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Analysts warn of ‘institutional exhaustion’ with Bitcoin price back below $32K

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The price of Bitcoin (BTC) recovered in the past two days after dropping to as low as $28,850. Following the swift rebound, however, BTC has been unable to break past heavy resistance at $33,000 on Jan. 23, pulling back below $32,000 at the time of writing.

BTC/USD 1-hour price chart (Coinbase). Source: TradingView.com

Coinbase premium returning is bullish, but what now?

Earlier, when the price of Bitcoin started to drop below $32,000, BTC traded much lower on Coinbase than on Binance.

The lack of premium on Coinbase was worrying for two key reasons. First, Bitcoin naturally trades higher on Coinbase due to the minor premium of Tether.

Second, when Coinbase sees a lower price than other exchanges, it shows that there is high selling pressure in the U.S. market.

As the selling pressure on Bitcoin began to increase in the U.S. market, the price of BTC feel steeply in a short period.

BTC/USD (white) vs. Coinbase premium Index (blue). Source: CryptoQuant

But, almost immediately after BTC rebounded from $30,000, the Coinbase premium reappeared. At the time of writing, BTC is around $40 higher on Coinbase than on Binance.

The Coinbase premium re-emerging after nearly 12 hours is a positive sign of a potential trend reversal.

Signs of “institutional exhaustion”

But everyone is far from bullish in the near term, however. Analysts at QCP Capital, a team of traders in Asia, see several signs of “institutional exhaustion.”

Considering that the main narrative around the recent has been the institutional demand for Bitcoin coming from the U.S., the rally may be in danger if the institutional appetite for BTC slows down. They said:

“Signs of institutional exhaustion: We’ve done a timezone analysis which breaks down BTC moves into Asia hours vs. US hours (12 hours each). Since March last year, the clear pattern has been relentless US buying while Asian whales and miners have been on the offer.”

Bitcoin loses strength in U.S. period. Source: QCP Capital

The traders empahsized that the strength in the U.S. trading session lost momentum for the first time.

In fact, throughout the past week, most of the BTC selling pressure came from Asia. This marks a key shift in market sentiment. They added:

“However after the BTC top 2 weeks ago, the strength in US hours has lost momentum for the first time. This is a clear sign of exhaustion in demand from the US institutions and corporates who have been the primary drivers of this bull run.”

What comes next for Bitcoin?

Bitcoin is at risk of a corrective phase throughout the first quarter of 2021 if institutional demand for BTC subsides.

Various institution-focused platforms and vehicles, like Grayscale, are still seeing large inflows, which is indicative of solid institutional demand. At the same time, MicroStrategy continues its policy of buying Bitcoin on each dip with the latest purchase on Friday totaling $10 million. 

“Today, $31,000 was a pocket of strong support, so at least not everyone is selling,” said Chad Steinglass, head of trading at Crosstower, a digital assets capital markets firm.

“We’ll have to wait and see if that wall remains, or if institutions continue to accumulate. If they do, it’s likely that the trend will re-establish itself and continue. If they move to the sidelines waiting for more regulatory guidance, then their lack of buy flows will be acutely felt.”

At the same time, the likelihood of a wider correction remains if the U.S. market continues to see an overall decline in the appetite to accumulate BTC, particularly if the dollar continues to recover in 2021.

Analysts warn of \’institutional exhaustion\’ with Bitcoin price back below $32K

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Coinbase Announces Offer Of Secondary Market As Firm Plans To Go Public

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As the crypto market is hotly anticipating the largest US cryptocurrency exchange Coinbase to go public, the company will also launch a secondary market along.

Although this market debut has been anticipated for some time, it wasn’t until last month that Coinbase filed a confidential S-1 for the stock listing on Nasdaq.

Employees are allowed to sell their shares

The exchange offers trading for several cryptocurrencies, including Bitcoin, Litecoin, Ethereum, Ethereum Classic, Tezos, and Bitcoin Cash.

Coinbase offers Bitcoin storage and transactions for about 190 countries, while it serves about 32 countries with fiat currencies.

The secondary market service will surely excite consumers and crypto enthusiasts who are wondering what type of service upgrade they are expecting when Coinbase goes public.

