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Research / forks-and-sushi
FORKS AND SUSHI
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BEQUANT Crypto&Coffee

Bitcoin traded a touch softer over the weekend but well within the recent highs and the price action early doors Monday pointed to another attempt to test higher levels. Similarly, Ethereum also dipped over the weekend just ahead of the key $500 mark, with the $477 zone showing some resistance. As noted recently, the aggregate open interest (OI) continues to rise and there are several key factors to point out. The OI on the regulated venue, the CME, is not lagging its peers is a very important factor to consider. 

In addition, the outperformance is led by venues that provide stablecoin margined futures as opposed to Bitcoin margined products. As a result, the market is in a much healthier condition, than it would have been if the said movement into stablecoin margined products did not happen. This leads to believe that higher levels will be achieved with much less strain on the market. 

Something to bear in mind is that a similar trend can easily emerge across alts that are offered through derivatives structures by various venues. This will bring more stability and avoid amplification of downside movement. Of note, the Bitcoin Cash network, a result of a hard fork from Bitcoin, has split into two new blockchains. Based on data from Coin.Dance, Bitcoin Cash ABC (BCH ABC) has received no hash power, meaning that it is possible Bitcoin Cash Node (BCHN) will become the dominant software of the Bitcoin Cash network.

Looking elsewhere, something that was noted latest week and on 17th Nov, UNI farming will end and as it stands, around $2.3bln funds are deployed farming the native token. Ethereum being the reference token means that there is currently $1.1bln ETH locked. It remains to be seen how much ETH will leave but a large portion will likely stay and enjoy the high fees. Others may look for higher returns elsewhere, potentially turning to SushiSwap. So far, the liquidity on Uniswap has come off its recent highs, where as Sushiswap liquidity has increased substantially. Of note, month-to-date (MTD) Uniswap is up 62%, while Sushi is up 109%. However, even in spite of these astronomical gains, the valuation based on price/sales ratio indicates that the two continue to trade relatively cheap vs its peers. Uniswap P/S is around 10x and Sushiswap is much lower than that, while its competitors such as Curve and Balancer trade close to 80x.

CoinDesk writes that a senior executive at U.S.-based financial giant Citibank has penned a report drawing on similarities between the 1970s gold market and bitcoin. The Citibank executive drew on bitcoin’s 2010-2011 “exponential move” as being “very reminiscent” of the 1970 gold market. Gold had experienced 50 years of a constricted $20–$35 price range before a breakout occurred after a change in fiscal policy by the Nixon administration in 1971. 

A decoupling of gold from fiat currencies, the COVID-19 pandemic and the desire for central banks to pursue aggressive quantitative easing policies could lead to future explosive price growth in bitcoin, according to Fitzpatrick. Fitzpatrick pointed to bitcoin’s weekly chart and used technical analysis (TA) of prior highs and lows to determine a target of $318,000 by December 2021.

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