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Daily Bitcoin and Crypto Analysis

Daily BTC Analysis: The Weekender

May 2, 2021
Welcome to the Weekender: Your weekly round-up of all the top news stories, as chosen by you, our readers. This week, there has been one clear theme for the most-clicked news stories: PayPal.

The payment giant’s entry to the crypto space was a huge headline back in October 2020. Bitcoin was trading at $12,000 and it has never traded lower since that day.

We start with comment from the CEO, Dan Schulman, who revealed that the demand for cryptocurrencies has been “multiple-fold” of his company’s initial expectations. Schulman also explained that Paypal has “been looking at digital forms of currency and DLT for six years or so.”

However, he noted: “But I thought it was early, and I thought the cryptocurrencies at the time were much more assets than they were currency. They were too volatile to be a viable currency. And it was still a little bit too much of people not really understanding what they were going to get into, and what we really wanted to do is make sure that it became a little more mainstream so that we would work hand-in-hand with regulators before we put anything out into the market.”

In ten years, the world will see a major decline in the use of cash, with all forms of payment collapsing into mobile devices, catalyzing the advent of digital currencies and forcing central banks to rethink their monetary policies, according to Dan Schulman, CEO of online payments giant PayPal.

Schulman predicts that the next five to 10 years will introduce more change in the global financial system than we have witnessed over the past one to two decades.

“Credit cards as a form factor will go away, and you will use your phone because a phone can add much more value than just tapping your credit card,” Schulman said in an interview with Time magazine. “And so when all of those things start to happen, then central banks need to rethink monetary policy as well, because you can’t just issue more paper money into the system because people aren’t using paper money.”

PayPal is also planning to become a "superapp"—something akin to China’s AliPay, offering interoperability with a range of payment instruments. PayPal aims to almost double its customer base to 750M users by 2025.

PayPal’s ambitions are having a knock-on effect across the crypto-sphere: Paxos—which powers PayPal’s crypto offering—announced they raised $300M in order to onboard new large clients.

In an interview with The Block, Cascarilla cited the company's existing performance and opportunities as to why it's raising more money now. It's tied to the number of inbounds it is getting from large potential clients. The firm—known for powering the crypto trading offering for PayPal and Venmo—has several similarly sized clients it is engaging with seriously, according to Cascarilla.

"We want to be able to invest in the team and the platform," he said. "Those clients want to make sure we are well-capitalized. These are the things we want to take advantage of in that window of opportunity."

Cascarilla spoke ambitiously about Paxos' recent growth. "We thought we could add one customer the size of PayPal this year. I think we can add three to five," he told The Block.

Rounding off the PayPal theme, Coinbase announced it will allow its U.S. customers to buy up to $25,000 a day in cryptocurrencies using their Paypal accounts.

Coinbase explained, “If you have an existing Paypal account, you’ll be able to start making transactions on Coinbase right away,” adding that “there’s no need to add bank accounts or card numbers directly to Coinbase.”

In an interview with The Block, Cascarilla cited the company's existing performance and opportunities as to why it's raising more money now. It's tied to the number of inbounds it is getting from large potential clients. The firm—known for powering the crypto trading offering for PayPal and Venmo—has several similarly sized clients it is engaging with seriously, according to Cascarilla.

"We want to be able to invest in the team and the platform," he said. "Those clients want to make sure we are well-capitalized. These are the things we want to take advantage of in that window of opportunity."

Cascarilla spoke ambitiously about Paxos' recent growth. "We thought we could add one customer the size of PayPal this year. I think we can add three to five," he told The Block.

Rounding off the PayPal theme, Coinbase announced it will allow its U.S. customers to buy up to $25,000 a day in cryptocurrencies using their Paypal accounts.

Coinbase explained, “If you have an existing Paypal account, you’ll be able to start making transactions on Coinbase right away,” adding that “there’s no need to add bank accounts or card numbers directly to Coinbase.”

Technical Analysis

The bulls took on the challenge this week, driving Bitcoin back above $54,225. A brief test of $53,130 was met with another show of force as prices leapt higher, stopping just short of our resistance level at $58,820.

$56,600 has so far held as a support level today, and will play a critical part in the unfolding of the price action this coming week.

If $56,600 becomes the floor for prices, then the market will once again test $58,820. A move up through here will see Bitcoin return to trading with a $60,000 handle as the bulls set their sights on $61,700.

The bears must take the market back below $54,225, else confidence will breed and buyers will return to support any dips. $53,130 will act as the last line of defense for leveraged longs; a drop below will likely takes us back to $50,225.

The longer the market can hold above $56,600, the quicker any rally back to $60,000 is likely to be, as frustrated buyers find the price dips are shallow and chase the market back up.

The Market In Numbers

This Weekend's Coffee Reading

BITCOIN’S ON-CHAIN MARKET CYCLES

Bitcoin is a free market for exponential, digital monetary technology. It has attracted interest from all manner of investors ranging from the individual right through to global institutions. Number go up technology has driven both speculation and investor conviction, as the thesis of digital sound money is tested, challenged, and ultimately proven through price performance and adoption.

Within that context, Bitcoin has proven to be a cyclical asset, with extreme price run-ups and lengthy and significant draw-downs. At all stages in these cycles, there are pools of people buying, selling, holding, transacting and mining within the Bitcoin network. To fully understand the psychology and characteristics of these market cycles, there are few data sets more suitable to study than the Bitcoin ledger itself.

In this article, we will explore some select on-chain metrics that provide insight into the sentiment and macro-spending patterns of hodlers, speculators and miners. The objective is to equip readers with the tools needed to appreciate the progress and data patterns as they relate to the current bull market.

ON-CHAIN CHARACTER

In bear markets, interest in Bitcoin the protocol typically wanes, and by the end of it, only Bitcoiners, smart money and miners remain standing. These are the buyers of last resort, and they all have one goal: to accumulate as much bitcoin as possible before everyone else works it out.

For on-chain data, the patterns and fractals we observe during bear markets are largely driven by these low time preference accumulators. The chart below shows supply accumulation by long-term holders and how it consistently peaks during the darkest times.

Bull markets on the other hand, are a very different beast. The dynamics between on-chain supply and demand are in constant flux as new speculators and old hodlers compete for block space, profitability and test their resolve to hodl through epic price rises. Old hands typically begin to distribute in bulls, transferring their expensive coins into the hands of new speculators (who return the favor in bears, selling cheap coins at a loss to hodlers).

As investors enter and exit this market, they leave behind on-chain footprints that capture the aggregate hodling conviction and spending patterns. Through study of Bitcoin cycles, we can establish sets of assumptions and fractals to describe the balance between supply and demand. With an appreciation for market cycles, and how different parties typically behave, we can use these patterns to better gauge the progress of bull and bear markets alike.

 Read the rest of the article here.

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