Crypto Ecosystem

Could the rest of the year be green for Bitcoin?

, November 2, 2023

In this week’s crypto highlights, we explore the price movements of BTC, SHIB, GAS, and INJ. Additionally, this recap includes other notable industry news items that occurred over the last seven days. Without further ado, let’s dive into the latest market developments.

Noteworthy market events

The U.K. government published its final proposal for crypto rules, stablecoin regulations 

The U.K. His Majesty’s Treasury published its reportedly final rules for the crypto ecosystem,  bringing various crypto activities under the oversight of the Financial Conduct Authority (FCA). Notably, the proposal does not address decentralized finance (DeFi), as the government seeks international collaboration before regulating it.

The U.K. Treasury plans to introduce these pieces of legislation in phases, with the regulation of fiat-backed stablecoins to be implemented early next year. Local companies may become  “arrangers of payment,” authorized by the FCA, responsible for ensuring an overseas stablecoin meets local standards.

Non-fiat-backed stablecoins, including algorithmic ones, will not be allowed into regulated payment chains. Although the document doesn’t impose a direct ban, it categorizes such transactions as “unregulated,” and subjects them to the same requirements as unbacked crypto assets.

Polygon’s POL contract went live

On October 25, the Polygon Labs team implemented a smart contract on the Ethereum mainnet for the new POL token. This token is intended to replace MATIC as part of the Polygon 2.0 update. In a blog post, the Polygon team said that POL “will power a vast ecosystem of zero knowledge-based layer 2 (L2) chains.”

POL also paves the way for other aspects of the Polygon 2.0 roadmap, including the launch of a separate staking layer to power Polygon L2s, the upgrade of the current proof of stake (PoS) mechanism to zkRollup, and the development of a shared liquidity protocol.

The developers stressed that POL hasn’t yet been integrated into existing Polygon operations, meaning for now that network participants don’t need to swap their MATIC.

Circle will phase out stablecoin minting for retail users

Circle, the USDC stablecoin issuer, notified its customers that individual accounts will be closed on November 30, as part of the company’s strategic review. Wiring and minting will no longer be supported for retail users after that date. However, business and institutional accounts will continue to be available.

Circle’s recent action sparked speculation, with theories around it ranging from depleting reserves, to streamlining costs and restructuring. The company refers to these individual accounts as “legacy consumer accounts,” suggesting they’re no longer in active use. Additionally, Circle pointed out that “hundreds of services worldwide, via retail exchanges, brokerages or wallet services, are available for individuals wishing to purchase or redeem USDC.”

This decision resembles a move toward a practice adopted by Circle’s main competitor, Tether, which limits USDT minting and redemptions to a $100,000 minimum threshold.

Kraken will share user data with the IRS 

The Kraken crypto exchange will send information to the U.S. Internal Revenue Service (IRS) about 42,000 customers who exceeded $20,000 in transactions during any single year from 2016 to 2020. User details will be shared with the IRS in early November to comply with a court order.

The platform will have to disclose the names, dates of birth, physical addresses, phone numbers, and Tax IDs of users. The company’s website says the IRS initially demanded a wider range of records and data, including IP addresses, employment information, and sources of funds.

One sentence news

  • Gemini filed a lawsuit against Genesis Global, its former partner for the Gemini Earn product, over 60 million shares of the Grayscale Bitcoin Trust (GBTC) that were pledged as collateral.
  • Ethereum developers confirmed that the anticipated Dencun upgrade will not be implemented in a network before the end of 2023.
  • The Marshall Islands recognized decentralized autonomous organizations (DAOs) as legal entities.
  • The Turkish government revealed its plans to tax cryptocurrencies and establish a regulatory framework for digital assets next year.
  • A popular Telegram-based trading platform, UniBot, experienced a token approval exploit on its new router, resulting in $640,000 in losses.
  • dYdX developers launched their own Cosmos-based L1 blockchain.

Notable price performances

Bitcoin is arguably facing increased demand among institutional market participants

As we mentioned a month ago, the last two times Bitcoin experienced a green September, the rest of the year continued green for the asset. In 2023, this pattern has the chance to repeat, as Uptober officially delivered, causing a 28% Bitcoin price increase last month. Furthermore, Bitcoin historically has had its highest average returns (+40%) in November. However, this metric is heavily weighted by November 2013 performance, when Bitcoin soared by almost 450%.

