Bitcoin Reaches 100k by the end of the Year
Bitcoin Reaches 100k by the end of the Year
Joys and sorrows for bitcoin in the last quarter of the year
Bitcoin would be convenient for people who don’t have a credit card or don’t want to use the cards they have
Satoshi Nakamoto
We are ten days away from entering the last quarter of the year, a period that increasingly attracts the interest of insiders as well as speculation. Statistically, it has proved to be the best performing period in the last decade, especially for the years that ended with the best performances.
Limiting the analysis to the last five years, for both 2017 and 2020, the performance recorded triple-digit gains (2107: +215% - 2020: +168%), while in the critical phase of 2018 and 2019, the balance was negative, with closures of -42% and -13% respectively.
Another interesting statistic relates to the positive reflection of the 3rd quarter on the following one. Except for 2018, every gaining closure of the 3rd quarter positively accompanied the last phase of the year. A reason that bodes well, considering that the current quarter is set to end - barring any nasty surprises in these last days of September - with average gains above 30% for all major assets.
And as it happens at this time of the year, hypotheses and analyses begin to increase, often with the best hopes of updating the new historical records reported in May this year. Particularly for Bitcoin, many are wondering if it is destined to reach $100,000 by December. Level not thrown at random but corresponding to the target assumed by the famous S2F model developed by PlanB, which predicts by 2022 the exceeding of this price target.
The StockToFlow model, which became popular during the Bull Run that characterized the beginning of 2019, calculates the future price of Bitcoin considering scarcity characteristics as for gold and silver.
It must be acknowledged that so far, the historical trend of the Bitcoin price has often respected the targets indicated by this forecasting model, and that is why the S2F model is always followed very closely by cryptocurrency traders.
In one of his recent tweets, PlanB picked up on a previous tweet from June, where he hypothesized reaching $63k by October. A target that, as noted, is 30% away from current price levels. As we know, a movement that is not impossible to achieve even in short periods of time. Therefore, based on the S2Fmodel and from the indications of its creator, we have a reference to respect by October: the return of the price to the highs, or beyond, of last May; when for the first time to buy a Bitcoin we needed about 64,800 dollars.
But if we want to make the analysis even more complete, we can analyze the time trend. And to do this, we need to resort to cyclical analysis. I take my secular cyclical analysis published in June 2017 as a reference to see if the trend so far has respected the cadence of the previous annual cycles (1.5 years). Until then, the cycles indicated a duration between a minimum of 18 and a maximum of 20 months, with a maximum gap between them of 2 months. From 2017 to now, the regularity has not respected the previous durations. In fact, we have a cycle of 21 months (from March 2017 to December 2018), the next of 15 months (from December 2018 to March 2020), and the last of 16 months (from March 2020 to July 2021). Unlike the previous period analyzed between 2011 and early 2017, since March 2017, each restart of the new annual cycle (1.5 years) has not been preceded by a long accumulation period, as happened for 7 months between January and August 2015. There is, however, a 3-month accumulation phase between December 2018 and March 2019 that provided the impetus for the restart of the 15-month cycle. That is the only cycle of all those analyzed since 2011 that has had a neutral structure. It means that the closing low ($3,850, on March 13, 2020) was close to the cycle start low ($3,980, on March 25, 2019). In fact, there is a 3% difference between the two lows. An insignificant deviation.
Of the events that characterize this 2021 with the explosion of NFTs and the confirmation of decentralized finance, many are finding similarities with what happened in 2017 with the ICOs that accompanied the price growth of both Bitcoin and Altcoins. Technically, the last 16-month cycle structure, which ended last July, reflects a similar pattern to both the 21-month cycle (March 2017 - December 2018) and the 18-month cycle (July 2013 - January 2015).
From these clues, I will continue the analysis next week to examine in detail the chances for Bitcoin to reach, or not, the USD 100,000 mark by the end of the year or in the coming months.
