Seems like everyone has something to say about Bitcoin recently. Musk, Dalio, the charts (do they talk to you too?)
In today’s free newsletter, let’s break down the Bitcoin fundamentals and technicals, on a need-to-know basis.
As per usual on Mondays, you can find your crypto / world calendar at the end of the letter.
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Michael Saylor Says Gold Is Dead, Predicts Mass Migration to Bitcoin 💰
MicroStrategy’s Michael Saylor warns investors not to be the last ones to get out of, what he views as, a dying asset.“Gold is dead money. Sell your gold, buy Bitcoin because other people are going to sell their gold and if you wait until you’ve been front-run by all the hedge funds when they dump their gold, you’re going to be the last person out. Eventually, it will only be the central banks that will want to hold it. Every private rational actor is going to move out of it and move into Bitcoin.” Read more.
XRP Pump Fails to Materialize as Price Crashes 40% From Day’s High 📉
XRP has crashed hard from a two-month high reached early Monday, with a planned community buying effort failing to yield desired results. A coordinated buying effort by some 200,000 members of the two-day-old Telegram group called “Buy & Hold XRP” at 08:30 a.m. ET was supposed to push the cryptocurrency to higher resistance levels. Instead, XRP pulled back from $0.75 to $0.60 ahead of the crowd buying and extended losses to $0.40 after 08:30 a.m. ET. Read more.
Mark Cuban Thinks Wall Street Stands No Chance Against Digital Natives 🏀Entrepreneur and Dallas Mavericks owner Mark Cuban has weighed in on the recent clash between Wall Street and the r/Wallstreetbets Reddit community.In a Jan. 31 blog post, Cuban suggested that the old-school investment community is currently taking a kicking from what he describes as the “Store of Value Generation.” These millennials have developed a greater understanding of the value of digital assets, having been brought up in a world where music was more often shared as a digital file than a physical object. Read more.
Hashmask NFT Raises $10M in Four Days as Trump Card Nets 97 ETH 🚀
Hashmasks, the latest non-fungible token (NFT) rave already seems to be drawing attention as the project has raised almost $10 million in only four days of its limited-edition “cards” being on sale. Meanwhile, one of the already acquired digital collectibles has already been resold for more than $126,000 on the NFT marketplace OpenSea as collectors rush to acquire the new piece of NFT memorabilia. Read more.
Grayscale Reopens Its Ethereum Trust to Investors 🌐
Digital asset manager Grayscale Investments said Monday its Ethereum Trust (OTCQX: ETHE) is again open to accredited investors. The company said the private placement of its shares in the trust is periodically offered throughout the year. The Ethereum Trust last closed its doors in late December, along with five other trusts. Grayscale – owned by Digital Currency Group, the parent company of CoinDesk – last week registered five new trusts for cryptocurrency assets, several being linked to the decentralized finance (DeFi) space. Read more.
Kraken to Run its own Chainlink Node to Provide Price Data To DeFi Apps 👾
Crypto exchange Kraken announced Monday that it will run its own Chainlink node to provide spot price data to decentralized finance (DeFi) applications and others. "Running our own Chainlink node will not only provide us with a mechanism to broadcast our Oracle Rates on any blockchain, but we can leverage Chainlink's built-in cryptographic signing capabilities to provide users with definitive on-chain proof of that data originating directly from Kraken," said the exchange. With today's news, Kraken has become one of a few major exchanges to run Chainlink nodes, besides Huobi and others. Read more.
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Musk Have Bitcoin
For today’s article, I take a look at bitcoin’s recent price action and zoom in on Elon Musk’s comments about bitcoin and what it could potentially mean for the direction of the market.
Elon Musk, the founder and CEO of Tesla who recently became the richest man on the planet significantly moved the market last week by editing his Twitter bio to a single word: ‘#Bitcoin’.
While rumors about Musk or Tesla buying bitcoin spread around quickly and bitcoin exploded upwards ~20% in a single 4-hour candle, the market rejected the move a few hours later and closed the day on a rather bearish note.
With a significant amount of new long positions trapped above $34000, it looked like the market was headed south after yet another lower high.
That said, this weekend’s positive comments by both Musk and legendary investor Ray Dalio seem to have restored the confidence in the market, at least short-term.
Back To Ranging. What Does The Chart Tell Us?
In an earlier edition, we wrote that bitcoin breaking above $34-34.5k was the first sign of strength that could be an early warning signal that could potentially weaken the altcoin trend.
A week later, that level is now the most important resistance on the chart with two fierce rejections last week.
On the flip side, a break and close above would indicate that bulls are back in control and bitcoin is likely ready to challenge new highs.
An interesting fractal to keep in mind is a comparison between gold and bitcoin.
The rejection of the pump following Elon’s tweet now adds confluence to the idea that the market might revisit lower levels one more time before it is ready to continue this cycle’s uptrend.
Don’t forget that these outcomes are never certainties, we’re merely assigning probabilities to certain outcomes so we don’t get hurt by either scenario.
