Bitcoin is still chopping around in a trading range. We still maintain that a washout is needed before crypto can enjoy a sharp bear market rally. BTC continues to get rejected at $17,000, with significant resistance at $17,500. Should we see continued pressure in the stock market, it will likely catalyze additional selling pressure for digital assets.
Large financial institutions continue to capitalize off the collapse of FTX. For instance, it was reported that Goldman Sachs would be allocating tens of millions of dollars on discounted crypto investments. While this may seem like a scant amount, crypto represents a high-risk, high-reward speculative opportunity, which means that sophisticated investors and firms will only allocate funds they are willing to lose. As we continue to see firms like JP Morgan and Goldman Sachs dip their toes into the crypto market, it is likely that institutional late adopters will also start to embrace cryptocurrencies.
Quant (QNT) has been a leading altcoin in the crypto market, and could possibly give insight as to the future direction of the market. Similar to Bitcoin and Ethereum, Quant is in a trading range, but recently we saw QNT break beneath the 20-EMA. This could be an indication of a break of the range, and another leg down for Bitcoin and the altcoins.
To conclude today’s crypto briefing, we wanted to highlight an interesting use case that digital assets could fulfill. The foreign exchange market is known for being very fragmented in terms of price data due to there being no centralized entity that transmits price data. Instead, individual exchanges have their own separate price data with arbitragers keeping prices fairly similar across different platforms and exchanges. With blockchain-native projects such as API3 and Chainlink, price data can be distributed from different exchanges and enable more accurate price information. As distributed ledger technology becomes widely adopted by traditional financial institutions and governments, we expect to see markets become more efficient than ever.