Week Ahead: BTC and ETH defend support levels, miners sell crypto to cover operation costs
BTC has held above the $20K support and traded in the $21K on Sunday. ETH likewise has defended the $1K price level and is trading near $1.2K despite a drop in mining profitability as it moves to the $1.4K resistance level. US equities rebounded, almost recovering from the drop two weeks ago, signalling a higher risk appetite by investors with commodities mostly weaker. Recession concerns are on the rise, with the narrative of a monetary policy mistake as the leading triggering event. The IMF downgraded US growth but noted the economy will narrowly avoid a recession.
Option traders noted despite high levels of volatility, crypto showing liquidity has not dried up dramatically and, in particular, an influx of institutional flow in the options market. Miners are increasing their participation by hedging future production. Crypto miners have taken profits in long positions to cover operational costs, with estimates of 23K being sold. Some analysts take it as a signal that the market is approaching a bottom.
Despite a crypto winter, companies in the space continue to launch products and make deals. Coinbase to roll out the first crypto derivative with the launch of its nano BTC futures contract through multiple third-party retail brokers. Tether to launch a stablecoin pegged to the British poundFalconX closed a $150M funding round now valued at $8B, with the company looking to increase headcount by 30%. BlockFi signed a $250M revolving credit facility with FTX adding an extra option for raising capital in the short term. Roxe Holding to go public via a SPAC with Goldenstone to be renamed Roxe Holding Group and list on Nasdaq.
Uniswap overtook Ethereum for fees generated last week as investors migrated to Layer 2 blockchains seeking lower transaction costs. Harmony hack highlighted crypto bridge vulnerabilities, with the company announcing $100M was stolen. Voyager Digital lowered its daily withdrawal limits to $10K after the company wrote it may issue a default notice to Three Arrows Capital if the fund fails to repay its loan.
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