29 January 2021 | ZebPay Trade-Desk
The Bitcoin price gains this month are backed by strong fundamental metrics on the network, and good institutional flows. Bitcoin has been in a wild run lately, reaching an all-time high of $42,000 and losing $11,000 in just 36 hours. The market capitalization of Bitcoin also hit its all-time high this month, crossing $550 billion. Analysts remain bullish, and claim that with retail on-ramp platforms becoming more prevalent in 2021, Bitcoin’s price could rise to unprecedented levels, though corrections are likely time and again. With more institutional investors entering the Bitcoin market as well as miners not liquidating their positions, coupled with the endorsement of Wall Street billionaires, publicly backing the cryptocurrency, helped to persuade more sceptical mainstream investors to enter the market, and it appears likely that price will continue to trend positively over time in 2021.
January saw Bitcoin’s price reach new highs, providing a positive start to the new year. The trend has been such since the month of October, after PayPal announced support for cryptocurrencies. Bitcoin saw its price increase by ~300% in 2020 alone, much of it coming in Q3/Q4 last year. The second-largest asset by market cap, Ethereum, also saw upward movement, with Ethereum price up ~35% this month, compared to December. 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. Bulls believe it is now gaining the traction needed to become a contender for the top spot. Designed for decentralised applications, Ethereum has started to infiltrate major industries, dragging the investors’ attention to Ether.
In terms of market capitalization, Bitcoin regained its momentum and continues to have a strong outlook. As of now, Bitcoin accounts for ~65% of the total crypto space. If we combine Bitcoin, LiteCoin, Monero, Ethereum, and other significant cryptocurrencies, the total value comes to ~$800 billion, which accounts for ~87% of the total global crypto market which currently stands at ~ $925 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, and it has seen a correction lately. Covid-related money printing has also added a tailwind to crypto assets, along with a large stimulus package being announced by the newly elected POTUS is office. Large Fiat debasement is underway across all economies, adding new flows to Bitcoin and Ethereum. On the performance side, both BTC and ETH have outperformed key traditional assets for the month of January.
January 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 January, here is everything you need to know about what has happened this month—from launches, to news updates, technical analysis and more.
January Fundamental Snapshot at ZebPay:
The ZebPay trade desk also conducted research on broader, fundamental investment topics this month. We looked at what DeFi has in store for the crypto landscape, what are forks and why they are an important feature among cryptocurrencies, and we also initiated the launch of Yearn Finance (YFI), on our platform. Here is a quick glance of what these reports entailed.
More on DeFi:
DeFi stands for “decentralized finance,” and is an umbrella term for a variety of financial applications in digital assets or blockchain. DeFi is interesting as it extends the use of blockchain from simple value transfer to more complex financial use cases.
Decentralized finance leverages key principles of the Ethereum blockchain. This allows for increased financial security, better transparency, more liquidity and growth opportunities. Ultimately, this helps to support the development of an integrated and standardized economic system.
It would be safe to say that we are heading towards a new financial system that is more liberalised and decentralised than before. The central question is how best to guide its development with checks and balances that minimise the risks and spread the potential benefits as widely as possible.
To read our in-depth report on DeFi, please click here.
Forking
In rather basic terms, a fork is what happens when a blockchain diverges into two potential paths — either with regard to a network’s transaction history or a new rule in deciding what makes a transaction valid. Sometimes forks are also willingly introduced to the network. This occurs when developers want to amend the rules of the software, and use it to decide whether a transaction is valid or not. Forking in each and every Blockchain is different, based on the design architecture and characteristics of a particular blockchain.
Since inception, the BitCoin blockchain itself has seen upward of 44 forks, which include some of the well known forks like Bitcoin Cash, Bitcoin Diamond, Bitcoin Gold, and Bitcoin Private, which see trading volumes of more than $100,000 per 24 hours. The two biggest and most popular Bitcoin hard forks, till date, are Bitcoin Cash and Bitcoin Gold.
To read our in-depth report on Forking, please click here.
YFI Launch at ZebPay
Yearn.finance is an aggregator service for decentralized finance (DeFi) investors, using automation to allow them to maximize profits from yield farming. Its goal is to simplify the ever-expanding DeFi space for investors who are not technically minded or who wish to interact in a less committal manner than serious traders. Launched in February 2020, the service, formerly known as iEarn, has seen huge growth in recent months as new products debuted and developers released in-house token YFI. YFI as a token was launched in.
YFI is a governance token, like a company’s shares with voting rights. Governance tokens like YFI are a crucial component in making DeFi truly decentralized, since decision-making power is now spread across many hands. Since its launch, it has since rallied from ~$3 to ~$29,000 at the time of writing.
To read our in-depth report on the YFI token, please click here.
January Technical Analysis Snapshot – Results:
For the first week of January we published 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. Our bullish call on BTC failed to materialize for the week as we saw sharp corrections from the peak,with ETH rallying, BAT and USDT/INR were in line with our calls.
For the third week, we covered BTC, ETH, BAT, and USDT/INR. Our technical analysis was bullish on all except USDT/INR. We saw BTC after breaking the lower trendline support level it went further down to $29,000 levels, so our bullish call on BTC failed but it did take support at the levels we mentioned in the report. ETH, BAT, USDT/INR behaved as expected.
