Crypto Corner Newsletter
Written on 16 May 2021
Market Turmoil Will Not Last Long
May 2021 #2
Welcome To the Mid-May newsletter.
We've had quite a tumultuous week, right?
Bitcoin's dominance is dropping by the hour, now reaching 40% for the first time since 2018 and with the speed this is happening right now we will be at 35% in no time. This is when the Altseason will be at its peak, so trading alts is pretty much on everyone's mind but we have to be careful when entering new long positions (or buying) alts during the peak of altseason because as soon as Bitcoin's dominance begins coming back up, some of these alts will be going down (especially in bitcoin value) and you could get caught up with a heavy bag or two for quite some time.
We saw a huge drop in Bitcoin at the start of the week, with Elon Musk tweeting about the U-turn that Tesla (his company) did in regards to Bitcoin's energy consumption - I covered this topic in detail in this episode of Crypto Corner a few days ago.
We are now waiting for Bitcoin to complete this corrective move and go above the current resistance of $60k. Once this level is conquered (again) we can see the next leg up toward the $68k and $73k price levels - my current targets for BTC.
At the same time, Bitcoin's recent flash crash is causing a dip in all major cryptocurrencies with only a handful still printing gains. Ethereum is notably experiencing less damage and coins like Aave, ADA, KSM and EWT seem to be unphased from the overall market drop. For now...
In other news:
The Department of Justice and the Internal Revenue Service are both investigating Binance, according to a report. “Officials who probe money laundering and tax offenses have sought information from individuals with insight into Binance’s business,” according to a new report from Bloomberg, which also reported in March that Binance was facing an inquiry from the Commodity Futures Trading Commission over whether it let U.S. residents trade on its platform. Binance told The Block that it does not comment on “specific matters or inquiries.” CEO Changpeng Zhao tweeted something about “FUD.
USDT: Tether finally published a breakdown of its reserves. While it is not 100% backed by assets, it's about 70% and with that, I think we can stop worrying about USDT going out of favour with the traders - from all the trading pairs, USDT still has the biggest trading volumes.
Yesterday we heard that Coinbase plans to add dogecoin. So is Revolut, according to sources.
Peter Thiel’s secretive data analytics firm Palantir started taking bitcoin payments.
Point72, a hedge fund owned by billionaire Steve Cohen, is poised to enter the crypto market.
Bitwise launched an ETF that tracks 30 companies in the crypto market.
MoneyGram has partnered with Coinme to sell bitcoin at its locations.
Swiss bank UBS is reportedly planning to offer wealthy clients exposure to cryptocurrency.
Coinbase reached #1 on the Apple App Store for the first time since 2017.
Power plant and bitcoin miner Greenidge Generation said it will buy carbon offsets in an effort to become carbon neutral.
Bitcoin’s mining difficulty hit a new high after its biggest increase since 2014. Bitcoin miners have begun officially signaling their support for the Taproot upgrade.
eBay opened its platform to NFT sales. Nine CryptoPunk NFTs sold for nearly $17 million at Christie’s auction house.
Floyd Mayweather will release his own NFTs.
Balancer Labs launched the second version of its automated market-making protocol.
A Shiba Inu token holder turned $17 into $5.9 million.
Vitalik Buterin donated more than $60 million to charity after selling meme tokens including Shiba Inu. He also proposed Uniswap’s UNI token become an oracle token.
Microsoft will close down its Azure Blockchain service in September.
Diem, formerly known as Libra, left Switzerland and will partner with Silvergate Bank to issue its dollar-backed stablecoin.
China has already started testing their CBDC (Central-Bank-Digital-Currency) and it seems it will be leading the race into eradicating cash.
Sir Jon Cunliffe, deputy governor of the Bank of England for stability, hinted that the CBDC of UK might be in the making soon.
“We may not be there yet. But it looks probable in the UK that if we want to retain public money capable of general use and available to citizens, the state will need to issue digital money that can meet the needs of modern-day life", he said in a speech earlier this week.
A Very Bullish Case For Ethereum.
The European Investment Bank’s $121 million Ethereum-based bond is a sign of things to come. That was the major takeaway from a conversation that Ryan Weeks recently had with two officials at the EIB, the lending arm of the European Union. They explained why the EIB went out of its way to make traditional investors comfortable with the bond, why Ethereum was the “obvious choice," and why the digital euros involved in the transaction only existed for 90 minutes.
Ether has rallied from $2,000 to record highs over $4,200 in the past month. At the beginning of May, a single high-net-worth trader or a group of traders bought 9,000 contracts of the $8,000 call expiring June 25.
These block trades crossed the tape via the institution-focused, over-the-counter desk Paradigm and were booked on Deribit, the leading exchange for cryptocurrency options. Theoretically, buyers of the calls are expecting the second-largest cryptocurrency by market cap to rise above $8,000 by the end of June.
However, if Ether continues its steep bull run for few more weeks, the price of the $8,000 call would surge, simply because the trade would be more likely to pay off. At that point, traders could sell the options in the market for a quick profit.
Whatever transpires, according to analysts, the surge in demand now for the $8,000 call implies bullish price expectations potentially linked to the network upgrade known as EIP 1559 that would reduce the pace of the net issuance of ether.
"Investors look to be betting on continued bullish momentum in anticipation of a big drop in ether's issuance after the EIP 1559 upgrade," according to Laevitas, a Swiss data analytics firm for cryptocurrency markets.
Call options, or bullish bets, with strikes ranging from $5,000 to $10,000 listed on Deribit have become popular in recent weeks.
However, right now, the second biggest cryptocurrency by market capitalization, is positioned to log its first weekly loss since the end of March, as its price, along with that of larger sibling bitcoin, are going through a correction since Tesla's controversial move against Bitcoin. The short term is certainly not too bullish right now, but this is going to pass soon and we are bound to see new ATH for both cryptocurrencies and the rest of the top coins for that matter. I do regular TA in my video podcast - at least 3 times a week I look at the charts and analyse the top coins, so make sure you catch these - you will find them on my blog (crypto-corner.com) as well as directly on my Youtube Channel.
And lastly, a few videos that I released recently that you might have missed and I want to draw your attention to them here as they could be really useful to you:
Yesterday I posted an update about one of the services I use for automated trading (copy trading). This is called Covesting and is provided by PrimeXBT Exchange - a new service that I started testing recently and so far it's proving to be very profitable. One of the best so far.
Check out this video here: https://youtu.be/H9Umc2Zep6c
I also posted an update on my progress with the trading bots service from Mudrex - you may remember that a few months ago I shared this with you and now I just posted an update of my progress too.
It's in this video: https://youtu.be/OKQUyEPfiyo
Last, but not least, I did a comprehensive review about the top 10 curious facts about Blockchain that you might not know about, so this a great, informative video that I think you might find interesting.
Check it out here: https://youtu.be/opYaHBM9s9s
This is all for today, Thank you for your interest and as always, trade carefully and stay profitable!
Till next time!