By Matrixport Research

Summary

BTC Price Trend: Based on the 4 key BTC price indicators and data as of 31 May, BTC prices do not exhibit any clear trends.

Market Trends:

  • More traditional firms are recognizing the growing importance of cryptocurrencies as a form of payment/store of value. With increasing utility and channels for cryptocurrencies, the asset is slowly shedding its reputation as an asset of pure speculation. In addition, more traditional finance giants are entering into the space, offering a bevy of crypto-centric products and services. These moves help to add a layer of legitimacy for the budding crypto industry.

Abnormal Activity Tracker: Due to power restrictions faced by the miners in the Sichuan province, the total hashrate fell sharply in the third week of May. In addition, the region is also undergoing a delay in the wet season, resulting in a decrease in electricity generation, making conditions unsuitable for Bitcoin mining. It is likely the hashrate will remain low till conditions in the region improve. No abnormal activity detected on the Ethereum blockchain. 

BTC Price Trend

Based on the 4 key BTC price indicators and data as of 31 May, the BTC has reached a low point with the market in bear territory. The indicators suggest that the market has yet to form a clear trend and could easily move either direction. Overall:

  • NVTS is a short-medium term bull/bear indicator. Current NVTS value is 51.8, on the low end of the scale, the lowest level it has been in months, therefore, it is likely BTC is slightly undervalued;

  • MVRV is a short-medium term bull/bear indicator. Current MVRV value is 1.86, around the mid-point of the scale, suggesting a lack of clear direction；

  • Mayer Multiple is currently 0.88, indicating that the market has entered into the bear territory, it remains unclear if the market is primed for a bounce back or will continue to stay in the bear territory for a longer period of time;

  • Funding rate did not reach abnormal levels during May. No clear short-term price signals are provided.

As discussed per our previous report “Price Indicators Deep Dive and Bitcoin Price Analysis”, there are limitations to the aforementioned indicators, and these indicators should only serve as suggestions and not investment advice.  

Market Trend

Palantir Technologies, owned by Peter Thiel, has begun accepting the crypto as a form of payment and is looking to invest in Bitcoin as a treasury reserve asset. The publicly listed software company has $151m in adjusted free cash flow that could be invested in Bitcoin and other investments. Peter Thiel, Palantir’s co-founder and chairman, has invested in several crypto startups through his funds.

MoneyGram International announced that it will allow customers to buy and sell Bitcoin for cash at 12,000 U.S. retail locations through a partnership with Coinme. In addition to the existing 6,000 supermarket kiosks, Moneygram plans to introduce bitcoin trades in another 20,000 stores across 32 states by 3Q2021. The rollout will vastly expand U.S. investors’ access to brick-and-mortar crypto touchpoints.

Samsung is connecting its smartphone’s cryptocurrency wallet to Ledger storage devices. The Samsung Blockchain Wallet that comes with Galaxy smartphones will support Ledger Nano hardware storage devices, designed specifically for the safekeeping of cryptocurrency. The company will release a software development kit that allows third parties to create “D-apps,” which could include things like paying for goods and services in crypto by scanning a merchant’s QR code. The launch signals Samsung’s intention within the crypto ecosystem.

Commentary: The crypto industry is slowly evolving as more traditional industries look to participate in its growth and offer new utility to cryptocurrencies. Once seen as an asset of pure speculation, the industry has slowly gained acceptance amongst the public and evolved to become a form of payment and currency. This bodes well for the long-term value and development of the crypto industry.

U.S. hedge fund giants Millennium Management, Point72 Asset Management and Matrix Capital Management are preparing to set up cryptocurrency-focused trading funds. These traditional hedge funds are not just setting up dedicated cryptocurrency investment vehicles but are also looking to invest/start using DeFi platforms.

Singapore-based DBS Private Bank launches Asia’s first cryptocurrency trust service backed by a bank. DBS is offering its clients the ability to invest and manage up to four assets through the bank’s wholly owned, licensed trust company DBS Trustee. The assets are Bitcoin, Ethereum, Bitcoin Cash and XRP, which are all hosted on the bank’s digital asset exchange that launched late last year. The fiat trading pairs on the exchange are the Singapore dollar, Hong Kong dollar, U.S. dollar and Japanese yen. The bank also offers tokenization of securities and other assets as well as providing bank-grade custody for digital assets.

Commentary: Once spurned by traditional financial giants, the crypto industry continues to mature and has continued to attract the big players within the traditional financial industry to participate in its growth. The aforementioned moves add a layer of legitimacy to cryptocurrencies and provides large players with a means to invest in digital assets they consider safe.

Block.one has launched a subsidiary, Bullish Global, with $10 billion in funding backed by prominent investors including Mike Novogratz and Peter Thiel. Bullish Global will operate as an independent subsidiary under Block.one, the developer of the EOSIO blockchain. The new venture will be focused on the launch of a crypto exchange called Bullish, which aims to offer automated market making, lending and portfolio management.

Balancer Labs has released version 2.0 of its automated market maker (AMM). The upgrade, which has been in development for more than a year, offers a generalized protocol for AMMs operating within the DeFi sector. With v2, all pools managed by Balancer will now be administered from a single vault. Additionally, Balancer’s v2 introduces asset managers or external smart contracts where the underlying value of a liquidity pool can be used elsewhere in the DeFi sector where previously they are often left unused.

*Commentary: The decentralized exchange space within the crypto industry continues to grow as an increasing number of firms see potential in the space. Companies are launching new decentralized exchanges while existing decentralized exchanges continue to update and innovate their existing protocols. Should the new exchanges/new updates prove to be success with users, it is likely that the native tokens of these exchanges will experience a bump in prices. *

Abnormal Activity Tracker

In the third week of May, Bitcoin experienced a sharp drop-in total hash rate as due to restrictions faced by miners in the Sichuan district. The Bitcoin network’s hash rate has suffered a short-term loss as miners in China’s Sichuan region are facing temporary power limitations. The State Grid in Sichuan’s Aba county, one of the mountainous areas in the province that houses hydropower plants, issued a notice on May 16, requiring local energy-intensive enterprises to limit their power consumption as the province is currently facing a surging utility demand. Sichuan is undergoing a delay in the wet season, which decreases electricity generation, making conditions unsuitable for Bitcoin mining.

With the sharp rise in Ethereum price in early May, average transactions fees continue to be increase on the Ethereum network. However, there is no abnormal activity detected on the Ethereum blockchain. 

Market Statistics

In the month of May, the derivative market witnessed a shift in trend.

Disclaimer

Matrixport provides this analysis as general information only. Matrixport accepts no responsibility for the accuracy or completeness of any information herein contained and Matrixport shall not be responsible for any loss arising from any investment based on any forecast or other information herein contained. The contents of this materials should not be construed as an express or implied promise, guarantee or implication by Matrixport that the forecast information will eventuate. The cryptocurrency market is highly volatile. Buying, selling, holding, or investing in cryptocurrencies or related product carries various risks and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before participating in the cryptocurrency market. Matrixport is not acting as a financial adviser, consultant or fiduciary to you with respect to any information provided. Any information available here is “general” in nature and for informational purposes only.