The message from Coinbase states that the Nasdaq private market will inform users how they can access the Coinbase sharers for trading and how the market will operate.

With this new development, both former and current employees with vested equity in the exchange are allowed to sell their shares. The exchange is expected to go public soon.

Coinbase will go public through a direct listing

Ahead of the Coinbase IPO, Nasdaq Private Market will provide services for companies, which includes controlled liquidity programs, especially for firms who want to raise secondary capital for investors and shareholders.

However, rather than going through an IPO, the expectation is that Coinbase will use the direct listing to reach the public markets.

The digital currency exchange was founded in 2012, with headquarters in San Francisco, California.

The company was founded by former Airbnb engineer Brian Armstrong, and former Goldman Sachs trader Fred Erhsam.

Coinbase has taken huge steps towards making the company attract global attention as it is today. The firm’s ambitious growth plans started yielding results almost immediately, as its user base grew to 1 million barely 2 years after it was formed.

Its growth was also helped by several partnerships with top brands like Time Inc, Dish Network, Expedia, Dell, as well as Overstock.

Presently, the exchange is valued at over $70 billion, as pre-IPO contracts have already started trading on FTX.

Coinbase Announces Offer Of Secondary Market As Firm Plans To Go Public

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Crypto and blockchain: What the Brazilian market can expect for 2021

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2020 will be remembered as one of the most difficult years for contemporary societies: Countries and entire populations have faced lockdowns and economic crises, financial markets still suffer from the severe impacts of the economic recession, and more than 2 million lives have been taken by COVID-19.

Despite this, other sectors have been impacted in other ways during the severe global health crisis — which still seems far from over, even though vaccines are beginning to be distributed in wealthy countries. Economies have radically digitalized, hedge assets have attracted mistrust, and the crypto market has had one of its most important years since 2009, the year of Bitcoin’s (BTC) launch.

In fact, the crypto and blockchain markets have stood out in the face of a crisis that has spared almost no sector. Cryptocurrency funds are among the most profitable of the year, Bitcoin and the biggest altcoins reach new historic highs, large institutions and investors in the financial markets have allocated investments in Bitcoin, and blockchain technology has broken down barriers in the financial sector and in the production chains of the most varied of sectors.

Faced with a year of profound changes, what is to be expected for the future? Cointelegraph Brasil invited some of the country’s top crypto and blockchain experts to chart the next steps for the market.

Institutional investment

Institutional investment was highlighted in 2020, finally reaching the cryptosphere, and it promises another year of growth in 2021.

According to Rodrigo Borges, founding member of the Oxford Blockchain Foundation, large Bitcoin contributions by institutional investors — which have even bought more BTC than the production capacity of miners — will intensify in 2021: “Regarding Bitcoin, I imagine that there will be an increase in demand for institutional investors, enabling the emergence of new products with exposure to Bitcoin,” analyzed Borges. He also sees “2021 as a year of consolidation and strong development in the sector.”

As for Tatiana Revoredo, MIT blockchain expert and Cointelegraph Brasil columnist, the custody of cryptocurrencies by traditional financial institutions and the adoption of stablecoins will be key in the new year:

“In the financial sector, we will see applications for custody of crypto assets being launched in Brazil, with the possible participation of the traditional market. And if the regulatory authorities allow it, stablecoins will have an expressive role in the Brazilian market, with the turnover being able to quadruple in size.”

Crypto markets

Crypto markets experienced a year of extreme optimism — or greed, as demonstrated by the Crypto Fear & Greed Index. Bitcoin reached a dramatic bottom close at $3,800 in March, and it beat its 2017 historic high of $20,000 on Dec. 16. In Brazil, the currency set a new historical record in November when it reached $106,000 Brazillian reals.

Cointelegraph Markets reporter Marcel Pechman highlighted the behavior of the market despite the setbacks suffered during the year. He recalled: “The Bitcoin and Ethereum markets developed in 2020 as never before imagined, both in terms of trading volume, price and the contribution of renowned investors like Paul Tudor Jones and Stanley Druckenmiller.”

Pechman said that despite the crypto market suffering some setbacks, the impact of those setbacks on market performance was not so significant: “We had, for example, the US Department of Justice suing BitMEX — at the time, the largest derivatives exchange — and KuCoin’s $280 million hack, and none of those affected the market.”

