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- Crypto Saving Expert Newsletter - Issue 109
Crypto Saving Expert Newsletter - Issue 109
Good afternoon! Given bitcoin's recent weakness, characterised by a series of lower highs and lower lows, the market has struggled to maintain any upward momentum, but as we look forward into the rest of the month many believe this will soon change. Let's dive in for a closer look at what is going on behind the scenes with bitcoin and the overall Web3 market. 👇
This week's issue will feature technical analysis of bitcoin, Tron, Solana, as well as important dates and key news stories:
Table of Contents
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Bitcoin Remains In Limbo
Bitcoin’s next direction remains unclear as the price can provide strong evidence for an upside or downside move.
Bitcoin Outlook
Bitcoin remains roughly in the middle of the downward broadening channel it is within.
Due to bitcoin’s weakness over the last few months, which has created lower highs and lower lows, it has been unable to sustain any upside momentum.
Bitcoin has an area of high interest between $45,000 and $40,000. This also coincides with the bottom of the channel, which leaves the possibility of a cascade to the downside occurring and bitcoin interacting with them both simultaneously.
Still, bitcoin is likely to witness a turning point moving into Q4. A break to the upside would result in expansion after such an elongated period of steady sell-offs.
CME 200DMA
Bitcoin is testing the 200 daily moving average (200DMA) on the BTC1! chart, which is bitcoin futures on the Chicago Mercantile Exchange.
In the last 18 months, bitcoin has only closed below the 200DMA on three occasions: twice in March 2023 following the collapse of Silicon Valley Bank and the USDC depeg and the third time in August.
The trend suggests that bitcoin is bullish in the high time frame while above the moving average, and it is currently being successfully defended.
Tron
Tron has been one of the strongest coins over the last month, with the price breaking all-time highs.
However, the price could have topped out upon its surge up to $0.17. Due to the strong move, TRX left a sizeable amount of inefficiency behind, which could get filled alongside the price retesting the previous resistance for a flip to support.
If TRX holds, it will likely bounce towards the fresh all-time high. But if it drops below, the price could undergo a further pullback.
Solana
Solana is at a critical inflection point. It is resting at the six-month-long demand zone.
Solana must bounce here if its structure is to remain intact. A rally back towards $160 would provide the make-or-break moment for the price to rally towards $190 if it were to get above.
On the other hand, a break of support and the price could undergo an aggressive sell-off towards $100, with the possibility of a drop towards $70 if bitcoin were to follow suit.
Fear & Greed Index
The Fear and Greed Index remains within the Fear section as investor sentiment mirrors bitcoin’s price action and has failed to make a significant uptick.
There is the potential for investor sentiment to improve if bitcoin can reclaim $62,000 or it could plummet further if the price drops down towards $55,000.
Important Dates
Tuesday 3 September, 14:00 UTC - ISM Manufacturing PMI
The Institute for Supply Management (ISM) provides an overview of economic business conditions, signalling potential strength or weakness in the economy. The consensus is set at 47.5, with the previous data at 46.8. A score above 50 is a positive reading.
Thursday 5 September, 12:15 UTC - ADP Employment Change
Automatic Data Processing Inc. (ADP) releases employment change for the US. A higher figure is bullish for the markets due to increased employment, which suggests economic strength.
The consensus is set at 145,000, with the previous data coming in at 122,000. Therefore, the ADP expects a slight increase in employment.
Thursday 5 September, 14:00 UTC - ISM Services PMI
The Institute for Supply Management (ISM) releases this data, with it providing a measure of the US non-manufacturing sector. It is considered positive if the figure is above the 50 mark.
The consensus is set at 51.1, with the previous data at 51.4.
Friday 6 September, 12:30 UTC - Nonfarm Payrolls (NFP)
The US Bureau of Labour Statistics releases the NFP. This form of data represents the number of new jobs created in the previous month, which will be December and is another signal of economic health.
The consensus is set at 165,000, with the previous data at 114,000.
Gainers
Losers
Are Telegram Tap-to-Earn Games Onboarding The Next Generation of Crypto Users?
A former executive at Binance believes that Telegram clicker games are onboarding vast numbers of new crypto users.
A former Binance Executive has commented that he suspects around half of the tap-to-earn gamers on Telegram are completely new to crypto, which could lead to an upswing in the technology's adoption.
