Daily Bitcoin and Crypto Analysis

Daily BTC Analysis: Weekender

January 17, 2021

Welcome to the Weekender! Every week, we review the top news stories from the digital asset world, as chosen by our readers' clicks. This week we start with the news that Bitcoin exchange Bakkt has inked a business combination deal that will result in the Intercontinental Exchange subsidiary becoming a publicly traded company.

Following hot on the heels of Diginex, an announcement on Monday, stated the agreement will see Bakkt merge with VPC Impact Acquisition Holdings, a special purpose acquisition company sponsored by Victory Park Capital.

The combined company will be called "Bakkt Holdings" and will be listed on the New York Stock Exchange with an expected valuation of $2.1 billion.

With the announcement, Gavin Michael, former head of technology of Citi’s Global Consumer Bank, is joining Bakkt as CEO effective today. Bakkt investors' equity will roll into the combined company, with Intercontinental Exchange contributing an additional $50 million, according to the announcement.

PayPal has boasted nearly double its previous cryptocurrency volume transactions according to cryptocurrency market aggregator Nomics.

As reported, the global payments platform recorded a massive $242 million USD worth of cryptocurrency transacted on the platform in one day, breaking the record by almost double its previous record of $129 million USD earlier this year. In the last two weeks, the daily moving volume of cryptocurrency on the platform has spiked by nearly 1000%.

UK investors have been faced with a dilemma after HSBC announced it would no longer support the transfer of funds from crypto exchanges.

The Sunday Times reported last Saturday that HSBC had blocked all transactions involving crypto exchanges. Crypto customers will now be unable to transfer their profits to their bank account.

Jason Yanowitz from BlockWorks Group also shared his views on the same, claiming that banks were trying to hinder cryptocurrencies’ progress.

“HSBC is now blocking transfers to and from crypto exchanges. Legacy financial institutions will do everything in their power to stop this movement. They’re literally denying their customers access to the greatest performing asset of the past decade.”

How’s that for a contrast of adoption between traditional banks and digital payment providers!

A bitcoiner has shared his story of how he lost access to his 7,002 bitcoins, worth about $240 million at the current price. He has lost the piece of paper on which he wrote his password and now has two guesses left before his device seizes up and encrypts its contents forever.

Stefan Thomas, a German-born programmer living in San Francisco, has been unable to access his 7,002 bitcoins, which is worth almost $240 million at the current price, the New York Times reported on Tuesday.

He stored the private key for his Bitcoins on a small, encrypted hard drive known as an Ironkey, and wrote the password to the device down on paper. However, he said he lost the piece of paper where he wrote down the password years ago. The device gives users 10 guesses before it seizes up and encrypts its contents forever. He has used up eight of the 10 allotments without success. He was quoted as saying:

I would just lay in bed and think about it. Then I would go to the computer with some new strategy, and it wouldn’t work, and I would be desperate again.

There is a very simple answer to ensure you never face Stefan’s problem, use Digivault!

Ever since business intelligence firm, MicroStrategy, invested $425 million of its treasury funds into Bitcoin last year, the company and its CEO have been lauded for supposedly driving mainstream BTC adoption.

The onset of the Bitcoin rally allowed MicroStrategy to take advantage of market conditions and increase the value of its BTC holdings. At the time when Bitcoin was nearing $13,000, MicroStrategy reportedly earned $100 million in two months, from their Bitcoin purchases. These figures were compared to the $78 million that MicroStrategy had earned in the last 3.5 years from their actual business operations.

Moreover the firm’s “primary treasury reserve asset” had increased the overall visibility of the company in the market, MicroStrategy’s CEO Michael Saylor said.

It comes as no surprise that the CEO now plans to host a conference about Bitcoin corporate strategy

Along with Ross Steven, Founder, CEO, of Stoneridge and other prominent figures from the industry, Michael Saylor will discuss integrating Bitcoin into treasury reserve strategies. The talk will also include incorporation of the asset into the balance sheet of public and private companies. Legal and regulatory and audit considerations are on the agenda as well.

Per a filing with the Securities and Exchange Commission released on Jan. 8, investment bank Morgan Stanley had acquired 792,627 shares in business intelligence firm MicroStrategy. The investment represents a 10.9% stake in a firm that has made massive investments in Bitcoin over the past several months.

The purchase apparently happened on Dec. 31. MicroStrategy has had a colossal month, seeing its shares move from $289 on Dec. 8 to $545 as of Jan. 8.

Technical Analysis

As suspected, the bulls, failure to push Bitcoin past $42,000 has led to profit taking and volatility. Monday saw an $8,000 price range, with leveraged longs liquidated in a flurry of activity, having stabilized and regained composure and attempted to pass the $40,000 level before finding sellers once more.

Price have headed south during the weekend trading session, with support at $34,820 currently holding the decline. A break lower would see $32,065 trade, with the key support level of $28,000 coming into play.

On the upside, if $34,820 holds, the market will rotate back towards $38,180 before bulls take on the selling interest at $40,000. A break through $40,000 will ultimately set Bitcoin up to register another new all-time high.

The Market in Numbers

This Weekend's Coffee Reading

US Fed: CBDC a ‘very high priority’ to combat bad private sector money

The United States Federal Reserve needs its own digital currency to protect against a possible overnight proliferation of stablecoin technology, says Fed chairman Jerome Powell.

Cryptocurrency stablecoins could become systemically important overnight, says United States Federal Reserve Chairman Jerome Powell, and that’s why the Fed is determined to get its own central bank digital currency right.

CBDCs are the banking industry’s answer to cryptocurrency stablecoins. While they are often hosted on the blockchain, they share little in the way of philosophical parity with their decentralized counterparts. CBDCs will be overseen by the banks that issue them and will be regulated under the laws of their respective jurisdictions.

Speaking in an interview with Yahoo Finance, Powell said advances in technology had enabled private entities to create their own money — and that history had shown this was something to be avoided:

Speaking in an interview with Yahoo Finance, Powell said advances in technology had enabled private entities to create their own money — and that history had shown this was something to be avoided:

“Technology has made this possible and effectively private sector actors can create the equivalent of digital money. We know in the past with private sector money, the public sometimes just thinks of it as money, and then at some point they find out it’s not money. That’s a very bad thing we need to avoid.”

Powell can envision a scenario where stablecoins are suddenly relevant to a large enough number of people to become “systemically important” overnight. He said the Fed still doesn’t know how it might respond to such an occurrence, and admitted that it isn’t even close to understanding the risks:

“[Stablecoins] could become systemically important overnight and we don’t begin to have our arms around the potential risks, how to manage those risks — and the public will expect that we do, and has every right to expect that […] It’s a very high priority.”

 Read more here!

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