Decentralized Finance
Highly tense week for the decentralized finance sector, and not just for the prices of assets used as collateral, impacting the loss of about $4 billion from Total Value Locked values since last week. Currently, the TVL at $84 billion is supported by 7.5 million locked ETH, up over 300K ETH from the previous week's levels, and 206.2k BTC immobilized, at the highest levels ever.
One of SushiSwap's contractors, Giuseppedelong, was caught red-handed for using the Miso token code maliciously, transferring nearly 900 ETH from the launchpad to his wallet. After promptly spotting the hack and being backed by the support of the Sushiswap team, the users managed to get the loot returned. Also this time, the story ended with a happy ending. Still, the numerous cases that hit DeFi projects must remember the dangers that easily weigh on development systems often fragile and exploited by the malicious.
DEX (Decentralized Exchange) trading volumes plummet to $14 billion, down 37% on a weekly basis.
The biggest suspect is Uniswap, with about $5 billion lost since last week, dropping from $13.3 billion to $8.6 billion in the last seven days. The loss causes a 4 point drop in market share to 59%, the lowest level since last June.
Loss distributed between Sushiswap (17.6%) and
Curve (8.7%), both up 2% despite a rarer trading volume from the previous week.
Despite the drop in volumes, September looks set to take the podium as one of the best first three most traded months.
Solana Blockchain
One of the ecosystems that are currently attracting the most attention is Solana Blockchain. Solana currently represents the blockchain that is developing and growing faster than any other.
This summer, hundreds of thousands of developers from all over the world have been working on this network, as it is very competitive in terms of transaction fees and speed. That is exactly why Solana got a big price hike on the market, going from around $30 in June to hitting $200 a few weeks ago.
This big climb of almost 300% by the price of Solana blockchain in just three months is derived from the possibility of building cryptocurrency financial products of different types such as on DeFi, DaPP, NFT, and Web3 simply and intuitively.
In fact, with well-structured tutorials and a relatively simple Smart Contract language, it is now possible to build at 360 degrees in a very easy way, thus offering infinite potential to all its users.
Solana currently supports about 2,100 transactions per second, with transaction fees much lower than other blockchains and with a number of validator nodes that increase proportionally with the ecosystem's growth.
All of these positive notes have propelled Solana and its development into the top 10 blockchains and ecosystems in the world right now.
Unfortunately, a few days ago, Solana experienced network congestion of about half a day due to an overload in transactions that reached 400,000 per second.
As a result, there was an outage of some nodes, which collapsed without validating transactions in time and, to solve this problem, Solana developers planned a restart of the blockchain by making improvements to the network to prevent the problem from happening again.
After the congestion news, Solana immediately lost a good 10% on the coin's price, subsequently recovering only a 2% and staying around the $150 quote.
Even after the system outage, Solana still remains among the top ten most reputable and well-known cryptocurrencies globally, competing with Ada and Ethereum; this one seems to have significant plus points, including network speed and very low transaction costs.
A further phase of development and improvement for Solana blockchain could lead to a new rise in prices, so let's watch what could happen. Unimaginable developments and growths are possible.
So let's keep a close eye on the upcoming improvements for Solana, which could prove to be a real success in this industry.
Non Fungible Token
At approximately $300 million, weekly volumes remain in line with the previous week, returning to the quarterly average after exploding in the second half of August, with record weekly total volumes exceeding $1 million. The decline is due to a drop in trades for the art and collectibles category, while the gaming category led by Axie Infinity remains toned and with slightly increasing numbers, which with approximately $110 million in trades, generated by approximately 396k sales on Marketplace, covers 96% of the entire weekly turnover.
In the overall rankings, Axie Infinity's Marketplace remains the leader despite a 20% contraction from last week. Following on the podium with $66 million traded, the Art Blocks platform with an increase of 180% week on week. Numbers dragged by the two auctions that enter the top five weekly rankings. The first one
Cromie Squiggle #6339 awarded for 485 ETH, equal to $1.6 million. The third in the Fidenza series #647 awarded for 291 ETH equal to $1 million. These include CryptoPunks #5827 featuring a beard and hoodie, which changed hands for the fifth time in the last year for 360 ETH or $1.2 million. CryptoPunks with $52 million, up 50%, ranks third in terms of volume traded in the last week.