Be ready for both, anticipate rather than react and be caught off-guard.
Paving The Way
Musk also appeared on Clubhouse yesterday where he once again spoke about bitcoin.
Musk was very conservative with his comments because he realizes his power to move the markets which is not his intention.
Musk said that he was late to the party but considers bitcoin ‘a good thing’ and outed himself as a supporter of bitcoin once again.
Meltem Demirors @Melt_Demso @RayDalio's opening line on his research note about bitcoin is... "I believe Bitcoin is one hell of an invention." "Bitcoin looks like a long-duration option on a highly unknown future" welcome, Ray, we're so delighted you're here https://t.co/jilWoPv08z
When both the richest man on the planet and one of the best macro investors of our generation speak positively about bitcoin, it’s worth questioning bearish assumptions.
Ray Dalio was known to be a bitcoin skeptic but publicly said that he was willing to change his views on the topic.
That alone is an important lesson in and on itself.
An investor of such caliber willing to investigate a topic he is less familiar with, publicly searching for arguments that could disprove his hypothesis.
In a Bloomberg article, Erik Schatzker summarized how Dalio now thinks about bitcoin in a few bullet points. Some of our favorites:
Bitcoin has succeeded in “crossing the line” from speculative idea to something likely to have value.
Because there aren’t many of these gold-like storehold of wealth assets that can be held in privacy and because the sizes of their markets are relatively small, there exists the possibility that Bitcoin and its competitors can fill that growing need.
If there were restrictions on the usage of Bitcoin, “demand for it would plunge.”
To summarize, Dalio concluded that he thinks of bitcoin as ‘a long-duration option on a highly unknown future that I could put an amount of money in that I wouldn’t mind losing about 80% of.’
The trend is clear, respected investors do not necessarily have a position in bitcoin but the sharp rise of prices requires them to at least have a well-thought-out opinion about it.
It’s a sign that the industry is maturing and talking about bitcoin isn’t automatically considered to be a scam anymore.
In today’s article, we have explored recent technical and fundamental developments with regards to bitcoin. The technical analysis is neutral at this juncture, with the fundamentals doing the heavy lifting. Industry leaders such as Dalio and Musk pave the way for the topic to become accessible and less controversial.
On Mondays, our ‘Scan The Week’ section is designed to show our community what events and headlines we will be keeping an eye on.
Monday, 1st February
Black History Month ◼️
Black History Month is an annual celebration of achievements by African Americans and a time for recognizing their central role in U.S. history.
Tuesday, 2nd February
Market Meditations Giveaway 💸
Congratulations. If you are reading this, you are among the first people to know that we will be having a Market Meditations Giveaway worth $900 tomorrow. Keen to win the prize? Keep an eye out on Koroush AK’s Twitter 🐦 Rumour has it he will be tweeting instructions to win.
Wednesday, 3rd February
Bluzelle Mainnet Launch 👀
‘This grand debut of the Bluzelle network will mark the arrival of decentralized storage that can operate at massive scale, with super low latency, and with industry-changing anti-censorship features.’
Golden Globe Nominations 🌎
Kava (KAVA) 5 Testnet Launch 🌐
An incentivized testnet is launching and users can win in the “Money Market Madness”. Kava 5 is part of the 2021 roadmap that includes ‘at least 2 new native applications and tokens, decentralized bridges to onboard the largest cross-chain crypto assets, and a host of features to reinforce the safety and security measures already enjoyed by all users of Kava’s decentralized financial applications and services.’
Friday, 5th February
U.S. Non Farm Payrolls 🇺🇸
The first monthly employment report under Biden’s presidency. This will be important to consider not just for the prospects of the world’s largest economy but also because it could influence the conversation about various stimulus proposals.
Saturday, 6th February
TomoChain TOMO) Halving ✅
The Tomochain halving reduces the inflation by 50%. ‘Masternodes are rewarded a certain amount of Tomo whenever an epoch (every 900 block) is produced (approximately every 30 minutes). After 31,536,000 blocks are mined (approximately 2 years), the epoch reward halves and will keep on halving until the epoch reward becomes 0 (approximately after 8 years). As of now, the epoch reward is 250 coins and will decrease to 125 coins per epoch post halving.’
Sunday, 7th February
Super Bowl 🏈
With the Weeknd performing the halftime show
Monday, 8th February
CME’s Ethereum Futures 😱
The new contract will be cash-settled, based on the CME CF Ether-Dollar Reference Rate, which serves as a once-a-day reference rate of the U.S. dollar price of Ether. Ether futures will join CME Group's Bitcoin futures and options. For more information on this product, check out: www.cmegroup.com/etherfutures.
This is a special thank you to my team for their research and contributors, they make this Newsletter possible. Today we have guest contributor 👉 Thijs Janssen (Cryptocurrency Expert) help extensively with our main article.
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Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. I am not a financial advisor. Every investment and trading move involves risk. Do your own research when making a decision.