October 12, 2021
Is a Bitcoin ETF Just Around the Corner?
Introduction
Declining or stagnating altcoin prices, BTC hovering below critical resistance, and speculations about an imminent Bitcoin ETF decision… This is the fastest way to summarize today’s day in crypto. While altcoin holders might as well take a short vacation to endure the lull, there is still a multitude of fascinating stories in crypto land to be aware of!
Market Watch
BTC is facing the $57,200 to 59,300 resistance area at the moment which is most likely synonymous with the last big hurdle before a breakout towards new all-time highs. It might require some patience and strong hands to get there though…
As we already pointed out last week, there are some short-term risk factors such as relatively high open interest and, of course, BTC’s multi-week price run which will inevitably lead to a correction at some point. Not all is doom and gloom though since we have seen far more concerning levels during last winter’s bull market at times.
As crypto trader @the_coinmaster points out, the amount of shorts has been increasing which raises the potential for a short squeeze. Let’s see how price action plays out.
When too many people see we are at resistance... then the level stops being a resistance..
Bitcoin ETF: It’s Decision Time
Will this be the pivotal catalyst for the push through upper resistance? A Bitcoin ETF approval (even if only Futures-based) would certainly send (positive) shockwaves through the crypto space! Very soon we will know if there is another delay or… the first approval of a Bitcoin ETF in the US.
Exchange data indicates that the latest BTC rally hasn’t been spurred by retail but mostly by institutional investors. Do they know something that retail doesn’t?
El Salvador 1 – IMF 0
Just a few months ago, the IMF scrutinized El Salvador for its decision to make Bitcoin legal tender. Now, the IMF estimated El Salvador’s GDP growth for 2021 at 9 % – that’s almost twice the US’ estimated GDP growth. Can you see where this is heading?
Celsius Network Unfazed by Regulatory Threats
With a remarkably large equity raise of $400 million, the CeFi lending platform Celsius Network continues on its successful mission of bringing crypto savings products to the mainstream. It’s obvious that Celsius hasn’t been rattled by a few rogue regulators in the US. Notably, the latest equity raise was led by Canada’s second-largest pension fund, which manages almost $400 billion in assets – a sign of what the future holds?
Innovation in L1 and L2 Ecosystems Continues Relentlessly
While the excitement for the emerging L1 and L2 ecosystems, from Solana, Avalanche, and Fantom to Polygon, Arbitrum, and Optimism, has been huge in the last few months, these ecosystems are still very early. From a lack of projects and liquidity to high bridging costs, there are still issues to be ironed out. Technology needs time…
The good thing is that these ecosystems keep pushing innovations at a breathtaking pace, improving the UX for users almost on a daily basis. Here is a short list of improvements and upgrades by different L1 and L2 projects from just the last few days:
Transactions on Arbitrum Are Getting Cheaper
With some criticizing that transactions on Arbitrum are still too expensive, the brand new L2 is already hard at work to deliver a significant improvement in that regard.
Easier Onboarding to Polygon
One of the most annoying things is to send assets over to a new chain like Polygon only to notice minutes later that you lack the native token (in this case MATIC) to pay for gas… While Avalanche solved this problem elegantly with an airdrop system, Polygon has now also introduced a solution that will make onboarding for new users a lot easier.
Bridging Between L1s and L2s Is Getting Easier
With liquidity fragmentation and bridging costs / speed still being major pain points in the emerging multi-chain DeFi space, bridging services like Hop Protocol, Composable Finance, and Synapse Protocol play a central role in connecting the different chains and improving the overall user experience of this new multi-chain world.
BSC Joining the Incentive Program Club
It has been the trend of the last few months: One L1 after the other announced massive DeFi incentive programs, most of the size of a couple of hundred million dollars but a few – like the one Binance announced today – have cracked the $1 billion mark… just mindblowing!
It’s obvious that Binance saw what these incentive programs have done to these emerging L1 ecosystems, with one after the other attracting massive amounts of capital and users. Binance obviously doesn’t want to miss out on this party…
Will this move bring BSC back to the center of the crypto community’s attention? Likely so, since there is not much beating high yields in the current multi-chain DeFi landscape – and these incentive programs are highly effective in achieving this in the short-term.
It is a good time though to think about where all these liquidity incentive programs will lead in the long-term? Certainly, they help to bootstrap an emerging L1 ecosystem and propel it to a level where it can reach “escape velocity”.
As surely as night follows day, however, many of the currently hot L1s will lose their “shiny object status” and with yields returning to uncentivized – and thus much lower – levels, only the L1s offering a superior UX or network effect will remain relevant.