The Weekly Recap: Week 42 & 43

KEY TAKEAWAYS 

  • The Bitcoin market was relatively stable in Week 42, but broke through two consecutive resistance levels at $12k and $13k in Week 43, after the price soared beyond the highest point since June 2019. 
  • The market remains resilient to the negative press of major trading platforms and has begun to show signs of sustained upward momentum. 

Bitcoin

The Bitcoin market opened at $11,371 in Week 42, and closed above $13,000 for the first time since Jan. 16, 2018. Overall, the price jumped by more than 14%, finally breaking through the critical resistance target set by Bloomberg Intelligence in its July report, and managed to establish support at this level. Despite occasional slips into the $12k territory, BTC’s price managed to quickly bounce back. The bull has finally broken out of its cage and looks set to charge at full strength. 

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Source: Bybit

What is particularly impressive is that the bull charge occurred despite uncertainties enshrouding two of the largest crypto trading platforms in the market. Bitcoin displayed considerable resilience and continued to reclaim market dominance at 61.9% of the total crypto market cap. 

BTCETHBCHLTCXRPLINK
Market Share61.9%11.74%1.26%0.97%2.88%1.19%
Weekly Change 5.8%1.04%0.04%0.12%-0.13%+9.36%

On-Chain Activities 

In the grand scheme of things, BTC’s price has been above $10k for more than 14 consecutive weeks now, and surpassed the 13-week record during the 2017 bull market. Could this mean that we’re about to see a similar display now?

The seven-day average BTC inflows to exchanges was 52.5% below the 90-day average. The inflows to exchanges experienced a spike on Oct. 21 and 22, when BTC’s price looked as if it would break above the $13k mark. Despite the initial rush to sell off, the inflow volume has plunged significantly since, indicating that the constant increase in price didn’t incentivize people to transfer large numbers of bitcoins to exchanges.

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Source: Chainalysis

Though the trade intensity has been steadily declining since Oct. 22, it remains on par with the 180-day average. This highlights that there is still constant demand for Bitcoin, as an investment instrument or a store of value. If we look at the destinations of bitcoins originated from mining pools, as the volume transferred to exchanges declines, the number of bitcoins in transit to private wallets or to other services has seen substantial growth. 

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Source: Chainalysis
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Source: The Block

Owing to price movements and strengthened support at the $12k level, Bitcoin’s hashrate continued to climb to new heights last week. As of Oct. 25, the seven-day average was around 152EH/S, growing by 42% since the start of the year. The increasing hashrate shows that, with greater profit margins, miners are more likely to engage in activities that improve the efficiency of their mining operations. 

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Source: The Block, Glassnode

Market sentiment is improving drastically too, establishing itself in the “Extreme Greed” territory. Market participants seem more confident, at least for the time being, after the announcement of another two-month extension for the Mt. Gox Rehabilitation plan submission. Market confidence is also pumped as the balance is tilted in favor of a Democratic Sweep, which potentially beckons a greater stimulus relief package and an expanded balance sheet. 

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Source: Alternative.me

Altcoins & DeFi

Top altcoins saw substantial gains in value over the last two weeks. Popular Bitcoin spinoffs are up by at least double digits. Litecoin increased by 24% and Bitcoin Cash (BCH) close to 9%. LINK trails BCH closely, garnering an 8% increase. The market has observed the development of specific use cases, other than a speculation tool, for both ETH, and USDT. ETH is being actively used in the DeFi space to chase yield, as the total value locked in DeFi exceeds $9 billion. 

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Source: DeFi Pulse

Tether’s market capitalization topped $16 billion as of last week. 31% of the total supply has been transferred to wallets since the March liquidity crunch. Among which, 60% are wallets that are less than six months old. Nearly half of its supply in circulation is being held in wallets that are less than one month old. This shows that Tether is gradually adopting a new role as a store of value in the current near-zero rate economic environment, which is expected to last for several years.  

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Source: The Block

News Headlines

On Oct. 15, the Mt. Gox trustee extended the submission deadline for the rehabilitation plan, again, to Dec. 15, 2020. We’re beginning to see a clear pattern now — the sheer complexity of entangled non-exchange related claims is hindering the progress towards final settlement. 

The market’s overhang in anticipation of the Mt. Gox eventual rehabilitation is the primary reason why Bitcoin hasn’t experienced major breakthroughs, despite strong bullish signals. Now, as the Mt. Gox “doomsday” is pushed further down the timeline, Bitcoin looks set to initiate a major bull charge, as evidenced by the surging price. 

The breakout above crucial resistance levels at both $12k & 13k are possibly fueled by continued speculation surrounding the U.S. elections. Since the resumption of the stimulus talk, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin had been zeroing in on a near $2 trillion package, following a month’s impasse. Pelosi’s optimism is what could have propelled the short-term upward momentum of BTC, gold and U.S. equities last week. 

Another reason behind BTC’s breakout is the continued news of mass adoption, such as PayPal. Last week, the US$250 billion payments conglomerate announced that it plans to allow its 340 million users to buy and sell Bitcoin, along with other crypto assets. The company will also enable its 26 million merchants to transact in recognized cryptocurrencies next year. PayPal’s adoption of Bitcoin and other cryptos will substantially improve the impression of cryptos featured in mainstream media. In addition, it will also drive increased use of Bitcoin in broader use cases. 

What to Expect?

With a broader use case and the growing possibility of a Democratic sweep, the crypto market is signaling the return of a bull momentum, which is reminiscent of the staggering gain in 2017. At the same time, the price of Bitcoin is likely to be buoyed by the positive feedback loop from the fear-of-missing-out mentality and poised to overturn the next resistance level.