GB Market Commentary 01/12/2021
by Marcus Sotiriou
Ethereum has broken out of a bullish technical pattern against Bitcoin (shown below) after 7 months of accumulation! A renowned phrase in technical analysis is ‘the longer the consolidation, the bigger the expansion’. This suggests that Ethereum could see a significant move against Bitcoin in the coming days/weeks if this breakout holds.
Ethereum has many bullish catalysts helping to propel price further to new all-time-highs – the appealing tokenomics in particular. Firstly, the burning aspect of the recent hard fork has resulted in a total of 1 million ETH being burned – around $4.7 billion. Additionally, in the near future, there will also be a 90% reduction in the annual emission of ETH – equivalent to three Bitcoin halvings happening at the same time. On chain metrics also show how Ethereum on exchanges has been on a constant downtrend since early 2020. Lastly, 9.7 million Ethereum is currently locked in DeFi, equating to around $45 billion at time of writing. All of these aspects mean that Ethereum is becoming more of a scarce asset. Few ETH left on exchanges to buy is great for long term price appreciation.
Grayscale have fired back at the SEC after their Bitcoin spot ETF application has been rejected, after 3 futures ETFs have been approved. The Grayscale Bitcoin Trust (GBTC) operator argued in a letter that argues that the SEC has “no basis for the position that investing in the derivatives market for an asset is acceptable for investors while investing in the asset itself is not.” I agree with Grayscale and think the SEC are wrongly denying access to retail investors who do not want to pay the premium that comes along with futures ETFs.