GB Market Commentary 02/08/2021
by Marcus Sotiriou
After an incredible 10 consecutive days of green for Bitcoin, there is noticeable optimism in the cryptocurrency market. Today marks the day that Spezialfonds (4000 German institutional investment funds) are able by law to invest up to 20% of their assets in cryptocurrency. The total assets under management of these funds combined is around $2 trillion, which means $415 billion is now allowed to enter the industry. One of Germany’s largest asset managers Dekabank, who manage $403 billion themselves, are said to be considering an investment in Bitcoin.
Some on chain metrics suggest a continuation of the recent uptrend. In particular, Bitcoin balance on all exchanges is down 105,011 Bitcoin in the last 4 days alone, which is around $4.3 billion (shown by the orange downwards spike on the left). Furthermore, illiquid supply is at an all-time high (shown below). This adds confluence to the theory of short term speculators selling over the past few months whilstlong term holders have been accumulating and withdrawing to cold storage, due to supply on exchanges currently being at an all-time low. Technically, Bitcoin has closed above the 21 Week EMA today, which is regarded by many as the key bull market support, as well as the 100 day SMA. However the breakdown of the rising wedge (shown below) suggests that Bitcoin may fall back to the mid-range at around $36,000, or lower, before the rally continues.
The NFT craze continues as many institutions continue to show interest in the rapidly growing sector. Louis Vuitton, the French fashion giant, are launching their own NFT mobile game this Wednesday. The game is part of the celebrations for the 200th anniversary of the founder’s birth, and will launch on IOS and Android devices. The Vuitton chairman and CEO said "Media is evolving so quickly that every time there’s a new way of communicating, you have to tell your story all over again. Generations are now defined by technology, not by age," Coca-Cola have also joined the NFT space. They have partnered with Tafi, who create custom avatars and 3D branded content, in order to hold an auction for loot boxes of NFTs – which started last Friday and ends today. Participants of the auction are able to bid on the Coca-Cola friendship box, which is a virtual take on Coke’s vending machine, and includes NFT goodies of memorable Coca-Cola items. Lastly, Binance’s NFT marketplace has announced that it is issuing tokenised collectibles which resemble the works of renowned artists such as Leonardo da Vinci and Vincent Van Gogh. Binance will be teaming up with the State Heritage Museum for the auction. I feel that the integration of NFTs by one of the largest museums in the world, as well as some of the biggest fashion brands, is another step towards global digitilisation.
Last week, Chainlink released details of their staking protocol. LINK holders will witness how their tokens serve as collateral and help with increasing the security of the oracle network. Dishonest participants get a penalty and will lose a portion of their stake, hence ensuring that most participants in the network are honest. The implementation of Chainlink staking would supplement the vision of high-value hybrid smart contracts. This is because the cost required to attack the network would increase, therefore making it economically unfeasible. The market has reacted positively to Chainlink’s staking announcement, as it has risen almost 20% since.
Regulatory crackdown persists, as stock trading keeps getting pressed. Firstly, Binance stopped supporting their synthetic stock trading, before Uniswap did the same on their website. FTX and Binance also reduced their maximum leverage from 125x to 25x, interestingly at the same time. Exchanges like Phemex and Bybit are expected to follow suit.