CoinLoan Weekly: BTC above $17,000, macro improvements, blockchain-based projects
The downward pressure keeping BTC below $16,250 lasted until the 7-day low of $16,184.67 on Tuesday, November 29. The following day, the coin soared twice — to $17,000 and nearly $17,250. For the remainder of the week, BTC see-sawed around the former. On Monday, December 5, it shot up to a 7-day high of $17,362.29.
Despite Jerome Powell's hints at the Fed's monetary easing, miners' capitulation and BlockFi's filing for bankruptcy on Monday, November 28, impeded BTC's growth. Mass protests in China over COVID-19 restrictions added to the negative sentiment. As a result, The Crypto Fear and Greed Index was stuck in the fear range, with little change throughout the week.
As of this writing, BTC is changing hands at $16,942.14, with a 24-hour slip of -0.8% and a 7-day gain of +3.0%.
Ether tanked along with BTC and bottomed out at $1,167.87 on Tuesday, November 29. Following jumps to $1,275 and $1,300, its volatility subsided on Thursday, December 1. ETH approached the $1,300 level again twice — on Saturday, December 3, and Monday, December 5, when it hit a 7-day high of $1,302.22.
By December 1, ETH had outperformed BTC for ten consecutive days, rising by 15.4% versus BTC's 7.7%. At press time, this trend is continuing. Meanwhile, the amount locked in the ETH 2.0 Deposit Contract has set a new record — an ATH of 15,512,583 ETH, accompanied by peak revenues for validators over the past month. In addition, Ether futures open interest on Binance have reached an all-time peak (2.01 million), increasing the likelihood of further growth.
As of now, ETH is worth $1,256.94, with a 24-hour loss of -1.6% and a 7-day gain of +5.1%.
XRP dovetailed with major coins in the first half of the week. On Tuesday, November 29, it bounced back from a 7-day low of $0.385482. After three spurts higher, the price peaked out at $0.414044 on Thursday, December 1. It then repeatedly dipped back to the $0.39 mark and fell deeper on Monday, December 5.
XRP's recovery from the post-FTX fiasco plunge, which pushed it down to around $0.32, supports increasingly bullish predictions. Flipping a critical hurdle at $0.40 last week implied a possible run-up, but Bitcoin's lack of volatility delayed it. Meanwhile, in papers filed on Friday, December 2, both Ripple and the SEC urged US District Judge Torres to issue a ruling without a trial to end their legal saga.
As of now, XRP is trading at $0.387590, with a 24-hour drop of -1.5% and a 7-day fall of -2.9%.
BTC back above $17,000: Key things to know
Last week, Bitcoin was back above $17,000 despite BlockFi's filing for Chapter 11 bankruptcy. However, while technical analysts spotted signals of downtrend exhaustion, other experts urged for caution, claiming the passing of a bear market bottom was yet to be confirmed. Here are the key developments to know.
- On Wednesday, November 30, BTC jumped, apparently in response to Jerome Powell's hint at softening the Fed's hawkish benchmark rates. Federal Reserve Chairman admitted that the regulator may mitigate its stance, which has been sucking liquidity out of the market, "as soon as the December meeting." The Federal Open Market Committee (FOMC) is scheduled to decide on a new hike on December 13-14. A smaller 50-basis point increase would raise the target range to 4.25%-4.5%.
- The latest US jobs report released on Friday, December 2, did not trigger significant crypto price movements despite a "blow to the Fed's anti-inflation efforts." The market added 263,000 jobs in November, less than 284,000 in October and 269,000 in September, but well above the projected 200,000. Meanwhile, unemployment is at 3.7%, the lowest in nearly half a century. Bloomberg interpreted the results as "enduring inflation pressures," although some crypto analysts were more optimistic.
- On Monday, December 5, Bitcoin traded above $17,000 again, while the rest of the top 10 cryptos gained ground. The favorable macro backdrop included the relaxing of COVID-19 restrictions in China. Asian markets opened higher after several cities dropped the requirements for negative PCR test results for entry into public spaces.