Pechman also recalled that the 2020 DeFi race led to expensive transaction costs on the Ethereum network but did not impact market sentiment.

OriginalMy CEO Edilson Osório agreed with the promising future of the DeFi sector, but he cautioned against fraud:

“This is an experimental and very promising market, but it must be given extra attention because of malicious groups applying scams and fraud in general. As it is a very new market, platforms may have problems with hacks, and due to the great centralization that exists (even with many platforms presenting themselves as decentralized), there is still a risk of exit scams.”

About 2020’s innovations, and the digitalization imposed by the COVID-19 crisis, Pechman also said that it will go even deeper in 2021:

“Successive innovations, which include Taproot, Schnorr and Lightning Network in Bitcoin, in addition to the launch of Ethereum 2.0 phase 0, pave the way for the next wave, with increasingly larger, scalable applications, and interconnected with traditional finance. The final proof? Fidelity offers loans covered in cryptocurrencies.”

On the domestic markets, Osório is betting on the tokenization market in Brazil, which is already used by the country’s largest crypto exchange, Mercado Bitcoin. According to him, 2021 will be a year for “maturing the security tokens market.”

“Existing protocols are beginning to be well regarded by regulators, since most of them provide for greater participation and visibility on the part of the regulator itself and allow the mitigation of various risks inherent in this market. In this race, there is a great chance that Brazil will gain prominence because the local regulator has established a regulatory sandbox and the first projects are already beginning to mobilize to have their applications running in a more legally secure environment,” – noted Osório.

Another player at the Brazilian crypto markets, João Paulo Mayall — head of operations at QR Asset Management — is also optimistic about the tokenization market in 2021. He highlighted the role of regulators in the sector’s expansion in the South American country: “I believe that the future is the tokenization of assets, debentures, court bonds, government debts. Brazil is very advanced in its banking system and we will have many surprises in this sector, so I am very optimistic. Tokenization is a billion-dollar market, but it lacks the infrastructure. Innovation came in front of the regulators, but I think they are open to listening and working on it. I think [the regulation] will happen next year, even before March 2021.”

Finally, blockchain expert Tatiana Revoredo argued that crypto adoption in Brazil, which saw its currency melt in 2020, will intensify, with Bitcoin once again asserting itself as an economic-protection asset. She believes that the crypto markets will see “an increase in the interest of Brazilians, with consequent increase in the Brazilian market, with a prominent role for Bitcoin being adopted as a protective asset.”

CBDCs and national governments

The digitization of economies has placed the discussion of central bank digital currencies, or CBDCs, at the center of debates by financial authorities around the world. One of the countries that has definitely entered this race is China, which is already conducting real tests of the digital yuan in the country. Its main geopolitical rival, the U.S., announced that for the time being, it does not intend to digitize the dollar, but it is already seeing internal pressure from not following the Chinese leadership in the sector.

The Central Bank of Brazil has also commented on the transformation of the Brazillian real into a digital currency a few times, although there are no concrete plans for that in the short term.

Osório believes the European Union will join the hype soon, further accelerating the global race for CBDCs: “Although China appears to be leading the CBDC race, other countries are also beginning to move in this direction. Among them, Estonia, which recently started an internal consultation for the launch of its currency in the digital version. In particular, I believe that in Europe a more comprehensive and organized movement should take place in this sense, given the incentives promoted by the European Union.”

Many experts try to predict the impacts of CBDCs on economies — one of the main concerns of economic regulators. Governments, which largely study the adoption of blockchain in their public processes, should also enter the debate on privacy and the digitization of money.

According to Tatiana Revoredo, “in the government sector, the forecast is for the growth of [blockchain] applications in document registration and health applications, as well as a greater concern, by the citizens, regarding the relationship between privacy and CBDC.” She also claims that payments processors should closely monitor this innovation:

“Those who should be more attentive to these movements are the means of payment, such as PayPal and their peers. They will have to look deeply into their business models as soon as governments start issuing their currencies digitally. ”

Blockchain adoption

Governments have also viewed blockchain technology through a positive lens. In Brazil and Latin America, several state entities already use the technology to certify documents, including customs and notary offices. Big companies are also adopting blockchain to certify production, with use cases that are only expected to grow going forward.

