Crypto Market Forecast: Week of January 11th 2021

Bitcoin and the wider digital asset market continued its excellent start to 2021 with strong gains across the board in the last week. The Bitcoin price rose by ~12% and the Ethereum price was up ~31% over the week. Even the Ripple price (XRP) was up 37% – despite being hit with multiple delistings in recent weeks due to the impending SEC action. The overall crypto market cap rose by 16% in the last week and crossed the USD1 trillion threshold for the first time.

There were signs in the last week that institutional investor interest in Bitcoin from hedge funds is continuing. On January 7th a Zoom call hosted by hedge fund Skybridge Capital, to provide information about its newly launched Skybridge Bitcoin fund LP was swamped by over 6000 people attempting to join the call. The overwhelming response from potential customers has pushed Skybridge to schedule another launch call for Tuesday, January 12th.

Skybridge Capital is run by former White House Director of Communications and Goldman Sachs investment banker, Anthony Scaramucci. The fund targets affluent investors giving them a straightforward, secure onramp for gaining exposure to Bitcoin. The fund opened holding USD310 million worth of BTC and the minimum investment threshold is USD50,000. The fund is also backed by heavyweights in the world of law and financing with Fidelity serving as its custodian and Ernst & Young managing audits.

Two days before the Skybridge Zoom call was overloaded, hedge fund investor Bill Miller aggressively backed Bitcoin as part of a Q4 2020 market letter for Miller Value Partners. In his post, he takes on another vaunted legacy finance investor Warren Buffett who famously called bitcoin “rat poison”. Miller writes “He may well be right. Bitcoin could be rat poison, and the rat could be cash.” Earlier in the post he explains, “If inflation picks up, or even if it doesn’t, and more companies decide to diversify some small portion of their cash balances into bitcoin instead of cash, then the current relative trickle into bitcoin would become a torrent.”

At one point on Saturday, the price of BTC traded well above USD41,000 before sharply pulling back on Sunday. While Bitcoin dropped by over 10% it only dropped to as low as prices seen just 4-5 days earlier. This implies the drop was only a minor retrace in the context of the mammoth bull run BTC has been on since October last year.

Crypto news for the week ahead

January 15th – Bittrex Global Delists privacy coins Monero, Dash, Zcash, & Grin

Seattle-based Bittrex announced on December 30th, 2020 that it will be delisting privacy coins Monero (XMR), Zcash (ZEC), Dash (DASH), and Grin (GRIN). Users of Bittrex must perform any trades associated with these coins no later than January 15th, 2021. The upcoming Bittrex delistings are at least in part a response to a string of new regulatory proposals in the US that will affect the legality of privacy coins in the country. Despite the upcoming delistings, all the coins targeted have had excellent trading weeks, with XMR, DASH, and ZEC rising ~27%, ~63%, and ~58% respectively.

January 17th – Grin hard fork (mandatory network upgrade)

Grin, a privacy by default coin that uses Mimblewimble technology to obscure transaction data, is set to conduct its fourth network-wide hard fork upgrade this Sunday. The upgrade will include targeted changes that are set to improve Grin’s transaction fee calculation and difficulty adjustment algorithm. The price of Grin rose ~22% in the last week in anticipation of the hard fork.

Top 10 Crypto Summary

It was a strong week of trading for large-cap assets on the Brave New Coin market cap top 10, with most enjoying double-digit gains. Cardano (ADA) was an alpha performer rising ~46%. Crypto staking data aggregator Stakingrewards.com announced on January 10th that the network had surpassed Polkadot to officially become the largest staking network in the world. The announcement was celebrated by Cardano network founder Charles Hoskinson on Twitter.

Bitcoin Price Chart

It was a strong week of trading for Bitcoin bulls that would have been even sweeter if not for a weekend drop that dragged the Bitcoin price below USD40,000. CryptoQuant CEO Ki-Young Ju suggested that the Miner Position Index (MPI) may be heading for a local top. This is a bearish indicator that suggests miners may be preparing to sell their BTC holdings after a period of positive price activity.