Technical analysts' view
This year, Bitcoin has made three failed attempts to reverse into a bullish revival. For this reason, Markus Thielen, head of research and strategy at Matrixport, recommends waiting "for bitcoin prices to trade above their 21-week moving average ($20,851) in order to call for a sustainable rally and a cyclical low."
In early November, BTC fell below the 21-week moving average. According to Coinbase, it then bottomed out at $15,460, the lowest point in two years. In March, BTC also failed to scale the average before a deeper sell-off. Confirming a bottom now will require a robust jump above the line.
Caleb Franzen, the founder of research firm and newsletter Cubic Analytics, suggests watching the monthly Heikin-Ashi chart, whose averaged candlesticks gauge reversals more reliably by cutting through the noise. In November, BTC printed its 12th red monthly Heikin-Ashi candle in a row. Franzen called for patience, tweeting, "After 5+ months of red candles, a green monthly candle has [historically] marked the end of each bear market."
The previous red streak of this kind stretched from February 2018 to March 2019. That string of 14 red monthly candles ended with a bull revival opened with a green candle in April 2019.
Financial firms continue to explore blockchain's practical applications
Despite the toxicity of the FTX fallout, some financial firms exploring blockchain applications are undeterred. According to Forbes, the resolve to roll out blockchain-based products is still firm. While the market is in turmoil, crypto technology is being applied to real-life challenges for businesses and customers.
Distributed ledger technology
Since 2020, dedicated teams in the financial sector have launched multiple products and services that harness distributed ledger technology (DLT). Today, fully-fledged businesses with "established and growing client bases and hundreds of millions of dollars in annual revenues" utilize DLT in various fields. The existing applications include stocks, bonds, structured products, mortgages, life insurance, annuities, and healthcare claims.
For example, Broadridge's Distributed Ledger Repo (DLR) Platform solves specific problems of the global repo market, whose manual procedures are error-prone. It digitizes the underlying securities and relegates ownership transfers to smart contracts, enhancing transparency and streamlining trades.
Tokenization as "next generation for markets"
One of the critical aspects of this global shift is tokenization — the creation of digital representations of assets on blockchains. BlackRock CEO Larry Fink expects tokenization of securities to become "the next generation for markets, the next generation for securities," bringing “instantaneous settlement” and “reduced fees.”
Tokens authenticate transaction and ownership histories that remain visible on a public ledger. As a novel way to trade, tokenization is applicable to a wide range of assets, from stocks to real estate to art, land, or wine. This technology should fit BlackRock's business model organically. Earlier this year, the world's largest asset manager signed a deal with Coinbase to provide institutional clients with access to BTC.
Another giant apparently shares BlackRock's high hopes for tokenization. In early November, New York-based JPMorgan executed its first DeFi trade on a public blockchain. Using Polygon, it issued tokenized cash deposits worth S$100,000 ($71,000) and traded them with Japan's SBI Digital Asset Holdings. This endeavor was part of the Singapore central bank's initiative to explore DeFi. Its other pilot programs involved DBS Bank Ltd., Standard Chartered Plc, and HSBC Holdings Plc.
Today, banks are mainly experimenting with private blockchains – permissioned networks. Public blockchains may remove some of their limitations — in particular, isolated or fragmented liquidity — while making the infrastructure available to everyone. In a 2022 research paper, Morgan Stanley experts suggested DeFi adoption will necessitate some centralization, citing the example of Aave — a crypto lender whose Aave Arc protocol permissions participants and applies KYC and AML compliance standards.
Supporters of tokenization include Flowcarbon. This environmental start-up has attracted investment worth $70 million to support "projects that reduce or remove carbon from the atmosphere by creating the first open protocol for tokenizing live, certified carbon credits from projects around the globe." Flowcarbon's high-profile supporters include Samsung Venture Investment, Andreessen Horowitz, and General Catalyst.