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Tuesday Inferno market update

Tuesday Inferno market update

Analysis

It turned bloody over the weekend. Rothschild said to buy when there’s blood on the streets, but we think it needs to be more than ankle deep…

 

After the heavy falls we saw on Thursday, bitcoin stabilised, consolidating at that $3,600 support level. Then on Sunday afternoon we saw the start of the move we’ve been expecting: a sharp drop lower, below $3,500. For a while, it looked like BTC would be posting even greater losses, but the price again stabilised in the low $3,500s – before a dramatic bounce higher.

 

We’re used to short squeezes in this market, and the ‘Bart’ back up failed at the 50-day moving average line. It does not fundamentally change the picture; it’s part of the same ‘two steps back, one step forward’ narrative of the bitcoin bear market. Until we see something out of the ordinary, our view is the same. We are still expecting to test that 200 weekly MA once again, and hopefully experience some kind of decisive move one way or another.

 

Volumes are still down, which does not inspire great confidence in these moves. Looking back at the previous capitulation in 2015, the weekly volume was around 350,000 BTC (Stamp), or 820,000 BTC on Bitfinex, roughly equal to the highest volume since the bubble popped. We’d want to see that again – in this case, 200k BTC on Stamp and 600k BTC on Finex.

 

Overall, the fundamentals for Bitcoin overall are good. Average tx fees are less than $0.25, putting them back at 2015 levels. Hashrate is climbing again after its dip at the end of last year. Meanwhile OTC volumes are rising, according to one outlet: ‘Buying pressure has reportedly increased at many notable OTC crypto trading desks. One of the largest OTC traders, Cumberland, tweeted that the imbalance between buyers and sellers spiked by 60% over the last week. Galaxy Digital saw robust buy back from asset managers, who previously sold assets for tax purposes. The nature of most of Paxos’ trading activity this year was buy tickets from emerging markets traders. Circle’s OTC desk saw a “come back” in January after elevated sell pressure in December. Genesis OTC volume is up by 50% year-on-year. According to a director of the fintech research firm Tabb Group, Monica Summerville, the OTC market is about two to three times larger than trading activity across the whole of the retail exchanges.’

In breaking news, Cryptopia has experienced a security breach, which resulted in ‘significant losses’. We await further details of what that means in practice. Slightly better news is hackers have returned around $100,000 of funds stolen in the recent 51% hack on ETC, for reasons as yet unknown.

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