Bitcoin And Crypto Market Analysis For The Week Gone By

Whilst US equity markets fell last week due to drops from Big Tech, the European market plodded along and the FTSE All-Share Index rose moderately. Bitcoin and a number of alts remained relatively steady, despite some momentary blips as bitcoin very briefly dipped below the $10,000 level on both Monday and Tuesday.

Simon Peters, analyst, eToro

On-chain metrics belie the dips below $10,000

Despite the drops we saw throughout last week, we failed to see a close below $10,000 and although the sentiment in the community is clearly not overly bullish, I would say that it remains relatively neutral. That doesn’t always make for the most interesting story (and certainly not the punchiest line on which to hook a newsletter), but it does show a certain level of maturity in the sector. 

As we discussed in the previous newsletter, Jerome Powell and the Federal Reserve have now changed their inflation target to an average of 2% over time, rather than aiming to hold at 2%. With the central bank no longer obliged to cut rates if we see a rise above that level, investors will be eyeing up traditional inflationary hedges such as gold. CoinDesk reported last week that the correlation between gold and bitcoin has never been greater. Investors should also look to bitcoin as an asset that can serve the same purpose.

US inflation data on Friday was higher than forecast – both on a month-on-month basis and a year-on-year basis. Could this provide more motivation for investors, especially institutional, to add the ‘digital gold’ to their portfolios or balance sheet reserves?

Despite the discussed sub-$10,000 drops, bitcoin’s on-chain metrics continue to be bullish: the hash rate remains at an all-time high; Glassnode data shows that the percentage of bitcoin that hasn’t moved in over three years is at a two-year high of 30.9%; and Bytetree figures on the Miners Rolling Inventory, which measures the inventory held by miners, shows that they are hoarding bitcoin. All these metrics point to an increase in the hodling mentality.

In my view, any sub-$10,000 moves suggest a serious undervaluing of bitcoin. Any consistent drop below that level could push the bulls to top up their holdings.

David Derhy, analyst, eToro

Investors look ahead to TRON’s big week

Following impressive runs over the summer, many altcoins spent a few weeks retracing slightly as investors took profits. Last week this pattern appeared to reverse, and we are starting to see signs of an upwards move

One crypto-asset I’m adding to my watch list this week is Tron. Investors who have locked away their TRX to participate in the genesis mining of SUN tokens will be able to withdraw it on 16th September along with their SUN tokens. SUN token is a governance token dedicated to the development of Tron’s DeFi (Decentralised Finance) ecosystem. The larger the amount of TRX, and the longer these are allocated to the genesis mining of the SUN tokens, the more the user will receive and in turn have a higher degree of ‘say’ for the future of DeFi on Tron.

Wednesday’s release date could spark further price rises from TRX, with those that haven’t yet participated in the SUN token genesis mining rushing  to join for fear of  missing out on the issuance

DeFi continues to be the topic on everyone’s lips, and last week I highlighted some potential similarities between DeFi and 2017’s ICO bubble, but I think it’s also important to bring to your attention some of the differences that exist between the two. Firstly, DeFi as a trend is monumentally more complex to take advantage of than an ICO. Whereas ICO investors simply needed some Ethereum, DeFi arguably requires substantial technical knowledge before investors can get involved in some of the tokens that exist in that space. This naturally means that retail investors are not as interested in DeFi now as they were in ICOs back in 2017. CoinDesk recently analyzed Google Trends data on the two search terms, which showed that, despite the community chatter, the term DeFi is a way off the interest levels that the term ICO was in August of 2017.

Despite the fears of a DeFi bubble, perhaps there is much more room to grow? 

Disclaimer: This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without having regard to any particular investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as a reliable indicator of future results. 

All contents within this report are for informational purposes only and do not constitute financial advice. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared to utilize publicly-available information.

Crypto assets are volatile instruments that can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading crypto assets are unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk.

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