Gleb Kostarev, previously vice president and regional head at Binance, shared his thoughts at Korea Blockchain Week.
Kostarev stated that of the 50m users on his Telegram mini app, Blum, a tap-to-earn game, around half were newcomers to crypto.
Kostarev stated:
“Our data and community surveys show that half of these users had no prior interaction with Web3.”
He noted initial doubts about whether Telegram’s audience could be converted to Web3, but the results suggest that these users are real and can easily transition to become active participants in the crypto ecosystem.
Tap-to-earn games are rapidly gaining popularity in the crypto community. These simple clicker games, like Catizen and Hamster Kombat, are built on The Open Network (TON), Telegram’s blockchain, and subtly introduce players to cryptocurrency.
Kostarev emphasised the importance of educating this new audience, noting that while attracting users is crucial, guiding them to navigate the crypto space safely is equally important to prevent scams.
Telegram could also play a significant role in expanding access to decentralised finance (DeFi) applications, especially given the restrictive mobile app policies of Apple and Google. He pointed out that most centralised exchange users access platforms via mobile, which presents a barrier to DeFi adoption.
Kostarev highlighted issues with Apple’s App Store and Google’s Play Store, particularly Apple’s restriction on in-app payments that don’t support cryptocurrencies or NFTs, coupled with a hefty 30% fee.
“Telegram is a game-changer because it can provide mobile access to DeFi.”
Telegram clicker game Hamster Kombat has recently become one of the fastest-growing games of all time. The game, buoyed by the team's intention to become the largest airdrop in crypto history, gained over 100m users in less than two months.
The team has continued to supply their community with updates, confirming that the airdrop will come this month.
Could a Global Financial Crisis End Crypto’s Bull Run
Despite a positive first half of the year, bitcoin and crypto could be buffered by a global financial crisis. Let’s take a look at what could happen.
The first half of 2024 saw the approval of eleven spot Bitcoin ETFs, a major U.S. presidential candidate endorsing cryptocurrencies, bitcoin reaching a new all-time high, and the fourth bitcoin halving event in a barnstorming first half of the year.
To mark the start of the second half, Ether, the world’s second-largest cryptocurrency, is on the cusp of yet another milestone: its own ETF could launch in the U.S., news that has spurred ETF issuers to apply for other crypto-based ETFs.
Despite this positive news, crypto does not operate in isolation. The non-crypto world invariably has an impact on this highly fluctuating ecosystem. Yet, it appears that the outside world is escalating in volatility, plagued by several major wars, extreme weather events, and persistent monetary inflation, which will undoubtedly impact the cryptocurrency world.
There have been some indicators that all is not well in the traditional finance system. Earlier this year, the UK entered a technical recession following two consecutive quarters of negative GDP growth.
The End of The Bull
It raises an important question: What will happen to the latest crypto bull run if a traditional finance (TradFi) crisis occurs?
In conversation with CoinTelegraph, Paolo Tasca, economist and founder of the University College London Centre for Blockchain Technologies, stated, “Major corrections in financial markets are definitely possible before the end of the year, although they might not lead to a full-blown crisis.”
Tasca stated that the likely trigger would be a correction in AI stocks, “but the main market to watch is debt”. The US has been running significant fiscal deficits, making interest rate cuts unlikely, which could cause the bond and equity markets to “suffer from continued restrictive monetary policy.”
Two primary metrics are considered when discussing US debt: the US Debt Ceiling and the US debt-to-GDP chart.
The first metric, which shows US debt accruing over the years against the ever-increasing debt ceiling, highlights the country's debt crisis reliance on using debt to fund their operations. In fact, over the past 100 years, US debt has shot from $403bn in 1923 to $33.17tn in 2023.
As interest rates have been higher than usual over the past few years, paying back the debt has become more demanding. As of May 2024, the US government will spend $728bn to maintain the debt, approximately 16% of the total federal spending for 2024.
The problem is exacerbated by the second metric, the debt-to-GDP ratio. This ratio has steadily increased since the mid-1970s when it hit a local bottom of 32%. Since then, the US addiction to debt has ballooned to its current ratio of 123%.
Alongside the debt issue is the current overpricing of global equity prices, which we can see when we look at the Shiller ratio.