One of the catalysts behind the recent Bitcoin rally is believed to be increased interest in the largest cryptocurrency among TradFi traders. For instance:

  • Bitcoin futures-based ETF, BITO, saw its trading volume surge by over 420% in a week. According to Bloomberg’s ETF analyst Eric Balchunas, it was the second-largest performance for this ETF since its “wild first week.”
  • GBTC reduced its discount to a two-year low, and showed a more than 220% price increase over the last 10 months, outperforming Bitcoin and all S&P 500 stocks. 
  • Chicago Mercantile Exchange (CME) became the second-largest Bitcoin futures marketplace, and is close to surpassing Binance by open interest.
  • According to CoinShares, crypto-focused investment funds experienced the largest weekly inflows over the last 15 months. Bitcoin-related funds accounted for 90% of all them.

In addition, the Bitcoin options market hints at a potential gamma squeeze. Put options, or bearish bets tied to Bitcoin price, are trading at a discount, offering a rare opportunity for bulls to hedge at cheap valuations. In addition, call options saw a significant demand, driving put market makers in the “short gamma” zone. This means that as the Bitcoin price moves higher, market makers could potentially need to buy more BTC to hedge and maintain a market-neutral position. A gamma squeeze was also considered to be one of the catalysts that helped Bitcoin reach $35,000.

Amid these positive market developments, the Bitcoin price continued its consolidation, after the latest rally. During this period, the price reached a new 2023 high, approaching $36,000. This consolidation also resembles the shape of an ascending channel (white channel), hinting at a potential formation of the flag pattern

In some cases, instead of a sloped rectangle that counters the established trend, the flag’s slope may follow its direction. It implies that this trend may be even stronger. If the potential flag pattern is confirmed, Bitcoin price may explore $40,000.

However, the daily RSI is still in the overbought zone, suggesting that a price consolidation has the potential to continue. Alternatively, this means the asset may experience a correction before a theoretical upward movement. The 0.236 and 0.382 Fibonacci points could act as the next potential targets for bears.

SHIB price took advantage of token burns

Over the last week, more than 500 million tokens were burned, arguably helping the SHIB price maintain its recent bullish momentum. In addition, on October 28, Shiba Inu announced the Shib Name Service (SNS) that allows users to personalize their names and control their identity on the Shibarium L2 network.

Amid this news, the SHIB price approached the 200-day SMA. However, since that time, the asset has been experiencing a price correction. The following price movement could depend on whether or not the 20-day EMA remains defended. 

GAS doubled in price amid Neo sidechain news

The GAS price surged by over 140% in a week, amid news that Neo is set to create an Ethereum Virtual Machine (EVM)-compatible sidechain that would increase the utility of GAS tokens. One of the standout features of this sidechain would be resistance to certain types of attacks, such as frontrunning and sandwich attacks.

As a result, GAS became one of the best-performing assets within the week, and rapidly teleported to the overbought zone on weekly and lower timeframes. A bearish divergence was arguably formed on the four-hour chart, hinting that the asset may soon experience a price correction. The closest targets for the bears could be near $6.26, and/or $5.48.

INJ soared following integration with Google Cloud

Injective maintained its reported status as the best-performing digital asset in 2023, among the top 100 digital assets by market cap. At the time of this writing, the INJ price has surged by more than 1,100% year-to-date. The asset has recently continued exploring new highs, showing 18 green daily candles over the last three weeks.

One of the catalysts behind the latest rally could be Injective’s integration with Google Cloud’s data exchange platform, CloudHub. In addition, the Injective ecosystem experienced increased user activity, despite arguably minor changes in total value locked (TVL).

The asset reached the overbought zone with RSI and Stochastic, suggesting that a price consolidation, or correction, could follow. However, the Awesome Oscillator (AO) is showing decreasing peaks on lower timeframes, hinting that bullish momentum might be fading.

Tune in next week, and every week, for the latest CEX.IO crypto highlights. For more information, head over to the Exchange to check current prices, or stop by CEX.IO University to continue expanding your crypto knowledge.

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Disclaimer: For information purposes only. Not investment or financial advice. Seek professional advice. Digital assets involve risk. Do your own research.


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