By Matrixport Research

Summary

BTC Price Trend: Based on the 5 key BTC price indicators and data as of 31 December, BTC price looks stretched and could be due for a short-term correction. Market Trends: As Bitcoin price hit new heights, the broader ecosystem continues to develop. Several traditional institutions are actively participating in the growth, introducing digital asset exchanges and funds to allow investors to participate and trade cryptocurrencies. Venture capital funds have been actively raising new capital and investing funds into budding crypto startups as investors actively seek a multi-channel approach to invest in the industry. In our opinion, the recent developments bode well for the industry as public perception of digital asset have turned from “unorthodox” to one with more legitimacy. Abnormal Activity Tracker: There has been no abnormal activity observed in the month of December.

BTC Price Trend

Based on the 5 key BTC price indicators and data as of 31 December, BTC price looks stretched and could be due for a short-term correction. Overall:

  • NVTS is a short-medium term bull/bear indicator. Current NVTS value is 118.1, on the high end of the scale, indicating that BTC could be overvalued;

  • MVRV is a short-medium term bull/bear indicator. Current MVRV value is 3.15, on the high end of the scale, suggesting that BTC could be overvalued；

  • Mayer Multiple is currently 2.17 and has been rising rapidly, displaying strong bullish signals for BTC prices. However, it is near to the critical value that suggest a market bubble could be forming；

  • Bitcoin Difficulty Ribbon is a short-term buying indicator and has remained unchanged (still compressed compared to historical levels). Therefore, no price indicator could be derived；

  • During the timeframe of this report, funding rate has not shown any abnormality, therefore no 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

DBS Bank of Singapore has officially announced the launch of its digital assets exchange in Singapore, enabling Institutional Investors and Accredited Investors to tap into a fully integrated tokenization, trading and custody ecosystem for digital assets. With the DBS Digital Exchange, DBS will leverage blockchain technology to provide an ecosystem for fund raising through asset tokenization and secondary trading of digital assets including cryptocurrencies.

Standard Chartered bank has gathered a group of crypto exchanges for a new digital asset trading platform tailored to the institutional market. According to insider sources, the bank is looking to start operations in UK first, followed by Europe and Asia. The news was leaked by trusted sources within the bank although the bank has not comment on the development. The digital exchange is expected to be launched in 1st quarter of 2021.

An Ethereum-based fund, 3iQ has completed its initial public offering (IPO) on the Toronto Stock Exchange (TSX). 3iQ announced the sale of more than 7.2 million Class A and F units totaling gross proceeds of around $76.5 million. The Ether Fund Class A Units, aimed at all investor types, have opened for trading under the symbol QETH.U. 3iQ has also launched a similar Bitcoin fund in early 2020. The funds are aimed to provide investors with the ability to purchase shares in the fund and receive exposure to changes in Bitcoin/Ether’s price over time.

Sygnum, a digital asset finance firm with a Swiss banking license, has tokenized its shares on its own distributed ledger platform as it develops plans for a public offering. The tokenization of shares provides investors with a fully regulated and highly efficient alternative ways of raising capital. The issuance lays the foundation for a potential dual listing of shares in Switzerland and Singapore in partnership with the SIX Digital Exchange

Commentary: An increasing number of traditional institutional players are getting involved in the digital asset industry. Banks and financial institutions are offering investors safer and traditional ways to invest in cryptocurrencies. This budding trend will help to attract new customers (who were fearful of “unregulated” crypto exchanges) off the sidelines with its more reputable offerings. This should help to broaden the investor base, reduce volatility and boost prices going ahead.

South Korea’s blockchain firm, Hashed, raised $120m venture fund to invest in digital assets. The fundraise was one of the numerous venture capital funds raised globally that are focusing on investing in the blockchain and digital assets industry. As institutional interest continues to heat up in the space, investors are not only pouring in money into crypto hedge funds but are also focusing on the venture capital space in bid to find the next big hit.

Venture capital deals continue to accelerate in December as more startups are taking advantage of the heightened interest in the industry. Notable deals include Flexa Network, a payment processor for cryptocurrencies, and Tidal Finance, an insurance startup that is based on the Polkadot network. DeFi protocols are continuing to rake in millions of dollars of investments as the sector remains one of the key focus within the ecosystem.

**Commentary: The digital asset ecosystem continues to undergo a holistic development as different vectors of the industry continue to receive support and funding globally. Venture capital for digital assets has received considerable support as institutional investors seek a multi-channeled approach to invest in the industry. The growth of startups should boost the legitimacy of the industry, increase the number of real-life use cases, thus reducing the notion of digital asset being “pure speculation” in the public’s eye. **

The U.S. Securities and Exchange Commission (SEC) sues Ripple over its illegal sales of XRP token. The SEC believes Ripple Labs violated federal securities laws in selling the XRP cryptocurrency to retail consumers. According to a lawsuit filed, Ripple raised $1.3 billion over a seven-year period to retail investors through its sale of XRP on an ongoing basis without providing the type of financial and managerial information typically provided in registration statements and subsequent periodic and current filings. The first pretrial conference for the case is set on 22 February 2021 where the two parties will meet over video call to hash out the details and charges of the case.

Binance US is suspending XRP trading and support for its US based customers. Since the SEC lawsuit against Ripple, numerous notable exchanges have delisted or suspend XRP trading or markets. Exchanges include Coinbase, Crypto.com, Bitstamp, OKCoin, Bittrex, Galaxy Digital, Genesis Global Trading. In reaction to the news, crypto money manager Bitwise liquidated $9.3m worth of XRP in its crypto index fund and reinvested the proceeds in other assets.

Liquidations for XRP futures contracts have soared in December as SEC lawsuit and token airdrop whipsaw the market. Over $1.5b worth of XRP future contracts have been liquidated in December. Both events – the airdrop and the lawsuit – have pushed XRP price volatility to its highest level since July 2018. In addition, Jed McCaleb, Ripple co-founder sold over $120m worth of XRP in December, the highest in the recent months.

Ripple’s investee company, MoneyGram, has taken a wait and see approach regarding the lawsuit against Ripple. MoneyGram noted that it has yet to see any negative impact on its longstanding business arrangement with Ripple. MoneyGram has continued to use Ripple’s services to trade with its other traditional FX trading counterparties as per the terms of the agreement with Ripple. Other notable partners such as SBI Holdings and PNC Bank have continued to use Ripple’s suite of products and services.

Commentary: Since the announcement of the SEC lawsuit, many exchanges have delisted or suspended XRP as they fear being implicated and having to register as a security exchange. With the dwindling support of exchanges and looming lawsuits, many investors (both institutional and retail) have sold their holdings. Unless the lawsuit is resolved amicably, it is unlikely XRP will regain its losses and stem the wave of liquidation. However, it is noteworthy that its financial partners are still backing Ripple and utilizing its technology. This should help act as a support for XRP as Ripple retains its value proposition amongst institutional users.

Abnormal Activity Tracker

There have been no signs of abnormal activities on the Bitcoin and Ethereum network in the month of December.

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.