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Crypto Market Analysis: 2nd November 2020

Crypto 2020/11/02 19:23 by Guest Author

Global markets tumbled midweek as continued fears of further coronavirus lockdowns rattled investors. Contrastingly, bitcoin made a dramatic surge towards $14,000 before dipping back down to $13,000. Towards the end of last week, we saw another push upwards, briefly breaching the $14,000 level.

Simon Peters, analyst, eToro: Bitcoin rises as analysts run out of superlatives 

Last week saw bitcoin continue to blister through the $13,000 level, even touching $14,000 before dipping again. Despite these fluctuations in movement and the rapid dip following the rapid rise, I am happy with where we currently stand. It has been 12 years since Satoshi Nakamoto released their white paper on the world’s first cryptoasset, which sparked monumental change in how we think about currency. It is now the dominant force in a huge sector, with a community at its back and plenty of growth at its front.

From here I would like to see the $13,000 level act as a new base, from which we can then again push beyond the highly touted $14,000 resistance level.

In terms of how we make that approach, I think we should sit back and let it happen naturally. We are in a positive place right now and it will filter through to price. However, that’s not to say that a spark wouldn’t go amiss; a positive news development such as a confirmed fiscal stimulus package from the US government could push the price towards the $14,500-$15,000 mark. And whilst it usually takes a while for fiscal stimuli to filter back into the real economy, I would expect a more instantaneous reaction when the details and specifics are finally confirmed.

It seems that we will have to wait until after tomorrow when the US goes to the polls before we see any further clarity. At least we know that stimulus remains a high priority on both Trump and Biden’s agendas.

But what of the use and proliferation of cryptoassets in general? Would crypto benefit from Republicans or Democrats being in charge? It isn’t so black and white. There are politicians on both sides who are pro-crypto, and there are politicians on both sides who are anti-crypto. It all boils down to the specific representatives that are elected and what paths they will look to take. What we do know is that the US election is clearly going to be a gamechanger, even at the base level of being the event that precedes the stimulus.

David Derhy, analyst, eToro: Worth keeping an eye on DeFi 

There is no doubt that summer saw an exceptional boom in interest in Decentralised Finance (DeFi). Google Trends shows that the people searching for DeFi hit its peak in the last week of August and the first week of September. Since then, searches have dropped off by 62%.

But does that mean interest in DeFi protocols has tailed off? Not according to the amount of capital continuously being pumped into such protocols. The current figure, according to DeFi Pulse, stands at $11.02bn. What that means is that interest and the use of DeFi platforms continue to grow, but seemingly without the crazy hype from the summer. To me, that is not necessarily a bad thing. It is healthy that we see the end of the buzz but interest continues, as it highlights and is indicative of the genuine value that the crypto community places on DeFi. Or at least, some of the crypto community, as labeling such a group as homogenous would be inaccurate!

Exchanges should keep supporting projects that have garnered investor interest. At eToro we recently announced our support of Flare, with those holding XRP on our investment platform or crypto exchange to be included in the network’s snapshot, determining how many Spark tokens they will receive.

David Derhy, analyst, eToro: JPM could be the initiator in the crypto bank race 

Last week J.P. Morgan’s global head of wholesale payments Takis Georgakopoulos, said that the firm is about to use its own cryptocurrency for a commercial transaction.

Whilst this news is not likely to set many in the crypto community alight, most of whom are not going to use the bank’s own cryptoasset the JPM Coin, it still provides an exciting opportunity for the future.

This new cryptoasset could act as a gateway into the sector. J.P. Morgan clients could use such a token and then potentially look to take it onto an exchange and trade into other coins.

It could also prove to be the initiator for other banks and large scale financial institutions to start, continue, or speed up their own crypto and blockchain operations. It is positive to see that, having made a 180, J.P. Morgan and other iconic stalwarts of the current economic system are appreciating the whole host of benefits blockchain and crypto can bring to businesses.

 

This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without having regard to any particular investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as a reliable indicator of future results. 

All contents within this report are for informational purposes only and does not constitute financial advice. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilizing publicly-available information.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk.

Image by Free-Photos from Pixabay

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