Crypto Market Forecast: W/C 14th December 2020

A volatile week in crypto saw markets recover from a mid-week slump to end the week strongly and erase most losses. The Bitcoin price fell ~2% but remains above the USD19,000 price level. At the same time the Ethereum price is down ~3% after experiencing a similar U-shaped recovery to BTC after a mid-week price drop. The Ripple Price ended up taking the biggest hit of the large cap assets – dropping by ~17% over the course of the week with no late week reversal. The overall crypto market cap rose by ~4% for the week.

A key factor in XRP’s failure to launch over the weekend was the completion of the Spark token airdrop snapshot on December 12th. The hype surrounding the airdrop, a process that will involve XRP holders being rewarded with a new token, has been a key driver of strong price performance in the month leading up to the snapshot. The SPARK airdrop was instrumental in driving a surge of new account creation on the XRP ledger and a corresponding uptick in trading volume for the XRP token. With the snapshot for the airdrop now completed and the recipients of the Spark token airdrop finalized, XRP accumulators who had purchased specifically for the airdrop could freely sell XRP, but still receive their Spark token allocation. This drove the price of XRP down by ~8% on December 12th – a day when the market generally saw strong gains.

Bitcoin’s bullish weekend coincided with a Friday announcement from publicly-traded business intelligence company MicroStrategy that it had raised USD650 million in a convertible senior note sale that has been tailored to allow the company to add more bitcoins to its corporate treasury. In a press release, the company estimated that the net proceeds of the sale, USD634 million, will be available for Bitcoin allocation in accordance with the company’s treasury reserve policy. The notes were sold to qualified institutional buyers.

The USD650 million figure is significantly more than the USD550 million MicroStrategy has initially said it hoped to raise from the sale. The higher number was achieved after the initial purchaser exercised an option that granted them an additional USD100 million to the aggregate principal amount. Following the announcement, MicroStrategy’s CEO and noted Bitcoin bull Michael Saylor tweeted “Every investor is in danger of losing their wealth due to the great monetary inflation. We all need a Store of Value that is not based on fiat. #Bitcoin is The Solution – an investment grade, safe haven, treasury reserve asset. #BTC is our best Hope.com.”

Crypto news for the week ahead

14th December– Expected mainnet launch of the perpetual protocol
The Perpetual Protocol, a decentralized perpetual contract protocol is expected to go live on the Ethereum mainnet this Monday. The protocol uses a Virtual Automated Market Maker (vAMM) that allows users to trade without needing a counterparty. The AMM model popularized by Uniswap helped to address one of the primary issues associated with trading on decentralized exchanges, liquidity. The price of the platform’s native PERP token has risen ~61% in the last week.

15th and 16th December– Chainlink AMA’s with Base Protocol and Nexus Mutual
Decentralized oracle provider Chainlink (LINK) will conduct AMAs with the teams from Base Protocol, a crypto index-based DeFi product, and Nexus Mutual – an insurance product that protects users from smart contract failures. Useful sentiment may be gleaned from the AMA, such as a stronger understanding of Chainlink’s numerous synergistic integrations that have helped LINK grow to become the 7th largest asset on the Brave New Coin market cap table. The price of LINK dropped 4% in the last week.

Top 10 Crypto Summary

Despite the strong recovery over the weekend, mostf assets on the Brave New Coin market cap top 10 ended the week in the red. Stellar (XLM) was one of the top performers during the week and continues the excellent run it has been on for the last 30 days. On Wednesday, German bank Bankhaus von der Heydt (BVDH) announced that it would be joining forces with startup Bitcond to issue a stablecoin on the Stellar network. BVDH is one of Europe’s oldest banks and has been in operation since 1754.

Bitcoin Price Chart

Bitcoin’s price performance this week has been a tale of two halves, grinding downwards until Thursday before turning around and moving upwards for the rest of the week. Last week Fidelity Digital Assets announced that customers will now be able to use Bitcoin as collateral for cash loans when using the firm’s digital asset custody solution. This is the first time the subsidiary of financial services giant Fidelity Investments has experimented with crypto savings solutions.