Monat: Dezember 2020

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The price of DOT went up closer to $8.00 before slowing down, but will probably increase if bulls keep above $7.00

The price of Polkadot (DOT) has risen by more than 12% in the last 24 hours amid the positive sentiment around the cross chain protocol. CoinMarketCap data also shows that DOT rose more than 45% last week and is currently trading at $7.22 at the time of writing.

The emergence of Polkadot follows two major fundamental Crypto Trader developments, all related to an important cryptomore-trading and trading platform – Binance. It is the optimism resulting from the twin Binance announcements that has catalyzed the upward action and led the bulls to look at the coveted $10.00 level.

Last week, Binance announced that they had set aside a $10 million fund to support projects built in Polkadot. According to a blog post detailing the funding, the main goal is to improve access to decentralized funding (DeFi) for Binance users.

The reaction to the news saw the DOT rise 8.29% at Binance, from $4.71 to $5.12.

The price of the token then soared 28% to see highs of $6.58 on December 28th after the Binance changed to replace the ETH/BUSD currency pair on its home page with DOT/BUSD. The next day, the price of Polkadot jumped 14% higher, with the bulls rising to $8.00.

The DOT/BUSD currency pair also gained, rising by the margins compared to the US dollar.

DOT/USD Price Outlook
The rejection in recent highs saw the price of the token drop to current levels around $7.22. As can be seen on the charts below, the DOT/USD currency pair is facing bearish pressure and could fall below $7.20.

If this happens, the Fibonacci retracement level of 61.8% from a low of $5.00 to a high of $7.82 presents a cushion at $6.76. The 23.6% Fibonacci retraction level ($5.67) and the 50-EMA ($5.12) offer alternative support zones.

On the positive side, if the bulls manage to overtake the 76.8% Fibonacci ($7.23), a decent high could lead them to test the supply zone again around $7.80. Breaking through the next $8.00 barrier with a positive sentiment could put the DOT in course for action near $10.00.

On the 1 hour chart, the price of Polkadot shows a sell signal as suggested by the TD Sequential indicator. The pressure caused bears to try to push down from $7.00 which could result in a drop of 11% to $6.34. As long as prices remain above 100-SMA and the RSI fluctuates above 50, bulls will maintain the advantage.

The ETH 2.0 deposit contract receives around 40,000 ETH each day for its staking.

If the current pace continues, more than 15 million ETH will be staked into the contract by next year around the same time.

There is currently a waiting period for new nodes, as only 28,800 ETH can be spent daily creating new nodes

Ethereum 2.0’s Beacon Chain, which launched on December 1, is off to a good start with more and more users continuing to flock to the platform.

One of the key elements in this advancement in the network has been the adoption of a new verification method, with Ethereum moving from Proof of Work (PoW) to Proof of Stake (PoS).

This change means that users will now have to place their ETH on the network as a guarantee of validation. Previously, it was necessary to have computer software dedicated to mining.

For the initial launch of ETH 2.0 Beacon Chain , just over 500,000 ETH had to be staked on the network for it to reach its minimum level of security. This threshold of 500,000 ETH was reached relatively quickly, with a million ETH being “staked” a few days later.

Deposits keep pouring in

The current deposit contract balance is approaching 1.3 million ETH, with the contract receiving almost 40,000 ETH deposited per day.

Since users must deposit a minimum of 32 ETH into the deposit agreement in order to be eligible for a node , this number will not include users who have less than 32 ETH.

Although users are limited by this requirement, there are already exchanges and services that will allow users to deposit any amount of Ethereum they wish to staking, such as Kraken. Kraken launched its staking service for Ethereum 2.0 just a few days ago and has already placed 100,000 ETH on its exchange. This is a substantial percentage compared to the actual deposit contract.

On Twitter, internet user @antiprosynth posted an interesting statistic showing that the current deposit rate is almost three times the daily issuance rate of ETH. It is difficult to say whether deposits will continue at this rate. If this is the case however, it could create supply problems in the Ethereum market .

The whales are currently causing selling pressure, but soon the shortage could drive the price up again.

Bitcoin large investors, the so-called „whales“, are currently selling parts of their assets to institutional investors, while the shortage of the crypto currency is becoming increasingly acute.

As data from several sources show, although more and more Bitcoin (BTC) is paid in on crypto stock exchanges and offered for sale, nevertheless the demand, in particular by institutional investors, is still clearly larger than the existing supply.

Institutions do not let up

According to data from the crypto-market researchers at Coin98, the Grayscale asset management company bought up twice as many Bitcoin in November alone as were newly produced by Miner (see graph).
Grayscale purchases in November 2020. source: Coin98/ Twitter

Together with Square and PayPal, the other two big companies that are buying up more and more Bitcoin, Grayscale creates an imbalance between supply and demand, the logical consequence of which is a price increase.

Grayscale does not let up in December either, most recently buying up 7,000 BTC in just 24 hours, bringing the investment firm’s assets under management to more than $10.5 billion on December 4.
Grayscale purchases in the last 6 months. Source: Bybit

At the same time Bitcoin could crack in this week the past record high and climb toward the psychologically important 20,000 US Dollar, at which however substantial selling pressure opened up.

Subsequently, the market-leading crypto currency could catch itself however again with 18.100 US Dollar and climb back on 19.000 US Dollar, however the 20.000 US Dollar mark remains further a large hurdle. Driving force for it is probably that the „Bitcoin whales“ and long-term investors have at present a good opportunity to book out their profits, since institutions such as Grayscale continue to buy.
Bitcoin price development. Source: TensorCharts

This thesis is confirmed by the fact that the whales in this week increasingly deposited Bitcoin back on crypto stock exchanges, when the course ran up to the 20,000 US Dollar mark. So while the resulting selling pressure initially keeps the current climb in check, Bitcoin assets are moving behind the scenes from the whales to institutions like Grayscale and their clients.

Bitcoin assets on crypto exchanges (red line).

Wealthy investors are causing shortages

Even the mass media have now become aware of this development.

„The number of addresses that buy more than $1 million in Bitcoin and then take it off crypto exchanges has grown by leaps and bounds,“ CNBC reported accordingly on Thursday.

„This is an increase of more than 180 % since 2017, and analysts conclude that more and more wealthy investors are buying Bitcoin and then holding it offline“.

The shortage of the market-leading crypto currency will thus continue if the bought-up Bitcoin is immediately removed from circulation. All the more probable that Bitcoin can continue the current high-altitude flight, as soon as the whales no longer sell and the institutions continue to maintain their demand.

Profitable Bitcoin addresses.

Meanwhile, the number of profitable Bitcoin addresses reached a new record high on Friday, as new data from Glassnode shows.

Wall Street also seems to have acquired a taste for it, with several indices for crypto-currencies to be listed on the American stock exchange from January 2021.