Crypto Corner: Week Summary 12 April 2021
data taken at 9:06 am 16/04/2021
Bitcoin and Ether both reached new all-time highs (ATH) this week, boosted mostly by the Coinbase direct listing on Wednesday. Although the market capitalisation of the cryptocurrency exchange fell short of the most optimistic expectations at $100B, it is still ranked, at $63.5B, among the top 50 companies listed on the NASDAQ exchange. The Bitcoin price broke a strong resistance near the $60,000 levels, a resistance that lasted for more than a month. It reached $64,895 on Wednesday, eventually rewarding the diligent BTC HODLers once again.
The Coinbase listing was not the only factor to trigger the breakout. The BTC market liquidity and supply have been slowly decreasing over the past 30 days. The ‘amount of BTC held on exchanges’ fell severely on April 5th and ‘the total amount of BTCs transferred to all exchanges’ wallets’ reached on average the lowest levels observed this year. The proportion of long-term HODLers (holding above 155 days) is growing as expected: the HODLers net position metric is trending higher, indicating that the November buyers (including Microstrategy) might be turning into HODLers. As explained by Glassnode, if this indicator keeps on trending higher in the coming weeks, we will have confirmation that most institutions could be labeled as ‘Rick Astley’ HODLers (Rick Astley: the singer), namely buyers that could hold Bitcoin forever (‘never gona give you up’), and never let their balance go down (‘never gona let you down’).
Evidently, the market’s upside pressure has been there for a while: the constantly growing adoption of cryptocurrencies, together with the more optimistic legal environment, eventually had the best of the $60,000 resistance. However, the Bitcoin performance in 2021 is nowhere near the outstanding performance of Ether. Ether has outperformed Bitcoin since the end of September and it is already up by 225% this year, against 108% for Bitcoin.
Graph – source TradingView: 2021 ETHUSD price performance versus BTCUSD price performance in %
The ‘Ethereum 2’ (ETH2) upgrade from the current Proof of Work (PoW) protocol to the Proof of Stake protocol (PoS) is well under way. ETH2 is expected to slash transaction costs by increasing massively the number of on-chain transactions handled per second, against only a few dozen transactions handled with the current version. The launch of the Beacon Chain in December laid down the foundations of the new protocol, introducing the staking functionality. 3.8M ETHs are now staked on the Beacon chain. There are almost 120,000 validators who staked the minimum 32 ETHs required to process transactions, add new blocks to the blockchain, and earn ETHs for doing so. A new milestone was achieved when the Berlin hard fork went live yesterday. This latest successful upgrade will help mitigate the high gas fees, and eventually bring back small retail investors to the blockchain.
Finally, Ripple’s cryptocurrency (XRP) also registered an outstanding performance this week, surging by 62.4%. The SEC filed a complaint arguing that XRP is a security under the scope of the SEC. The SEC’s demand for eight years of personal financial information on Ripple’s executives was denied by a US magistrate last Friday. Two weeks earlier, Ripple was also granted the right to access SEC’s internal documents and discussions over Bitcoin and Ether. Ripple would like to argue that XRP is legally equivalent to BTC or ETH and might have now material grounds to do so. Following these legal ‘victories’, the Ripple community is now hoping for both parties to settle. Meanwhile, Ripple’s co-founders simply filed to dismiss the case.