Crypto Market Forecast: W/C 21 September 2020

It was a varied week in crypto markets with a number of altcoins struggling. BTC outperformed the rest of the market with the Bitcoin price up by 5%. Meanwhile, the Ethereum Price (ETH) and Ripple Price (XRP) both rose by ~2% and the overall market cap for crypto rose by ~1%.

This week has begun well for Bitcoin, with public business intelligence company Microstrategy announcing on September 21st that it had acquired 16,796 Bitcoin for $175 million. In addition to a previous purchase of 21,454 BTC, this takes the company’s holdings to 38,250 Bitcoin at an aggregate purchase price of USD425 million.

Bitcoin is now the company’s primary reserve asset. “This investment reflects our belief that Bitcoin, as the world’s most widely adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash," said CEO Michael J. Saylor after Microstrategy’s initial Bitcoin investment on April 11th. Since then the stock price of Microstrategy (MSTR) has risen by ~30%.

Last week the leading decentralized trading platform Uniswap launched its governance token, UNI. The exchange announced on Wednesday that it had minted 1 billion tokens that will be gradually released to the public over the next four years. 60% are to be allocated to Uniswap community members, 21.51% to team members and future employees with a 4-year vesting period, 17.80% to investors, and 0.69% to advisors — both with a 4-year vesting period.

Uniswap began a liquidity mining program to allow users to earn UNI on September 18th, offering rewards to liquidity providers for the platform’s ETH/USDT, ETH/USDC, ETH/DAI, and ETH/Wrapped BTC pools. Liquidity on Uniswap has more than doubled since the token launched and currently sits at around USD2.1 billion. UNI has already amassed a market capitalization of ~USD 566 million.

On September 16th the Kraken Exchange became the first cryptocurrency firm to become a bank after the Wyoming Banking Board voted to approve its application for a special purpose depository institution (SPDI) charter. The charter will allow the newly formed Kraken Financial direct access to federal payments infrastructure and integrate more funding and banking options for customers. Among the new products Kraken Financial is expected to release are crypto custody solutions for institutions, debit cards, savings accounts, and even access to other asset classes.

Crypto news for the week ahead

20th September – NEO mainnet network upgrade

NEO (NEO) is a decentralized smart contract network token that currently occupies the 15th position on the Brave New Coin market cap table. It begins the week with a mandatory mainnet upgrade that will significantly increase the free threshold for gas on the network and adjust the maximum number of transactions per block. NEO was an alpha performer last week rising by ~16% in an otherwise bearish market for altcoins.

25th September – CME 6-month Bitcoin futures contracts last trading day

CME’s Bitcoin futures contract, ticker symbol BTC, is a USD cash-settled contract offered to CME brokers and traders based on the CME Crypto Facilities Bitcoin Reference Rate (BRR). The nature of futures contracts means they need to be settled on a predefined date. All contracts will have to be traded, or settled, before this date. There is generally a fall in the trading volume of futures around expiration, which coincides with a rise in volatility and a potential short/long squeeze.

Top 10 Crypto Summary

It was a mixed week for assets on the Brave New Coin top 10 with many suffering heavy double-digit losses. Ethereum was one of the few positive gainers. The ETH transactions count and transaction fees hit all-time highs. Volume on the platform blockchain’s decentralized exchange sector continues to soar alongside demand to utilize its various decentralized finance (DeFi) borrowing and lending protocols.

Bitcoin Price Chart

Bitcoin (BTC) began last week strongly cruising past the USD10,500 price level on Monday and has since been consistently testing the USD11,000. Skew data reports that there are around 85,000 Bitcoin options set to expire between now and the end of the month which may be a trigger for a bout of price volatility. Both Bitcoin’s implied and realized volatilities have been on downtrends since mid-August.