysis, COMP gained contrary to the analysis.

Out of 20 coin specific analysis over the month 10 analysis were strongly consistent with actual move, market moves were opposite of 6 analysis and for 4 of the analysis though consistent but move was miniscule.

Weekly Technical Analysis: 

Cryptocurrency seems to have taken a breather after the bullish run of the last 3 weeks. The situation is still positive and markets still trade above key resistance they breached last week, especially with Bitcoin above $13,000. The picture is not as good for alt-coins. 

Bitcoin (BTC) Technical Analysis and Chart:

At the time of writing, Bitcoin is trading around $13,162 reflecting a loss of 3.75% approximately over the period of 24-hours.

As we see in the chart above, after successfully breaching $12,000 there was no stopping BTC. This, we think, is a good trigger for a euphoric rally at this point. Price sits comfortably within the bullish channel and next resistance appears at $14,000 both as shown in chart above, which may prove to be too weak if Euphoria ensues. 

The good news is unlike last euphoric rally in 2017 this seems to be driven by participants having a longer horizon on their minds, especially institutional participation. MACD is hitting bullish signals on all fronts, ADX is still on a bullish trend.

We still remain bullish on BTC till at least $14,000 levels and if scaled, we might see $14,800 and $16,200.

Ethereum (ETH) Technical Analysis and Chart:

At the time of writing, Ethereum is trading around $386.9 reflecting a loss of 1.39% approximately over the period of 24-hours.

As we see in the chart ETH did follow BTC last week, though it reverted from highs of $414. Currently trading close to support of $382, with nearest resistance at $450 levels.

MACD is still positive with signal line below the MACD line, RSI is around neutral levels suggesting price gain of the last two weeks hasn’t pushed ETH into overbought territory. Price is trading close to the upper end of the range it traded earlier. This should act as support in the term

We continue to stay bullish on ETH, yet the analysis will be negated if price falls below $365 levels convincingly.

Basic Attention Token (BAT) Technical Analysis and Chart:

At the time of writing, BAT is trading around $0.19460 reflecting a loss of about 3.5% approximately over the period of 24-hours.

BAT price has stuck in the bearish as shown in the chart above. The price did try to break out of the bearish channel last with some positive momentum (as our technical analysis predicted last week), resistance of $0.23 seemed too much. 

MACD is still negative with histogram turning negative, inability to breach previous high is another cause of concern in the near term. Hence, we are bearish on BAT in the near term, with price expected to trade within the bearish channel.

Analysis will be negated if price breaches bearish channel convincingly. 

Monthly Trade Summary Sheet: 

Monthly Price Analysis:

Monthly Volume Analysis:

Monthly Price Pointers:

Market Updates and Key Events: 

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

Crypto vs Gold:

A cryptocurrency mania known as decentralized finance has helped to turn digital currencies into this year’s best-performing asset by far. Bloomberg Galaxy Crypto Index of digital coins is up about 65% in 2020, exceeding gold’s jump of more than 20% as well as returns from global stocks, bonds and commodities. Increased adoption of decentralized finance, or DeFi, has driven the climb in Ethereum, which “appears to be maintaining its platform leadership status. DeFi ports financial functions onto digital ledgers called blockchains, allowing people to do things like lend or borrow funds and earn interest in a savings-like account without the need for traditional intermediaries such as banks. Its growing popularity is part of a wider trend of increased blockchain usage. Many DeFi applications are run on the Ethereum blockchain. June marked the start of a frenzy in DeFi governance tokens, with Compound’s COMP token kickstarting the phenomenon. The process is relatively simple: DeFi users “farm” new governance tokens by staking various cryptocurrencies, such as Ether (ETH). DeFi protocols that release their underlying governance tokens in a decentralized manner distribute them over time to users who stake.

To read the  in-depth report on how crypto is beating gold as 2020’s top asset, please click here.

DeFi Growth:

Uniswap first surpassed Coinbase Pro in daily volume on Aug. 30. Since then, it has continuously remained competitive with the top U.S. exchange. Uniswap 24hr trading volume is higher than Coinbase for the first time ever. Uniswap: $426M, Coinbase: $348M Hard to express but this blows one’s mind. The consistently high volume from Uniswap occurred despite a considerable slowdown in yield farming and the governance token craze. This suggests that the uptrend of decentralized exchanges maintaining high volume is sustainable over the long term.

To read the in-depth report on how DeFi growth has propelled Uniswap volumes, please click here.

Crypto Exchange Woes: BitMex and OKex

Two exchanges ran into problems this month with CFTC filing  a civil enforcement action against BitMEX and three of its executives for violating Anti-Money Laundering regulations.BitMEX was under investigation by CFTC since early 2019. Along with CFTC ,the United States Department of Justice filed criminal charges against four executives of the BitMEX trading platform — including its founder, Arthur Hayes — for violating the Bank Secrecy Act. Later in the month OKEx ran into trouble with exchange suspending withdrawals due to the founder reportedly being under investigation. According to Chinese news agency Caixin OKEx founder Mingxing Xu, also known as Star Xu, has reportedly been questioned by the police. OKEx has so far refused to investigate the nature of the ongoing investigation but withdrawal remains suspended two weeks after the news.

To read more on the woes these exchanges face, and its repercussions, please click here.

Crypto-friendly: Paypal

PayPal to offer crypto payments starting in 2021. PayPal customers will be able to use cryptocurrencies to shop at any merchant in its large network starting from early 2021.The payments will be settled through fiat currencies, similar to many existing crypto merchant solutions like BitPay. This means that the merchants will be receiving fiat, as PayPal will take care of the conversion. In addition to cryptocurrency payments, PayPal users will also be able to purchase crypto directly through the app. PayPal will thus feature a cryptocurrency wallet, letting users buy, sell and hold crypto via the PayPal apps.

To know more about what PayPal plans to do, and how it will integrate cryptocurrencies into its payment infrastructure, click here.

Key Events in November:

These are some key events taking place in the month of November in the crypto space around the world.

November Outlook: 

Bullish run key has shown in the month of April appears to have been taking a pause with the start of November. Key event to look for in November would be U.S. election results, as we have seen recently disagreement over stimulus was one of the reasons for crypto correction over the last few days, a contested election might lead to testing of BTC characteristics as a haven. 

We expect strong institutional flow to get even stronger over the near future. With Crypto assets not only competing with equity but also with Gold as a hedge. As J.P. Morgan reported this week they believe Millennials actively are choosing crypto assets as an hege over Gold this year, this could mean additional flows into the crypto space.

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 October 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:

*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.