GB Market Commentary 28/01/2022
by Marcus Sotiriou
Bitcoin remains boring in the short term as it yet again failed to close the day above $37,400 - a key resistance level. The wicks up and down on bitcoin's weekly candle show indecision, so it is hard to be confident in bitcoin's next direction. On a technical basis, $39,600 needs to be reclaimed before we can be bullish in the short term, which would also cause a breakout of the down-trending line resistance dating back to the all-time-high at $69,000.
Major financial institutions integrating cryptocurrency continue to rise, as Five Star Bank announced this week they will allow customers to buy and sell Bitcoin securely through its banking mobile app and online banking platform. Based in New York, the bank will be one of the first financial institutions in the U.S. to enable its banking clients to securely trade Bitcoin. Five Star Bank’s Chief Administrative Officer, Sien Willet, said that the exponential growth occurring across the digital asset industry played a major role in their decision to offer Bitcoin to their clients. This is an example of the positive feedback loop where institutions are inclined to integrate crypto due to its significant growth, which then propels growth further, to then encourage other institutions to follow suit. I think this will allow crypto to reach billions of people worldwide in the next decade or so.
Investment management firm Ark Invest predicts Bitcoin to reach $1 million by 2030, in the firms 'Big Ideas 2022' outlook report released on Tuesday. This follows last year's prediction that Bitcoin will reach $500,000 by 2026. The recent report explained that Bitcoin’s market capitalisation still represents a fraction of global assets and is likely to scale as nation-states adopt it as legal tender. Ark also said that Bitcoin is taking market share as a global settlement network, as its annual settlement volume has surpassed Visa’s annual payments volume. Furthermore, Ark said that institutional ownership will become more widespread.
Ark Invest also predicted that Ethereum will hit a $20 trillion market cap by 2030, giving it a price of $170,000-180,0000. Ark said that Ethereum could displace many traditional financial services as decentralized finance gains traction, hence allowing Ethereum to thrive.
I think that Ark's Bitcoin prediction is more likely to occur than Ethereum's, due to the competition that Ethereum has with other smart contract platforms, who could take substantial market share away from Ethereum. Nonetheless, I expect both cryptocurrencies to perform exceptionally well over the next decade and achieve multi-trillion-dollar networks. Even though a Bitcoin futures ETF has already been launched, I think a Bitcoin spot ETF could be a significant catalyst for a major institutional wave of money to flow into Bitcoin, along with the confirmation of more countries adopting it as legal tender.