European football clubs' fan tokens are in sharp decline. Paris Saint-Germain with $230 million slips in second position, leaving the podium to AC Milan that enters by force among the top five climbing the highest step with $566 million traded in the last week, making the price of the token rise above $10 and an increase of 25% since last Monday. For the Italian club in just seven days, 80% of the total volume traded in the last month has been exchanged. This makes three Italian football clubs, along with Juventus and AS Roma, among the top five with the best weekly trading volume.
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Technical Analysis
Bitcoin (BTC)
The timid attempt at recovery that closes the central week of September with an increase of 2.6% is canceled by the decline that characterizes the first day of the new week in recent hours. A slide that in some moments of the day registers losses close to double digits and prices that dangerously return to the 42,700 USD, a level not seen since the beginning of August.
The technical structure that reflects the new and current quarterly cycle restarted with the minimum of July 20 (1) enters the most critical phase of the entire cycle. In fact, if correct the hypothesis already exposed in the previous report, a few hours after the sending of last week's newsletter the closing of the monthly cycle has been realized. Consequently, if correctly identified, the beginning of the new monthly cycle would be already set to the downside, having violated the minimum of the restart. For this reason, it will be necessary to follow carefully and cautiously the evolution of prices throughout the week to assess which of the two-month cycle and the three-month cycle becomes dominant and of operational reference.
BTC levels to monitor for the week:
° Upside: the uptrend above 47,500 USD (2) did not find price confirmations beyond the levels indicated in the previous report 49,000-50,000 USD (3). That is a sign of weakness that must increase caution and patience before setting new operations on the upside. The previous indications remain valid: wait for the overcoming and confirmation above 47,500 USD (2).
°Downside: the current quarterly cycle started in July can be relegated as a reaction cycle to a bearish event and not as a real bullish cycle. A downward break of 43,000 USD (4), already attempted in recent hours but not confirmed, would open space for downward extensions in the 38,000 USD area (5). That is the level to defend to avoid compromising the bullish work of the last three months.
BTC Options
The operative strategies remain unchanged with the upward defenses that remain set between 48,500 and 51,600 USD, while on the downward side, they rise to the 43,800 area, a level hard tested in these hours of Monday. A fall below today's lows of 42,600 USD becomes a reason for speculation on the downside with spaces of descent without important defenses up to 38,000 USD area.
Ethereum (ETH)
The declines of this early week hit more heavily the price of Ethereum that, after more than a month, revisits area 2,900 USD (1). That is the only valid support level since, as it was highlighted in previous reports, the fast rise between July and August had not built a valid reference base in case of reversals.
Operationally it becomes important to follow the price trend in the coming days. With the fall of the last few hours, the current monthly cycle that began with the minimum of the end of August, which has been violated, has turned negative.
If the weakness is also confirmed in the coming hours/days with the return to the 2,850 USD area (2) - equal to 50% of the Fibonacci retracement calculated by taking as reference the minimums and maximums of the last three months - the hypothesis developed in recent weeks, which hypothesizes the closure of the quarterly cycle between the end of September and the beginning of October, would be confirmed.
ETH levels to be monitored for the week:
° Upside: return of bullish strength only with prices again above 3,600 USD (3) or after signals in favor of the conclusion of the current monthly cycle.
° Downside: A break of 3,000 USD would most likely see a test of the support of 2,850 USD (2). A break below the latter level opens up dangerous spaces of movement to the area of 2,300 USD (4).
ETH Options
Also, for Ethereum, derivatives traders keep protections unchanged. On the upside, defenses are between 3,450 and 3,600 USD, while on the downside between 2,900 and 3,100 USD. Unlike last week, we see a modest increase in Call hedges highlighting how professional operators identify a continuation of the current phase of weakness.