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What does Bitcoin’s Sentiment say about its future?

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When the weekend started, Bitcoin’s price had slumped to $16,788. By the end of it, however, Bitcoin was trading close to $18,147. The positive commentary from institutional buyer Guggenheim Partners helped retail traders remain optimistic about the Bitcoin market, despite the 15.6 percent retracement seen on Thanksgiving.

This was evidenced by the latest surge in Bitcoin Sentiment on Twitter. In fact, since the historic bull run of 2017, Twitter has registered such a degree of positive sentiment only three times, this time being the fourth.

Bitcoin Sentiment on Twitter || Source: Santiment

The weighted social sentiment v. BTC price chart highlighted that while post-July 2020 there was an increase in positive sentiment, it was nowhere close to the highs being recorded on the charts right now. The said sentiment is a reflection of the optimism among retail and institutional traders. This was further evidenced by the fact that Open Interest and trade volume on derivatives exchanges were higher than the monthly average, based on data from Skew. 

Such trading enthusiasm usually translates into profitability for traders willing to switch from narrative to narrative, until they arrive at the best fit for the market cycle and the season. The post-halving narrative of “buying the dip in BTC” gradually changing to the “store of value” narrative in August 2020 was a perfect example of the same. It coincided with the time when Bitcoin’s correlation with Gold was high, and now as it continues to drop, the narrative has shifted to “high returns and profitability.” There are more longs in the short-run than shorts.

Additionally, there have been several institutional updates that are bullish for Bitcoin’s price, like the Guggenheim Fund’s decision to invest up to $500M in Bitcoin and PayPal’s decision to enable crypto as a funding source for purchases in the future. This enthusiasm has helped Bitcoin’s price overcome weekend blues and start trading above the critical $18,000-level.

The sentiment is currently positive for longs and the trade volume on spot exchanges is reflecting the same. Further, amidst rising positive sentiment, the ROI on Bitcoin is recovering from the drop on 26 November, with the same noting a figure of 31.68 at press time, based on data from CoinMetrics. 

ROI on BTC || Source: Coinmetrics

The ROI may increase even further as the demand generated on spot exchanges absorbs the available supply. In fact, Bitcoin’s supply to spot exchanges has increased by 2% since 24 November 2020 and such a rise in supply should ideally be matched by the demand, for the price to continue rallying. Though further corrections/pullbacks are expected by most on-chain analysts, the current rally to $18k is a welcome relief from weekend slumps. 

Source: https://eng.ambcrypto.com/bitcoin-sentiment-future/

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US SEC charges crypto trader ‘Coin Signals’ in $5 million fraud case

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United States Securities and Exchange Commission (SEC) charged a cryptocurrency trader for allegedly being involved in a ponzi scheme defrauding more than $5 million from over 170 investors. The accused, Jeremy Spence, who goes by the name “Coin Signals,” was charged in Manhattan Federal Court for “soliciting funds” for various crypto funds that he operated. 

Federal authorities claimed that Spence operated a Ponzi scheme and that his offenses include “commodities fraud and wire fraud.” According to SEC, investors transferred Bitcoin and Ethereum to Spence, so that he could invest the assets on their behalf.  

Federal Bureau of Investigations (FBI) Assistant Director-in-Charge William Sweeney Jr claimed that Spence enticed investors by giving them false information about the “success of his investment platform.” The trader allegedly used money from new investors to pay off others in order “to keep his plan moving” which the FBI Director said was “a  typical marker of a Ponzi scheme.”

The official complaint read:

Spence solicited investments for several Funds, the largest and most active of which were the Coin Signals Bitmex Fund, a/k/a the “CS Mex Fund,” the Coin Signals Alternative Fund, a/k/a the “CS Alt Fund,” and the Coin Signals Long Term Fund. 

Manhattan US Attorney Audrey Strauss alleged that Jeremy Spence lured investors to his crypto “investment scam” by promising returns of up to 148%.  The Attorney further said:  

Spence’s investments not only failed to reach his audacious claims, they consistently lost money, leaving a $5 million void in his clients’ crypto accounts.

According to the Commission, Spence was arrested this morning in Rhode Island. He could face nearly 30 years in prison if authorities convict him on all charges. 

Source: https://ambcrypto.com/us-sec-charges-crypto-trader-coin-signals-in-5-million-fraud-case/

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Bitcoin has become a good long-term investment: Former WH Communications Director

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Anthony Scaramucci, former White House Communications Director, and founder of SkyBridge hedge fund made bullish statements about Bitcoin and called it “a good long-term investment.”

While predicting upcoming volatility and correction, Scaramucci believed the digital asset would only increase in price.

Alongside SkyBridge Partner and the Chief Operating Officer, Brett Messing, Scaramucci claimed that the asset declined in risk and was as safe as owning bonds and gold. The duo argued: 

Increased regulations, improved infrastructure and access to financial institutions — like Fidelity — that hold investors’ money have made bitcoin investments as safe as owning bonds and commodities like gold, which are also used to balance portfolios.

In short, bitcoin has matured — though it’s still in an early adoption phase — and now offers significant long-term value.

Recently, former senior chairman of Goldman Sachs, Lloyd Blankfein shared his opinion on how government regulations could get in Bitcoin’s way. The investment banker thinks that in such an event, perhaps investors could comply with new rules, but it would cost them their privacy, a key property that attracts investors to Bitcoin, in the first place. 

