Friday December 11, 2020
While the positive headlines continued to roll with all the newbies joining the fray and old-hats piling in more, the crypto markets themselves took a breather after the gallant effort to crack the $20K nut came up short. $BTC peeled off the upper Bollinger band and is looking to test the lower band at $17,213 coinciding with the first dead cat bounce off 2017 ATHs. We can suspect further downside if it breaches this level, but with the overwhelming demand well eclipsing the supply and momentum indicators off their oversold levels, see risk to the upside. Having said, futures’ curves across many of the trading venues imply a lack of consensus with some citing uptick of inflows into exchanges being a harbinger of a correction. But, it simply is not true with 43K $BTC exiting the building.
The European Central Bank topped up its Pandemic Emergency Purchase Program (PEPP) by €500bn, inline with street expectations as we continue to see signs of coordination by global central banks. Japan also pushed through a $700bn stimulus package while the Americans are back with their attempt to confirm yet another $900bn in COVID19 relief aid. The dollar is hurting. However if everyone devalues their sovereign currencies, it’ll certainly give more cover for the Fed. The DXY popped with the $2tn stimulus that came expediently during the quickest recession ever, only to lose its sheen as people got their heads around the biggest Fed balance sheet expansion ever. History sure repeats itself. The GFC triggered a $700bn TARP relief aid, subsequently joined by Mario Draghi pledging to do “whatever it takes”… Crypto is no stranger to history either. If you recall your initial foray into cryptocurrencies, the often mulled question was: $BTC or $ETH? While the OG is certainly the battle tested bigger, more stable network, transaction volumes on ETH have eclipsed $BTC and the advent of DeFi this year has thrown oil on the fire. You can almost hear the new entrants commiting to ETH, a’la 2018.
Grayscale reported: “we are seeing a new group of investors who are Ethereum first and in some cases Ethereum only.” Remember when the Flippening (ETH price > BTC price) was a thing? Well it’s back.