Crypto Corner - Summary of the Week 19/10

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data taken at 10:38am 23/10/2020

Written by: Yves, Head of Trading at Wirex

The Bitcoin price (BTC/USD) finally passed the $12,000 resistance level, reaching its highest level since June 2019 at $13,235. The price jumped by more than 7% on Wednesday after Paypal was granted a conditional Bitlicense to buy, sell and hold cryptocurrencies by the New York State Department of Financial Services (DFS). Paypal has kept one foot in the cryptocurrency economy for years, announcing partnerships with Bitpay or Coinbase back in September 2014: through these partnerships, merchants were already allowed to accept payments in Bitcoin. Wednesday’s announcement goes much further, bringing cryptocurrencies to all its US customers in the coming weeks, and to customers worldwide in 2021. Paypal customers would be able to fund their account with cryptocurrencies. Paypal’s ecosystem represents 26 million merchants, and more than 300 million active customers. Their partnership with Paxos would guarantee the exchange rate for a transaction and provide Custodial Services.

Crypto and digital payment companies that recognize Bitcoin and alternative cryptocurrencies as a valid medium of exchange are looking for a share of the stunning sector growth. Paypal’s integration follows the announcement of the payment platform Square to invest 0.7% of its total assets in Bitcoin. Square is one of Paypal’s competitors in the sector. It registered a 6 fold Quarter-to-Quarter revenues growth from cryptocurrency transactions. Customers are using and supporting the sector. Wirex raised more than $4.8 million from 7,000 investors in a crowdfunding campaign. Their funders are mostly their own customers. There is a positive feedback loop where the steady growth of the BTC price is pulling more potential small and large investors into the cryptocurrency space. In turn, these investors, among the hundreds of millions that already have traditional accounts, would soon find out how easy it is today to buy and hold cryptocurrencies. Their purchase would drive the market to new heights.

The BTC/USD pair is up by nearly 14% this week. The price jump did not start with Paypal’s announcement. The current macroeconomic cycle is still the constant driver of the BTC price growth. From Monday to Wednesday, The US dollar index (DXY Index) lost another percentage point in value, which initiated the positive price momentum. Another unwavering driver is the number of BTCs locked in DeFi: the number of BTCs locked in DeFi increased by 7.5% this week, reaching another all-time high at 171.8K BTCs. 0.81% of the total BTC supply is now locked in DeFi. It is catching up to the 2.22% share of the supply that is held in the Grayscale fund.

With Microstrategy and Square recently investing a total of $475 million in Bitcoin, we are witnessing a race for the limited supply of BTCs. Bitcointreasuries.org reports that the Bitcoin held in treasuries represents at least 786k BTCs, or 3.74% of the total supply and the number should keep on rising.

Source: https://bitcointreasuries.org/

Skew. reports that the BTC options open interest reached yesterday another all-time high at $2.66 billion. Volatility rose by nearly 13 points on Wednesday across maturities, and the Put/Call Volume ratio dropped to 0.52 yesterday from 1.76 last Friday, suggesting more Call options have been traded. The 25-delta skew from BTC options, that quantifies the expectations of a price fall, is back to the lowest levels seen these past few months: all the lights are green… And so far the profit takers (including miners) are holding.

Source: skew.analytics.com

Source: skew.analytics.com

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The above is an opinion piece and therefore should not be taken as financial advice. Please do your own research thoroughly when looking at Cryptocurrency.
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