Daily Crypto Analysis

Another day, another new all-time high. When prices break into new discovery phases, it's best not to try and work out where it might stop. But, we are human, and we like to ponder these things. Given we only have the 'big numbers,' (40,000, 50,000 etc.) to offer us markers, it's worth considering if the total market cap of Bitcoin is going to act as break on price appreciation.

Many virtual currency exchanges advertise the ability to trade products with leverage. In traditional finance, there are a number of popular leveraged products, such as ETFs. An ETF is a product that moves as a function of the underlying factor and the leverage factor. For example, an ETF that has 5x leverage will lose or gain 5% if the underlying asset moves by 1%. Leverage defines your position’s exposure to the underlying asset class.

The total market cap of all digital assets crossed the $1T mark today. Bitcoin printed a new all-time high and the fundamentals supporting this rally gained in strength once more. Open interest of Futures contracts hit the $11B level - a new all-time high.

While Covid cases continue to rise and countries around the world extend or impose stricter lockdowns, investors still turned risk-on yesterday. The S&P and Nasdaq were up 0.7% and 1.2%, respectively. As you would expect, treasuries were sold, pushing the 10-year yield back to 0.95%. The dollar keeps losing value as the index falls to multi-year lows. Conversely, gold continues to rise, currently closing at $1,950.

Another day, another ATH - it's become such a regular occurrence, I am considering hard-coding the 'A' on my keyboard to return 'all-time high.'

With the democrats winning not only the Senate, but also the whole Congress, certifying the electoral college results, cohorts of Trump supporters travelled to downtown Washington to protest. However, markets weren’t affected by the tense situation. The S&P is up 1% and treasuries were sold en masse, pushing the 10-year yield above 1% (the first time since before March of last year). Gold took a breather and pulled back, currently at $1,920.

With rising concerns over the new coronavirus strain and the feeling that vaccines might not arrive soon enough, investors are behaving risk-off. Both the S&P and the Nasdaq were down almost 2%, and treasuries were bought. The dollar, which continues to fall, bounced quickly. Gold rose higher still, now at $1,945.

10 trillion dollars. No, that's not the upcoming year's stimulus package, it's the total value of transactions completed on the Bitcoin blockchain since its inception. It's also proof (excuse the pun), that this new technology works and, in a watershed moment, has led the Office of the Comptroller of the Currency, which regulates US banks, to decree that banks can now start using blockchain technologies to perform what blockchains do best: moving money quickly and efficiently. RIP Swift, 3 days transfer times, and $15 bank fees...

It feels a bit silly to talk about traditional markets when the crypto space outperforms by so much. Since the last morning update, on the 30th of December, a lot has happened. Sure, the S&P and the Nasdaq are up, treasuries are up and the dollar is down but all of them by marginal amounts. Maybe gold is the good surprise, back above $1,900 after a number of ‘up’ days.

Bitcoin has started 2021 with a stark reminder that volatility is the norm, and the relentless rally of the last month can quickly be eroded. Today, as the market broke through key support, auto-liquidations kicked in and swept aside $31,000, $30,000, $29,000, and $28,000 in a matter of minutes.

As Bitcoin hits another all-time high, you may be surprised to know there is very little to report today. Having scoured the on-chain metrics, miner flows, exchange balances, and wallet balances, I can only say that everything appears to be ticking along nicely.

Let us cast our minds back to December 2017, when the CME's introduction of Bitcoin futures was in part blamed for the proceeding sell-off from the previous all-time high. A couple of weeks ago we asked: What will the price of Bitcoin be on the day the CME registers the largest Bitcoin futures open interest globally? Today, we have that answer: $27,000.