Bitcoin Over the Top
Bitcoin Over the Top
Bitcoin prices are rising again and the new all-time high has been reached. Institutional interest is growing, raising weekly trading volumes to the highest level ever
An increasing number of analysts are beginning to point out how the current bullish phase that is characterizing the cryptocurrency sector and which has brought the prices of Bitcoin to update the historical highs, is different from the unbridled race that characterized the previous bull run at the end of 2017.
Commenting on these details today is of no use if not to take note of what was already happening for over a year when several signals, often passed unnoticed by many, began to emerge. The reports of the "observers" who are now trying again to comment on the news of the last few days demonstrate the superficiality of not only technical but also basic knowledge that a technical and financial analyst should always respect. The bullish phases of the financial markets have always attracted people's attention, often with the dream of easy profits. Bitcoin and, as a result, the entire cryptocurrency sector, is a prime example of how interest increases as prices rise. And it often occurs too late, at a time when it becomes difficult to identify good opportunities.
"In order to discover opportunities, it is not necessary to take risks ahead of time, but to follow the silent moves of those who, in their DNA, are used to grabbing opportunities". (cit.)
News of important companies or major financial players interested in entering the crypto sector are becoming increasingly common on an almost daily basis, either directly (see S&P DJI) or indirectly by offering services to make it easy to use cryptocurrencies even in everyday life (see Visa/Circle).
Coinbase, Genesis and BitGo, three leading financial companies offering cryptocurrency services, have stated that they have begun talks with major Wall Street banks to obtain sub-custody services to expand the range of services also to people interested in owning cryptocurrencies in a simple way, overcoming the technicalities that have so far alienated many interested parties. The increase in institutional participation is reflected in a greater demand for Bitcoin, as well as other cryptocurrencies, decreasing the amount circulating. With an increase in demand and a supply that, instead, remains constant or decreasing due to the fact that the increase in value entices long term holders to have difficulty disposing of their Bitcoin, the price is destined to rise.
Today more than 842 thousand Bitcoin are held by companies that have decided to buy the cryptocurrency in order to add a financial or payment service for their clients (see Grayscale Trust, CoinShare or Square), or as a valid alternative asset and store of value (see MicroStrategy or Galaxy Digital). This number is likely to grow if other investment companies decide to offer crypto services in the coming months. A future that now seems "almost" taken for granted so as not to risk being excluded.
DeFi - Decentralized Finance
For the second consecutive month, with just over $17.5 billion, November closed with a drop in trading volumes on decentralized trading platforms. From the absolute tops recorded in September at over $28.2 billion, the total decline is 38%.
Monthly DEX Volume
The decline is also strong on a weekly basis with a 33% reduction from last Friday's levels.
At over $2 billion, Uniswap remains the leading platform with 55% of total trading on DEXs.
SushiSwap follows with $530 million with a market share of 14%.
DEXes Volume Last 7 Days
Conversely, Total Value Locked (TVL) is growing again at just one step from $14.8 billion, the all-time high. This is due to the increase in the prices of Ethereum, the most widely used collateral in decentralized protocols. With 6.7 million units, the number of ETH locked remains at the lowest levels in the last two months, while with just over 164,000, the number of tokenized BTC remains just below the mid-November highs.
Total Value Locked in DeFi
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Technical Analysis
Bitcoin (BTC)
After a slowdown in this past week, the prices rise again, reaching new historical highs. Between Monday, November 30th and Tuesday, December 1st all the main exchanges have updated their previous records. For the first time, prices reached the 20,000 USD threshold. A level reached with days characterized by high volumes. The previous week, and the week that is about to close, are among the periods with the highest trading volumes ever. This validates the current increase. Technically, it is important for prices to validate increases above 17,000 USD next week as well. Otherwise, with a return below 17,000 USD (1), the medium-term trend would reverse for the first time since early October. An inversion that would not cancel out the long term uptrend, invalidated only by a fall below 15,000 USD (2).
BTC Chart
Traders in options are increasing their positions to cover any increases. A signal that increases attention for any downward reversals that will be cancelled out by prices above 20,400 USD. On the other hand, downwards, the first defences start from 17,300 USD down to 15,700 USD, this last also being the technical level indicated above.
BTC Options
Ethereum (ETH)
The third week upwards for Ethereum, which sees the 635 USD. The bullish structure of Ethereum is strengthened, which sees a first warning signal only in the short term with a possible triple daily maximum (1) between from November 23rd to December 1st. Danger that will only be invalidated with a rise above 620 USD in the next few days. Otherwise, it is necessary to monitor the support of the 500 USD (2), last period minimum.
ETH Chart
Options operators identify areas of recent short and medium-term highs between 620 and 635 USD as the levels to defend in the event of further rises. On the other hand, downwards, there is still plenty of room for drops down to 440 USD, the first strategic defence area.
ETH Options
The returns of ETH 2.0
As everyone knows by now, the initial phase of ETH 2.0 was initiated on December 1st, 2020.
With the launch of the Beacon Chain, not only do we now have a different consensus system to the Proof of Work (PoW), i.e. the PoS (Proof of Stake), but we also have a reward that is directly proportional to the ETH that are staked, specifically the APR at that time.
Not everybody knows that this APR of the reward received is not fixed but variable: it is in fact inversely proportional to the number of ETH put in stake overall, so the higher the number of ETH staked, the lower the APR stakers will receive on their ETH. This APR will inexorably reach 0 in the future.
To understand in detail the APR rate it is possible to refer to the official platform where it is shown both the number of ETH placed in stake and the relative APR chart at a given time.
As can be seen from the graph, the current APR is 15.5%, which is a very attractive parameter and is pushing many users to join immediately to receive these figures on their stakes. The total number of ETH staked has already exceeded one million, in fact there are 1,016,130 ETH.
It's interesting how we can also quickly calculate the economic return by using a dedicated page to understand what the return on the ETH staked will be. Simply enter the various parameters and obtain the result: for example, at present, and with current prices, with 32 ETH it is possible to obtain about 4,7 ETH, a figure that currently amounts to little less than 3 thousand dollars.
Obviously this is reserved to those who know how to carry out the whole procedure, considering that maintaining a node is costly and it is necessary to be always efficient in order not to incur in slashing, which is that practice that penalizes the validators and subtracts ETH from their stake.
So far more than 600 validators have suffered slashing, losing 0.006 ETH, although the figures may increase considerably.
Returning to the validators, we can see that in total there are over 31 thousand, 31,049 to be precise, of which over 23 thousand are active, those pending over 7400 and 11 validators have left the program. When ordering data based on the number of ETH per validator, the maximum is 64 ETH, which is twice the minimum to join the program.
Surely this system and Ethereum 2.0 are still only at the beginning and it will take several months to reach the next steps and have more liquidity within this system, as currently only 1% of the Ethereum supply has been moved and locked.
This figure is too small to guarantee homogeneous stability, as it is not only the number of active validators that determine the stability but also the quality of ETH.