Borges said that the acceleration of blockchain adoption by large companies and governments can positively impact crypto assets:

“Within the scope of blockchain technology, I see the development of interesting solutions, with the increasing involvement of traditional players, especially in the financial and agribusiness sectors, which may result in increased liquidity for certain assets.”

Revoredo agreed and highlighted the advancement of technology in the agricultural sector: “There has been a significant advance in agribusiness, with use in the identification of devices (drones, for example), integration with IoT and artificial intelligence to provide greater reliability and certify quality of agricultural production.”

Osório defended the growth of the blockchain market in 2020 and its prospects for the near future: “When we look at advances in blockchain with applications beyond digital currency, we see a growing market in the area of ​​decentralized digital identity, including with the approach of governments. We have seen movements in governments in the US and Japan, interested in modernizing their digital governance models. And the pandemic has certainly helped to accelerate and advance discussions on the issue around the world, as it understands that the digitization of analog and traditional services is a necessity.”

The end of 2020 was a milestone that closed out one of the most dramatic years in the history of contemporary societies, but it also revealed ways to combat global economic and health crises.

Blockchain technology has helped societies fight corruption, adopt more transparent processes and even contributed to the certification of medicines and vaccines during the most serious health crisis of the last 100 years, in addition to helping companies to improve procedures, products and services.

Meanwhile, Bitcoin has strengthened as an economic protection and investment product, has attracted institutional investment giants, and — together with other crypto technologies — has even laid the foundation for central banks around the world to start implementing their own digital currencies.

We still do not know the depth of the revolution we are experiencing with the digitalization of societies and the weakening of national currencies around the world, but by the end of 2021, we will certainly know many of the answers to the questions that still plague us at the beginning of this new year.

Crypto and blockchain: What the Brazilian market can expect for 2021

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Philip Salter Says layer-two Bitcoin Solutions is Needed for Bitcoin’s Growth

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Philip Salter, Genesis head of mining operations, is of the view that Bitcoin would need second-layer solutions to be seen as a good store of value.

He said even if the coin can still be regarded as a good store of value now, it still needs such a solution to accommodate mainstream adoption.

“I think Bitcoin is a good store of value regardless of transaction fees,” he said.

Slater, however, noted that the high transaction fee on Bitcoin is posing a challenge since it affects the value that can be transferred. There have been several projections and predictions on Bitcoin even before the Bitcoin fork earlier last year. However, the top cryptocurrency is still waxing strong as is gradually proving naysayers wrong.

Bitcoin transaction price too unreasonable

Up to this point, Bitcoin (BTC) has stood the test of time, as the coin is the crypto with the highest market cap asset for the past decade.

These days, many people even prefer keeping Bitcoin as a store of value than digital cash. But Salter is not ruling out complications that may arise due to change in perceptions.

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“Some years ago it was possible to store and transmit $1 efficiently since tx fees were effectively zero,” he stated.

Salter added that those days have gone since some transaction fees can go as high as $15, and it’s not sensible to charge $1 anymore.

If the trend continues and Bitcoin continues to rise in price, transferring value in common amounts will be very difficult, but only when transferring very large amounts.

Second layer solutions will be feasible

Salter said the solution will be vital not only for transactions on BTC but also for the use of the coin as a store of value in the future.

There have been several layer 2 solution projects undertaken by industry players, many of which are still in a developmental phase. Some of the ready projects, such as Lightning Network, are intended primarily to make small BTC transactions more feasible.

Salter says he is one of those that use the Lighting Network solutions to facilitate transactions in small BTC denominations.

Philip Salter Says layer-two Bitcoin Solutions is Needed for Bitcoin’s Growth

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Crypto Lending Platform Celsius Now Holds More Than $5.3 Billion

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Cryptocurrency rewards-earning platform Celsius Network announced that it now holds over $5.3 billion worth of crypto assets. The news is coming months after Chainanalysis announced that it has validated $3.3 billion in total assets held by Celsius.

With this recent evaluation, Celsius has become the second-largest digital asset manager in the world, behind Grayscale Investments. Celsius has continued to grow in asset management since last year, as the crypto asset manager has gained a considerable level of exposure and asset under management.