Out of 12 coin specific analysis over the month 10 analysis were strongly consistent with actual moves, market moves were opposite of 2 analysis.
| Coins Covered | Outcome Aligned | Outcome Opposite | Aligned with Miniscule Deviation | |
| Week 1 | 4 | 4 | 0 | 0 |
| Week 2 | 4 | 3 | 1 | 0 |
| Week 3 | 4 | 3 | 1 | 0 |
| Total | 12 | 10 | 2 | 0 |
Weekly Technical Analysis:
Cryptos have seen good inflows this month, and in some cases also a correction. The situation is positive and markets have touched all time highs in BTC, and ETH this month. Alts are looking good as well, Let’s look at what we have in store for a trade set-up.
Bitcoin (BTC) Technical Analysis and Chart:
At the time of writing, Bitcoin is trading around $33,000 reflecting a profit of 5.1% approximately over the period of 24-hours.
Bitcoin has seen a further correction this week, falling over 5% 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 last week BTC has broken and is trading below the uptrend support line. After the support trendline was broken, the bears gained control against the same and got the price back to testing support levels of around $29,500. Last week, we also saw bitcoin make a low of $28,732. In the past few weeks we have seen BTC correct from its peak and is now consolidating and trading in a range of $29,500 – $34,880. Currently, there is relevant support along the horizontal line depicted in the chart above. For BTC to rally, it needs to close above the immediate resistance level of $34,810, However, if it trades and closes the support level of $29,890 we may see further downside. 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 $1,300 reflecting a profit of 1.3% approximately over the period of 24-hours.
ETH has followed the BTC on stairs and seems to have taken an escalator recently. Last week ETH made the all time high of $1,480. We saw the profit booking at the higher levels dragging the prices lower. It made the low of $1,209. This is approximately a correction of 18%. After correcting from its peak, it is facing stiff resistance at $1,377 levels. ETH is trading in an uptrend and it bounces every time it touches the support line as shown in the chart above. We anticipate that the bulls will take charge again if it trades and closes above the immediate resistance of $1,377. It has a strong support of $1,194 and $1,048. If it breaks these levels we may see further downside moves.
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 $0.2933 reflecting a loss of about 3.5% approximately over the period of 24-hours.
As mentioned in our previous reports BAT has been trading in a broad range from $ 0.1945 to $0.2887. Last week it successfully gave a breakout on the upside by breaking the long held resistance of $0.29 levels and made the high of $ 0.362. We can also see that it has started making higher lows and higher highs. For BAT to continue the upward rally it has to trade and close above the resistance level of $0.37 and $0.44.
We continue to lean on the bullish side with BAT,. On the downside if price falls below $0.18, analysis will be negated.
Monthly Trade Summary Sheet:
Monthly Price Analysis:
| December | January | Previous Month | Current Month | ||||
| Close | Close | % Change | High | Low | High | Low | |
| BTC | $28,990 | $33,488 | 15.52% | $29,322 | $17,580 | $41,986 | $27,678 |
| ETH | $736 | $1,329 | 80.54% | $758 | $532 | $1,480 | $715 |
| BAT | $0.200 | $0.306 | 53.38% | $0.264 | $0.181 | $0.362 | $0.198 |
Monthly Volume Analysis:
| Cryptocurrency | 1m – % Vol. Change (Global) |
| BitCoin (BTC) | 54.74% |
| Ethereum (ETH) | 164.99% |
| Basic Attention Token (BAT) | 100.42% |
Monthly Price Analysis:
| Resistance 2 | $40,425.000 | $1,480.000 | $0.440 |
| Resistance 1 | $38,085.000 | $1,377.900 | $0.371 |
| USD | BTC | ETH | BAT |
| Support 1 | $28,890.000 | $1,048.000 | $0.222 |
| Support 2 | $27,678.000 | $979.000 | $0.194 |
Market Updates:
- Leading Brazilian exchange Mercado Bitcoin has announced a regional expansion, naming Chile, Mexico, and Argentina as likely destinations.
- Guggenheim CIO Scott Minerd has made another bearish prediction for short term Bitcoin prices.
- INX has completed all the documents needed to complete its acquisition of security token platform OpenFinance, and is now awaiting regulatory approval.
- Uniswap’s governance token notched a new all-time high above $15 as daily volume on the DEX soars and investors anticipate the rollout of new governance rights.
- Japan considers XRP to be a cryptocurrency, but this has no bearing on the SEC’s allegation that Ripple sold XRP in unregistered securities transactions. Likewise, the U.S. classification of the cryptocurrency isn’t likely to impact how Japan treats XRP.
February Outlook:
The Bullish sentiment continued for cryptos, especially our favorite inflation hedge BTC in the month of January, and is likely to continue in February as well, despite a correction coming in early this week. We expect strong institutional flow to get even stronger over the near future. Crypto assets, especially BTC and ETH have been consistently beating traditional assets for a few months now, in terms of returns and performance.
Crypto’s mainstream adoption is accelerating with Wall Street banks coming up with research reports on cryptos, especially BTC and ETH. 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. Another trend that has been seen is the recent allocation of funds in companies on their balance sheets pertaining to crypto assets, namely BTC and ETH. 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 February to be a month similar to what we have seen in January. 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. With more coverage coming in on these assets, coupled with trust from the banking community as well as big hedge funds, we anticipate good institutional flows as well as improved volumes. While some correction seems likely, we still remain bullish on both BTC as well as ETH.
Conclusion:
This concludes our ZebPay December 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.
