Written by: Yves, Head of Trading at Wirex
The total cryptocurrency market capitalisation bounced back this week by more than 7%, driven largely by the performance of the second largest cryptocurrency Ether (+18%), Solana’s SOL (+18%), Avalanche AVAX (+14%) and Polkadot’s DOT (+8.5%). The Bitcoin price is also up by more than 2% this week, and more than 12% from the year’s low, quoting near $2,800 at the time of writing. For last year’s market entrants, including institutions, the rebound is certainly a relief given that January was for Ether the worst performing month since March 2020.
Historical backers of Bitcoin and Ether are voicing their support for the sector this week. Fidelity Digital Assets released a report called “Bitcoin first”, reminding us that the main cryptocurrency is ‘fundamentally different from any other digital asset’ because it is ‘the most (relative to other digital assets) secure, decentralised, sound digital money’. Ark investment’s analysts published the most bullish report called “Big Ideas 2022”, expecting ‘cryptoassets and digital wallets to command nearly $50 trillion in Equity market capitalisation’, mentioning also a potential Bitcoin price above the million dollars (near $1.5m), ‘scaling more than 25-fold in the next decade’, and an Ether price above $150,000 by 2030.
But the most hopeful projection this week is probably on Google Pay’s potential integration of Bitcoin and Ether. The hope followed the recruitment of a former Paypal executive. As reported by Bloomberg, Google’s president of commerce mentioned that ‘The move is part of a broader strategy to team up with a wider range of financial services, including cryptocurrencies’. Google’s executives are certainly showing a growing interest in cryptocurrencies, but Google’s interests, like Facebook’s, might stand at odds with their controlling centralised stance.
From a market perspective, more than $900m worth of Bitcoin long future contracts have been liquidated on centralised exchanges in the past two weeks and the open interest in USD is naturally falling. Still, the market leverage in BTC remains above the 400,000 BTCs: fresh positions are built as the long interest persists despite the correction.
Daily liquidations of future contracts (long and short) in USD and BTC as of 04/02/2022
Futures Open Interest reported by Coinglass in BTC value as of 04/02/2022