Since November last year when Chainanalysis made the confirmation, the company has added more than 125,000 new users, which now makes it over 340,000 total active users.

Other impressive milestones

Celsius has crossed other impressive milestones as the company prepares to gain more market share this year.

The firm now has more than 55,000 BTC held under management and more than $200 million as token rewards to the Celsius community, Besides, the platform has 45 different coins and tokens supported and earning yield. Also, the firm’s native CEL token has grown significantly, as it has hit an all-time high of $6.1, making it on the top 40 list of Coinmarketcap.

Celsius enables thousands of users and consumers to gain financial impendence through investments in digital currencies. It offers instant low-cost digital asset loans that are accessible through a mobile app or via the web.

It is designed on the principle that financial services should only operate for the best interest of the community and the customers. Membership in the fee-free platform offers access to curated financial services that are unavailable in traditional financial institutions. The company was established in 2017. It started offering a decentralized trading platform that enables customers to earn up to 10 percent of their crypto shares. It also enables Ethereum holders to earn about 9 percent from their investments.

In May 2018, the company raised about $50 million through an initial coin offering. The startup lends its assets to retail investors, investment funds, and miners on a collateralized basis.

The company said 80 percent of the returns are passed on to holders.

Crypto Lending Platform Celsius Now Holds More Than $5.3 Billion

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Kyber plans to become a hub for DeFi with massive DEX upgrade

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Kyber Network (KNC), a decentralized exchange platform and aggregator on Ethereum, announced plans for Kyber 3.0, a complete overhaul of its platform.

With the 3.0 release, Kyber will transition to become a network of specialized liquidity pools, similar to how different exchanges optimize for different kinds of assets. For example, Kyber 3.0 will allow very high amplification factors for pairs between different wrappers of the same asset, similar to Curve. The team says this would allow a 100-fold improvement to slippage. Other, less stable pairs like Bitcoin (BTC) to Ether (ETH), would be able to benefit from a five-to-ten-fold improvement in capital efficiency.

The optimization is achieved by implementing dynamic market makers, or DMMs. This iteration on the original concept allows fine-tuned adjustments to the key parameters of a liquidity pool. Creators will be able to customize the pool’s relative weights of each asset — similar to Balancer — and set a custom amplification factor to reduce slippage.

Trading fees will be adjusted dynamically as well: During periods of high volume, fees will be increased, and conversely they will be decreased during lower volume periods. Such a mechanism helps mitigate some of the damage from impermanent loss, the phenomenon where a liquidity provider’s assets are constantly rebalanced to sell the winner and buy the loser. Since most of the impermanent loss occurs during decisive and likely high-volume moves to either side, a higher fee parameter helps capture some of the upside.

Another important improvement is gas optimization. Previous iterations of Kyber generally consumed much more block space and were thus more expensive to use. In a conversation with Cointelegraph, a spokesperson from the team explained that this was due to Kyber using a single access point for interacting with its many reserves and routing paths. The new version will allow higher flexibility, with users being able to take liquidity directly from the source they need, in addition to a general improvement to gas efficiency. The new architecture is also designed to support future cross-chain and layer-two scaling solutions.

These improvements are just a start, the spokesperson said. Future plans include more specialized liquidity pools for certain user niches. These include the Professional Liquidity Protocol, a specialized liquidity model for professional market makers, the Bridge Protocol for pulling liquidity from external sources and an upcoming derivatives trading platform.

The token economics of KNC will also be overhauled to bring it in line with other governance tokens:

“In the coming proposal, KyberDAO will have multiple sources of value accrual, including the new DMM and all new liquidity protocols. The governance utility of KNC will be greatly enhanced as well, given that they now have effective oversight of these various protocols. KyberDAO will also have the ability to vote in and fund new protocols for the network.”

The details of the change will be discussed and approved by the existing community, the spokesperson clarified. The KNC token will also have various value capture mechanisms, with holders being entitled to a portion of the fees generated by the protocol.

The upgrade will be rolled out in two phases, called Katana and Kaizen. The first will feature the DMM and a proposal for KNC overhaul and migration. Though no specific dates have been selected, the full transition is expected to be completed late in the third quarter of 2021.

Kyber plans to become a hub for DeFi with massive DEX upgrade

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