October 14, 2021
Are We in for the Next Leg of the Bull Market?
Introduction
While Bitcoin is still chilling out, we are seeing some nice catch-up action by altcoins today. Among the biggest winners are DOT (which makes sense after yesterday’s announcement of the first parachains), Ethereum (whose fundamentals are improving day by day with increased L2 adoption and a massive burn rate) as well as several L1s like NEAR and CELO… Are we in for an explosive alt-season or is it still Bitcoin’s turn to make the next move?
Market Watch
Just as we pointed out two days ago, the markets are doing what the majority of traders and Crypto Twitter are not expecting: After many anticipated a major altcoin crash with Bitcoin below critical resistance, prices have – of course – gone up.
It also helps that traditional markets are having a green day after brushing off yesterday’s inflation news.
Still, it does feel like the calm before the storm with BTC, ETH, and DOT just a few percent below their all-time highs… While it’s hard to predict if Bitcoin season is going to continue or we finally get the start of a massive alt-season, the best thing is probably to be positioned well-diversified across your highest conviction plays – and wait for the action.
Just something to be aware of: With rising prices, we also see the Fear & Greed Index increase. This is by no means a sell indicator but it’s a “yellow flag” to be aware of.
Zooming out, it becomes clear that the current price action should, according to several price models, only be the warm-up for what is still to come. Once Bitcoin starts its next parabolic leg up, the move is likely going to happen quicker and more violently than what the last month’s consolidation made us used to.
The stars for Bitcoin really seem to align for the coming months with a potential ETF approval (unless the SEC “rugs” us again 🤞), the likes of Stripe as well as billionaires jumping onto the crypto bandwagon (see Tweet below) and mainstream adoption soaring (see second Tweet below).
Game Theory Is Playing out: Is Russia Warming up to Crypto?
Yesterday we covered how resilient the Bitcoin network has been in face of China’s crackdown on crypto mining. The biggest beneficiary has been the US which now hosts the largest amount of hash rate in the world. But not just the US, also other countries have capitalized on the Chinese miner exodus.
For example, in some regions in Russia, mining activity has more than doubled in recent months, making Russia a global powerhouse of Bitcoin mining. Instead of banning, Russia is now taking steps to further regulate and legitimize the mining industry.
In a recent CNBC interview, Russia’s President Vladimir Putin hinted that Russia could move away from dollar-denominated oil if the U.S. and said:
I believe that cryptocurrencies have value.
Asked whether crypto could be used as an alternative to the US dollar, Putin said:
There is a possibility that the asset class could serve a role as settlement units but it’s too early to say.
Asked about a potential ban of cryptocurrencies Putin said:
There are no guarantees for cryptocurrencies but everything has a right to exist.
Just a few days ago Russia’s Deputy Finance Minister Alexey Moiseev clarified that cryptocurrencies would not be banned as China did.
That certainly sounds like Russia is well aware of the potential that crypto holds and it wouldn’t be surprising to see major crypto moves out of Russia in the coming years.
Don’t Underestimate the Coinbase Effect
Just a day after Coinbase announced its NFT marketplace, more than a million users have already joined the waiting list – this is more than OpenSea has active users! 😲 Do you see where this is going? Mainstream crypto users clearly can’t wait to join the NFT trend but many are apparently overwhelmed by the complexities of NFT investing.
While no one in the active NFT community is really fond of centralized NFT marketplaces (we already have enough centralization issues with OpenSea and Co.), it’s undeniable that Coinbase, being by far the most important onramp for new crypto users, will be a massive catalyst for the entire NFT space, since it allows millions of people to get started with NFTs. These new users (and their capital) will later inevitably flow into the decentralized NFT space, once they get the ins and outs of NFT investing.
For seasoned (if we can even call anyone that) NFT traders it’s easy to forget the struggles that newbies face. Many of us are to a degree blind to the UX issues the current NFT space still has and how early we are.
Visa Doubling Down on NFTs
After Visa caused a stir with its CryptoPunk purchase and its super-bullish NFT report in August, the payments giant is now accelerating its active NFT efforts by launching an NFT program.
Visa is partnering with former Major League Baseball player turned NFT artist Micah Johnson to support artists who want to use NFTs to sell their work.
We believe that we are at the beginning of a digital renaissance in the world of art and content creation.