Could Bitcoin be Setting up for a Short Squeeze?

GB Market Commentary 27/04/2022

by Marcus Sotiriou

Bitcoin’s bullish divergence has been invalidated with high sell volume as Bitcoin dropped below $38k last night. There is significant sell pressure in global markets, due to fears around the Federal Reserve being more hawkish. However, earnings reports from many companies such as Microsoft which released yesterday were positive and did not support the idea of a recession coming later this year. Therefore, I think the market could be reaching oversold levels in the short term. Also, Binance shorts have been getting aggressive near the lows on Bitcoin and Ethereum, whilst Open Interest rises higher and funding falls lower. These indicators add confluence for some upside in the short term as it suggest we could be due for a short squeeze.

The metaverse has seen further interest from major institutions, following on from HSBC’s acquisition of land in the Sandbox metaverse. Toyota and Nissan, who are two of the largest Japanese carmakers, have joined the bandwagon - Nissan has launched a virtual showroom, whereas Toyota has created workspaces for employees.

In addition, Standard Chartered Bank announced yesterday that its Hong Kong subsidiary (SCBHK) is the latest banking giant to enter the metaverse, as it has acquired virtual land at The Sandbox metaverse’s Mega City district - according to the bank this is a culture hub based on or inspired by Hong Kong talents.

The initiative is led by Standard Chartered Group’s innovation, fintech investment, and ventures arm called SC Ventures. The head of Standard Chartered’s SC Ventures, Alex Manson, said “For the past few years, we have been building business models in crypto, digital assets and see the rise of the metaverse as a critical milestone in the Web3.0 evolution.”

Major banks clearly see where the metaverse is heading, as JPMorgan, HSBC, and Fidelity Investments have all entered the space. Whilst HSBC and Standard Chartered Bank have chosen The Sandbox metaverse, Fidelity Investments and JP Morgan have chosen Decentraland.

Furthermore, many banks have produced reports that predict exponential growth for the metaverse sector. Citi for example predicted around a month ago that the metaverse could be a $13 trillion opportunity with 5 billion users by 2030. Goldman Sachs and Morgan Stanley both believe that the metaverse could be an $8 trillion opportunity.

As Standard Chartered is a leading global bank with 85,000 employees in 776 branches globally and worth over $20 billion, their foray into the metaverse, and recognition of it being an important part of Web 3, provides further social proofing for the metaverse’s mainstream concept.