The Shiller Ratio, or the Cyclically Adjusted Price-to-Earnings (CAPE) Ratio or the Shiller P/E Ratio, is a valuation measure usually applied to the S&P 500 to assess whether the stock market is overvalued or undervalued.
The most recent figure on the Shiller ratio is 36.06, more than double the historical average.
“Equity markets, especially in tech and growth sectors, are already overvalued — except for AI. A correction could trigger broader market instability,” says Nigel Green, CEO and founder of the deVere Group, said to Cointelegraph.
Furthermore, “ongoing conflicts, such as Gaza-Israel, or heightened geopolitical tensions, like the Taiwan issue, could lead to economic disruptions and investor uncertainty,” Green notes.
What Will Happen to Crypto if The Global Economy Crashes?
Typically, all assets are affected during the onset of a financial crisis, with them usually experiencing a sell-off as investors seek liquidity. If this is to happen, then it could be assumed that the crypto prices would drop alongside this sell-off.
Not all assets get caught up in the sell-off, however. Notably, gold, the asset that bitcoin asserts to mimic in a digital manner, is usually less affected by economic stress. In 75% of the last recessions, gold outperformed the S&P 500 by 37% on average.
Economic crises are cyclical events, and a historical perspective can be useful.
For instance, the Panic of 1819 was linked to the eruption of Mount Tambora in 1815 and the subsequent crop failures. The Panic of 1907 followed the 1906 San Francisco earthquake. The global COVID-19 pandemic triggered the market panic of March 2020.
Some believe crypto is becoming an uncorrelated financial asset, meaning it wouldn’t necessarily fall when stocks and bonds do. Others perceive bitcoin as analogous to gold. In this case, bitcoin may also see a flood alongside gold, which could mean the wider crypto market would be less affected by economic stress.
However, this might be wishful thinking.
“In the event of a sell-off, crypto would join TradFi assets in a sharp decline as these are bundled together in the initial shock,” says Lucas Kiely, chief investment officer of bankrupt digital wealth platform Yield App. “But BTC could recover quicker due to its ‘flight to quality’ nature relative to other crypto assets.”
“Cryptocurrencies may not have completely detached from or become anti-cyclic with the rest of the risk-on category,” says Marc Fleury, CEO and co-founder of Two Prime, a financial technology company focused on applying crypto to the real economy, “but it has proven in the past cycle that it can sometimes function as a safe haven.”
Fleury is thinking back to the Silicon Valley Bank collapse in March 2023, arguably the closest we have come to an economic stressor event since Russia invaded Ukraine. The global stock market hit a bump when the collapse happened, causing a sell-off event. Bitcoin, on the other hand, and contrary to many people's expectations, rallied, increasing from $20,300 to $28,200 within two weeks.
Number of Bitcoin Millionaires Surges 111% Over Past Twelve Months
The surge in crypto over the past twelve months has seen the number of bitcoin millionaires reach over 85,000 individuals.
The number of bitcoin millionaires worldwide has surged by 111% over the past year, with 85,000 individuals now holding more than $1m in bitcoin, according to a recent wealth survey.
The Henley and Partners Crypto Wealth Report 2024 reveals that by 30 July, the number of bitcoin holders with over $1m had more than doubled to 85,400.
This growth isn't limited to bitcoin alone. Globally, 172,300 people now possess more than $1m in cryptocurrency, a 95% increase from 88,200 at this time last year.
The wealthiest in the crypto space also saw notable gains. The number of crypto centi-millionaires, those with over $100m, rose by 79% to 325.
Additionally, six new crypto billionaires were created, bringing the total number of nine-figure holders to 28.
The report rounds millionaire statistics to the nearest hundred, tracking growth between 1 July 2023, and 30 June 2024.
The data was derived from "in-house wealth tier models" and public information from major crypto platforms such as CoinMarketCap, Binance, BscScan, and Etherscan.
Andrew Amoils, head of research at New World Wealth, noted that while the crypto "millionaire band" saw the most substantial growth, the rise in billionaires was largely driven by bitcoin.
"Of the six new crypto billionaires created this year, five were from Bitcoin, highlighting its dominant role in attracting long-term investors with significant holdings," Amoils said in a 27 August statement.
Bitcoin’s price has risen over 138% over the past year, climbing from $26,100 on 27 August 2023 to $62,350 at the time of publication.
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