The Bitbuy Brief: BTC Dominance Continues

Issue 122: BTC Dominance Continues

Weekly Market Update: BTC Steady Climb To $21K

Analysis:  BTC is outperforming and threatening a decisive breakout at $16,000 USD ($21,000 CAD). Beyond BTC and ETH have led the way from major coins, with an over 10% gain over the 7-day period.


BTC Dominance

BTC Dominance Is Approaching New 52-Week Highs. Perhaps Surprisingly, The Ethereum-Based DeFi Narrative Has Been Overwhelmed By Bitcoin Sentiment And Performance

It seems we’ll all be talking about Bitcoin at the Christmas dinner table after all. The ratio between the market cap of Bitcoin to the rest of the cryptocurrency markets continues to climb steadily.

A far cry from September, when native tokens offering ‘yield’ on De-Fi platforms exploded in terms of market cap. Coins such as COMP, UNI, YFI all increased 1,000s of % within weeks. A slew of newer coins also followed suit in a move that was reminiscent of the 2017 ICO craze.

Google search interest spiked in turn with the terms ‘De-Fi’ and ‘decentralized finance’ seeing unprecedented levels of interest. In the last few weeks, however, that trend has completely reversed.

While DeFi tokens have remained somewhat buoyant, Google searches have evaporated. BTC Dominance has exploded and investor attention is clearly elsewhere.

Metric Growing After A DeFi Summer

Takeaway: Many have characterized the yielding platforms as dangerous momentum-based carry trades with risks that were for the most part ignored by investors.

The same critics said DeFi trading was distracting from important narratives. Such as: the BTC fundamentals emerging out of COVID-19 and future risks to Ethereum ahead of their move to PoS consensus.

That view has been vindicated in the last weeks as DeFi tokens have been flat to lower, while BTC posts a clear breakout.

Furthermore, since the beginning of October, BTC is up over 50% with ETH up closer to 20%.

While the DeFi unwind has been more ‘whimper’ than ‘bang’, we continue to urge caution around valuations in the space.

Other Weekly Headlines

Ethereum service providers are experiencing a range of technical difficulties caused by an apparent split in the network’s blockchain. The split was seemingly caused by Ethereum developers introducing changes to the network’s code causing some service providers to to be out of sync.  Binance’s CEO Changpeng Zhao tweeted ‘There was a possible ETH chain split at block 11234873. Etherscan and Blockchair are showing two different chains and data after this block. We’re resolving now but have temporarily closed withdrawals.’ – link – @CoinDesk

According to a JP Morgan Research note published on Friday, institutional investors ‘may be looking at bitcoin as an alternative to gold.’ Comparing the performance of Grayscale’s bitcoin trust and outflows from gold ETFs, the note claims that investors that previously sought gold may now be looking to BTC. – link – @TheBlock

A bill known as ‘Digital Asset and Blockchain Technology Act’ was introduced to New Jersey’s Senate last Thursday by a Democrat representative. The bill aims to bring crypto service providers under the regulation of the state’s Department of Banking and Insurance. – link – @CoinDesk

Fidelity Digital Assets has announced a ‘hiring initiative’ aimed at expanding its ‘platform to secure, trade, and support investments in digital assets.’ The firm is looking to hire ‘more than twenty’ engineers with ‘development experience with Bitcoin, Ethereum and other digital assets.’ – link – @Fidelity

Square’s Q3 earnings reported the firm had sold USD 1.63B equivalent BTC in the period through its Cash App. Square has now sold USD 3.4B worth of BTC since launching the service in 2018. According to the report, ‘Bitcoin revenue and gross profit benefited from an increase in bitcoin activities and volume per customer.’ – link – @Square

Disclaimer: The opinions and analysis expressed in this newsletter are those of the writer, and not of Bitbuy. Nothing in this note should be considered investment advice.