In Markets

Bitcoin has been on a wild ride this week falling from almost A$73K to below A$61K, before staging a 13.5% recovery in the past 24 hours. BTC finishes the week down 5.1% and is trading at A$68,800 at the time of writing. Ethereum meanwhile broke into new all-time highs around A$3,386 on April 22 and finished the week up 13.6% at A$3,233. It’s up 50% against BTC in the past month and there’s much speculation it’s poised for an even bigger move — Real Vision CEO Raoul Pal is thinking of selling all his BTC for ETH. Bitcoin’s rocky ride saw a wider pullback with XRP down 4.4%, Polkadot (-8.4%), Litecoin (-9.4%), Bitcoin Cash (-10.1%), Chainlink (-7.4%), Stellar (-7.4%) and Synthetix (-4.4%). Most altcoins are substantially in the green today however and Aave finishes the week up 10.3%.


In Headlines

The bad news

Bitcoin fell below the US$50K mark late last week, with the market cap dipping under US$1 trillion. Pundits blamed the fall on President Joe Biden’s proposed capital gains tax hike which would almost double the rate to 39.6% for households making more than $1M — while that’s only about 0.3% of all households plenty of crypto holders could be caught. Veteran trader Peter Brandt thinks the danger is that large amounts of BTC could be dumped on markets to avoid CGT before it comes into effect. Messari CEO Ryan Selkis however thinks the CGT hike could be bullish news for DeFi, encouraging holders to lock crypto in DeFi to borrow against it, thereby avoiding a CGT event.

The good news

The Relative Strength Index for Bitcoin dropped as low as 31.93 this week. Bitcoin hasn’t been as oversold since Black Thursday in March 2020 suggesting it may be undervalued. Real Vision CEO Raoul Pal noted that weekly RSI had hit levels comparable to “the first part of the 2017 bull run, before Bitcoin hit hyperspace.” Around 86% of Bitcoin addresses are currently in profit. The Fear and Greed Index tumbled from 74 (greed) last week to 27 (fear) today. With markets on the rebound, this metric can sometimes indicate a buying opportunity.

Tesla takes profits

Tesla’s quarter one earnings report show the electric car maker sold off US$272 million of its Bitcoin holdings. Tesla announced in February it had bought $1.5B of Bitcoin at some point in January. At the end of Q1 it still had $1.33B of BTC on its balance sheet. Bitcoin’s value has increased by 20% since then.

Ripple is harassing us: SEC

The US SEC is upset with Ripple, now that the shoe is on the other foot thanks to a recent court decision granting Ripple access to SEC docs about the classification of various coins as securities. The SEC called it “gamesmanship” and claimed Ripple “do not actually seek relevant evidence, but rather seek to harass the SEC, derail the case’s focus away from its merits, and bog down the SEC with document review.” The SEC has also filed a motion to dismiss one of Ripple’s defences. CEO Brad Garlinghouse reassured XRP holders there is no need to worry as “we are on the right side of the law” although he pointed out a resolution could still be a long way off.

Ethereum gas limit increased

After spiking as high as 500 gwei in late February and 300 gwei on April 20, gas fees on the Ethereum network have plunged to around 50 gwei today. Miners have raised the gas limit to almost 15 million in an effort to reduce congestion following technical changes made in the recent Berlin hard fork. This is the seventh time in the network’s history the limit has been increased. Bitcoin fees meanwhile hit A$79 on April 21, equaling the ATH from December 2017. It’s been blamed on the fall in the hash rate from a temporary power outage in China. Fees have since dropped back to around $30. One thing to note here – when priced in BTC, fees are a long way off their 2017/2018 top due to the BTC price being almost 3 times higher.

DeFi addresses top 2 million

The total number of unique addresses that have interacted with DeFi applications doubled in the past five months to two million. That suggests we’re still very early in DeFi adoption. DeFi pulse suggests the total value locked in the sector hit a record US$62.4B on April 16.

DeFi-Pulse-USD-total value

Normal service will resume shortly

Despite the recent volatility in the Bitcoin price, the bull market is far from over according to Stock to Flow model creator PlanB. He pointed out Bitcoin has gone up for six months in a row and released a chart overlaying the last three post halving bull runs, stating: “This looks like the mid-way dip that we also saw in 2013 and 2017.” In fact, the dips have been much worse in the past: in 2013 the price crashed 75% between April and July, while in September 2017 Bitcoin fell 40%. On both occasions the coin’s upwards trajectory continued on after. Bitcoin this week has been trading about 40% below the price predicted by the S2F model, meaning you could be snapping up a bargain if the model ends up playing out.

Until next week, happy trading!