Crypto Market Forecast: W/C 23rd November 2020

Prices in the cryptocurrency market soared this week. With Bitcoin (BTC) continuing to push towards a new all-time high, a number of altcoins joined in its bullish charge enjoying their best weekly price gains since the start of the year. Over the course of the week the Bitcoin price was up 15%, while the Ethereum price rose by 28% and the Ripple Price was up a whopping 66%. The overall market cap for crypto assets rose by ~19% in the last week.

Bitcoin received another institutional endorsement from a big player in the world of legacy with BlackRock CIO, Rick Rieder, saying in an interview on Friday that both Bitcoin and cryptocurrencies are “here to stay”. While he said it was hard to say whether Bitcoin was worth the price it is trading at today he did see advantages over Gold with Bitcoin being far more “functional”. Global investment manager Blackrock is the world’s largest asset manager, with $7.4 trillion under management as at the end of Q4 2019.

Leading up to Reider’s comments this week, other established names from the world of hedge fund investing have backed Bitcoin in recent months as a viable gold alternative – suggesting it may be set to capture some of gold’s share as an uncorrelated, safe-haven investment option. Paul Tudor Jones, Stanley Druckenmiller, Mark Yusko, and Bill Miller’s endorsements have increased the appeal of BTC as a valid option for large institutional investors.

As an example of the lengths investors will go to to get exposure to BTC, buyers of shares in the Grayscale Bitcoin Trust were willing to pay US$22,000 for Bitcoin on Saturday – an 18% premium to the spot trading price.The Trust is a security that enables large investors like retirement funds to gain exposure to BTC in an easily taxable form without needing to worry about managing custody

At the same time Ripple (XRP) has just hit its highest price since July 2019 – peaking at around US$0.49 on the XRPLX this Sunday after pushing past its key US$0.30 resistance level on Saturday. XRP has struggled to break out above US$0.30 since the start of the year, and its current bullish price momentum appears to still have legs. While there doesn’t appear to be any single reason why Ripple experienced such an extreme upward movement, the Official Monetary and Financial Institutions Forum (OMFIF) (an independent think tank for central banking, economic policy, and public investment) highlighted XRP as a remittance platform in a report released last week. The OMFIF said that the XRP digital ledger has the potential to streamline international payment networks and compared it favourably to the legacy SWIFT bank payment network.

Crypto news for the week ahead

November 27th – OKEx Exchange to resume withdrawals

After a prolonged period of suspension, the Malta-based exchange says it will be resuming withdrawals on or before November 27, 2020. Withdrawals were suspended on October 16th, after the exchange announced one of its private key holders was cooperating with the authorities. The incident was a PR disaster for the exchange and all eyes will be on the potential of a mass exodus of users and liquidity from OKEx as soon as withdrawals are enabled.

November 28th – Ethereum Classic hard fork

Ethereum Classic (ETC) is set to undergo a network upgrade – code-named Thanos (ECIP-1099) – this Saturday. The upgrade will be most relevant to miners as it is designed to reduce the DAG size by modifying the network’s consensus algorithm. This will allow miners with 3GB and 4GB GPU systems to resume mining ETC, increasing security and promoting a more distributed and healthy mining ecosystem.

Top 10 Crypto Summary

It was a breakout week for a number of large-cap assets on the Brave New Coin market cap top 10. Ethereum’s price rise this week coincided with a sharp spike in the amount staked to the ETH 2.0 deposit contract. The deposit contract to activate ETH requires more than 500,000 for launch. 279,296 ETH has been staked in the ETH 2.0 deposit contract with ETH custodians like Bitcoin Suisse making large deposits last week.

Bitcoin Price Chart

Bitcoin had another bullish week of trading and sits just 6.5% away from all-time highs. The amount of Bitcoin held by exchanges has fallen by a significant 18% since the start of the year. This liquidity crunch is tightening the supply available for buyers on these exchanges and driving prices up.