However, according to Scaramucci the value of the digital asset had strengthened because of increased regulation and scrutiny. In his latest opinion piece, Scaramucci said Bitcoin was a viable hedge against inflation for long-term investors.

Additionally, the exec believed that Bitcoin’s market capitalization was the strongest indicator of its value:

If we were to look at that through the prism of the S&P 500, it would make bitcoin a top 10 company in the world, having gone from zero to half a trillion in just 12 years. Only a few companies, like Facebook and Tesla, have grown that fast.

A month ago, Anthony Scaramucci planned to launch a new Bitcoin fund – named SkyBridge Bitcoin Fund L.P, which could seek “exposure to digital assets.”

Source: https://ambcrypto.com/bitcoin-has-become-a-good-long-term-investment-former-white-house-communications-director/

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The GBTC story – How Grayscale determines Bitcoin’s price, future

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Grayscale’s dropping BTC premium is sounding alarm bells for investors and traders alike. Alarm bells isn’t an understatement, especially since the premium plummeted to 2% from about 30% back in December 2020. What does this mean? Well, the premium may have been the only motivation for institutions to invest in GBTC, and not Bitcoin.

This irrational motivation and market were explored by Peter Schiff during a recent talk. Drawing a parallel between Bitcoin and Gamestop, Schiff highlighted the red flags in Michael Saylor’s argument for buying Bitcoin using cash from the balance sheet of institutions. Saylor had underlined this move as a hedge against inflation. According to Schiff, however, if you buy Bitcoin under the flawed line of reasoning that its price will go up in the future, relying on future buyers to generate demand and buying is just as good as buying Gamestop. 

Source: YCharts

This fuels the question – What makes Bitcoin different this time around, and why buy now and not before?

The argument is that Bitcoin’s price rally is centered on institutional buying and the digital gold narrative. The key here is that institutional buying is an investment in GBTC, and institutions are buying GBTC for a premium. Once the premium drops, the demand is expected to drop, and the same is what has happened.

What does this entail? Well, the drop in demand suggests that there may be a pause, or worse, a stop in institutional buying of GBTC, and this also highlights the possibility of the siphoning off of Bitcoin demand. As expected, this may lead to a drop in price. The price drop will be followed by a further drop in demand, and the direction of investment flows would change to accommodate the next best opportunity – If not a premium, then a discount. 

Just as institutions lined up for Grayscale’s premium (That was the equivalent of free money to most as the profits from the appreciation in Bitcoin’s price were passed on to them), they may line up for discounts. Seeing that Grayscale has been the largest buyer, pooling institutional investor resources in GBTC, a drop in demand from Grayscale may be the final nail in the coffin for Bitcoin’s demand.

The price hasn’t experienced a free fall as of now, but it wouldn’t be wrong to say that there is a probability that there may be one in the future. A drop in premium may lead to a point where GBTC is discounted, and this could be the turning point for Bitcoin. The leftover demand may move towards GBTC, siphoning off further demand and the price of Bitcoin.

Simply put, GBTC that fed Bitcoin with demand and a price rally for all of retail and institutions, may turn against it, and with the changing tide, it might take demand and investment flows away from Bitcoin. Does this mean that GBTC will replace BTC altogether? That’s a tricky question to answer, but for institutions, Bitcoin may become synonymous with GBTC, instead of the other way round. 

Such a hypothesis posits an uncertain future for Bitcoin’s price and for institutions and retail traders buying Bitcoin at the press time price level. However, this may only be the beginning. If GBTC premiums drop further, a different story may unravel.

Source: https://ambcrypto.com/the-gbtc-story-how-grayscale-determines-bitcoins-price-future/

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Polkadot Price Analysis: 26 January

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Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice

Polkadot has been one of the market’s top performers in 2021, with the cryptocurrency’s price action speaking for itself. In fact, since 28 December, the crypto-asset has risen by a whopping 300%, a figure that highlights its tremendous rise on the charts.

After avoiding corrections for a week, the asset seemed ready for a period of drawdowns. However, the crypto’s market structure was flashing ambivalent signals at press time, with DOT registering a market cap of $14.97 billion while ranked 4th on CoinMarketCap’s charts.

Polkadot 4-hour chart

Source: DOT/USD on Trading View

In the 24 hours before press time, Polkadot suffered a slump on the charts, with the asset dropping down to $16.42. However, the long-term chart highlighted the presence of an ascending triangle, one which predominantly kept bullish expectations alive. Further, the Market Structure dictated that the possibility of the price moving in the direction of the green line was true. It should be noted though that there have been cases of fakeouts in the past.

If Polkadot’s period of correction takes place over the next couple of weeks, the possibility of the asset consolidating down to $14.50 is widely probable. One of the major reasons for the same would be market exhaustion and the current bearish divergence forming with respect to DOT’s rise over the last 2 weeks.

Market Rationale

Source: DOT/USD on Trading View

According to the Stochastic RSI, the crypto-asset may register an immediate pullback. However, historical movements suggest that DOT has the tendency to remain near the oversold region, whenever the price has dragged down the indicator.

The Relative Strength Index or RSI was exhibiting the rise of selling pressure as the indicator was starting to drop on the charts.

Finally, the Awesome Oscillator or AO was pointing to an immediate trend reversal, with the bears rising in momentum.

Conclusion

The correction period has been inevitable for Polkadot since the start of 2021 and it may manifest in the charts over the next few weeks. The immediate support at $14.50 should act as a bouncing board, before estimating a new bottom or top.

Source: https://ambcrypto.com/polkadot-price-analysis-26-january/

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