October 18, 2021
Discover more from EllioTrades
October 18, 2021
Bitcoin Closes Its Highest Weekly Candle – and Takes a Breather
Introduction
Despite the weekend’s usual “scam price action” and the volatile day today, Bitcoin achieved something very important: It closed its highest weekly candle EVER! This is a very positive sign from a macro perspective, signaling that after a multi-month correction, BTC is back strong and ready for new price discovery…
Market Outlook
Are we seeing some “sell the news” action today after the anticipation of the ETF approval led to an impressive run-up in BTC’s price? That’s possible but today’s weaker price action is also in line with general risk-off sentiment in global equity markets.
It is a risk off day as global inflation concerns are back.
No one knows what the short-term price action holds – else, every leverage trader would “make it” easily. However, the current cool-down action after BTC’s impressive move-up is looking healthy for now.
We might sound like a broken record but it’s important to highlight that on-chain metrics, which tend to be a good indicator for mid-term price action, are pointing towards more bullishness over the coming weeks and months. First, BTC has to overcome its old all-time high though, which could take more than one attempt…
Bitcoin ETF Starts Trading Tomorrow
It has been quite the ride: After years of waiting and lots of speculations in the past months, we finally got a Bitcoin ETF greenlighted by the SEC and ready to start trading tomorrow! We have already outlined the drawbacks of Bitcoin Futures ETFs, nonetheless, the symbolic impact of the approval can’t be overstated!
Here is a reminder for those who are considering investing in the new Bitcoin Futures ETF – and why the SEC is actually not protecting but hurting retail investors:
All in all, the Bitcoin Futures ETF is only the first crucial step towards a physically-backed Bitcoin ETF, which several high-hitting players in the industry are now working towards…
Major international brokerage platforms like Interactive Brokers enabling cryptocurrency trading and investing is also a critical step in bringing financial advisors and mainstream investors onto the crypto bandwagon.
Crypto Adoption Is on Track – but Still Earlier Than Many Think
When trying to predict bull and bear market cycles, there are several factors to consider: Price and data models (such as Plan B’s Stock-to-Flow model), sentiment (e.g. Fear & Greed, leverage, open interest), external catalysts (such as regulation and macro developments) and – very importantly – adoption curves (aka network effects), which are the ultimate fundamental driver of crypto prices (even though prices might disconnect at times).
In a recent (bullish) report, Morgan Stanley compared the user growth of the cryptocurrency space with that of the Internet in the 1990s, and they found striking parallels: According to their timeline, crypto user growth is currently at the level the Internet achieved around 1997 – so still incredibly early.
On a different but related note, MacroScope highlighted the similarities between today’s crypto market and the tech boom in the 90s. Similarly to Goldman Sachs, he compares the current stage of the crypto space with the early-to-mid (and not the late) stages of the tech cycle.
In terms of institutional interest and involvement, feels very similar to early stage of tech/internet despite current ATH price.
Both these comparisons are looking at the long-term technology S-curve of the crypto space. Of course, bull and bear cycles are a beast of their own, since prices can over- and undershoot the overall growth trajectory… It’s good to know, however, that in the grand scheme of things, the crypto space still has a lot of room to grow – even though this will entail more than one bull and bear market cycle.
Big Tech Is Going All-in on the Metaverse
The Metaverse isn’t just the hottest buzzword in NFT land, it’s also a concept that big tech and legacy gaming companies such as Facebook, Microsoft, Roblox, and Epic are going after. That Facebook plans to hire 10,000 people (in Europe alone) to achieve its mission underscores how big the company’s Metaverse ambitions are.
