RESEARCH
BEQUANT Crypto&Coffee
After a strong and mostly one-sided price action on Wednesday, which saw Bitcoin move swiftly through $7,800, $8,000 and all the way to $9,000, the market decided to spontaneously combust on Thursday just as Bitcoin approached $9,500 level. Crypto maximalists are known for their admiration towards parabolic price action, but the reality is that such wild moves often need to undergo correction, profit taking and price discovery is an indication of a healthy market, as opposed to one that is dominated by whales. Despite the correction towards $8,800 zone, the upside bias remains intact and the market is still more likely to see a test on the psychologically important $10,000 rather than move down towards $7,000. Something that the bearish camp may focus on is that the next mining difficulty is now expected to adjust lower, albeit marginally so. Current estimates are for a small 0.13% correction lower, estimates earlier in the week were for a positive adjustment. Despite the above, the hashrate remains well supported and is proving to be very sticky, especially given the uncertainty.
Looking elsewhere, Ethereum also underwent a correction of similar magnitude and crucially for Ethereum, there are signs of network again reaching capacity. Ethereum gas usage is back to all-time highs, network utilisation is also close to full capacity at 90%. In addition, the average fee paid has increased significantly from around $0.14 to $0.20 (up 45.5%), while median gas price also increased significantly to 11.926 GWEI, from 8.494 GWEI. The main problem is that the most liquid stablecoin, USDT, is issued on Ethereum, as such any network issues are unlikely to bode well for the sentiment.
Overall, it appears that the bullish spot market, also supported by anecdotal evidence of retail buying over the last few weeks, continues to be offset by the less infused derivatives market. Still, in early trade on Friday, the futures curve was trading in contango, with Dec contract on Deribit just shy of $9,000 level. At the same time, the positioning in the options market appears to be more bullish, the skew has come down a lot in the last few days. But as is the case in crypto, a lot can change very quickly.
In terms of news flow, large venture capitalist firm Andreessen Horowitz is expanding its presence in the crypto sector. The United States-based company has raised $515 million for its second crypto-focused fund, according to an April 14 article on Fortune. Earlier reports suggested that Andreessen Horowitz, also called a16z, was hoping to accumulate $450 million in capital for the new vehicle, meaning that the firm has surpassed the initial goal by $65 million.
Finally, CoinDesk writes that messaging app Telegram postponed the launch of its TON blockchain for a second time, pushing the new go-live date to April 2021 and triggering a costly clawback clause in its agreement with token-sale investors. According to a letter to investors, Telegram is offering to return up to 72% of each investor's stake. The terms were agreed upon when Telegram first postponed TON's launch in October, following a lawsuit from the US Securities and Exchange Commission (SEC) charging Telegram with running an unregistered securities sale that raked in $1.7 billion in 2018. At the time, Telegram set a revised launch deadline of April 30, 2020.
