November 14, 2021
Cryptocurrencies: Weekly Update
By Holden Milstein
Welcome to the first official release of the CryptoPulse Weekly Report!
We have been working for months to be able to deliver you trading tools, strategies, and crucial information regarding the cryptocurrency space in order to help you maximize potential profits while mitigating unnecessary risk in the world’s most exciting market.
CryptoPulse is MarketGauges’ very own trading dashboard that includes access to our impressive Crypto Quant trading model, market commentary and analysis, proprietary coin and stock sector radars, interactive charts, and valuable resources for anyone looking to be involved in the cryptocurrency space.
Check everything out here ("$" indicates CryptoPulse premium service):
CryptoPulse Quant: ($) Automated trading model issues complete buy and sell alerts
Daily & Weekly Commentary & Special Reports: Analysis of trades, markets, trends and more
Stock Sectors Radar: ($) *Breakdown of stocks and ETFs that offer insight and trading opportunities related to crypto
Coin Rankings: ($) *Top 50 coins with additional indicators
Resources: Free resources for learning more about all areas of crypto
*Simply click a symbol on either the Sectors Radar or Coin Rankings in order to see an interactive chart*
We want to also let you know that MarketGauge is exploring nearly every potential opportunity in the crypto realm ranging from day-trading microcap coins to the NFT market. With the aim of staying a step ahead, we will continually roll out new CryptoPulse features and resources as the crypto industry itself builds out for the next several years.
Now, let’s look at what you can expect to find in each edition of the CryptoPulse Weekly Report.
Each week this report will:
We are very proud to offer our CryptoPulse Quant model as a backtested and algorithmically formed method of trading the large-cap crypto market, and our commentary is designed to provide alternative and more speculative trading opportunities that you may not have otherwise heard of.
So… Let’s get into it!
Areas to focus on from this week...
Biggest Winners: Large Cap DeFi projects reached new all-time highs… Ethereum (ETH) touched $4,867, Solana (SOL) hit $260 and Avalanche (AVAX) got as high as $96.91. Bitcoin also set its own all-time high at $69,000!
Biggest Losers: Polkadot (DOT) failed to maintain its trading range at new highs between $50-53 but is maintaining support above the $45 level. VanEck’s application to form a Spot BTC ETF was denied by the SEC on Friday, tanking the entire crypto market by nearly 2%.
What to watch: Loopring (LRC) is trading up about 3x its price from the beginning of the week as news and speculation comes out regarding GameStop potentially partnering with Loopring to create their own NFT marketplace. Another piece of news, despite its rough week Polkadot (DOT) may be looking at major upside potential in the near future with their parachain auction going live this week.
Things are heating up once again in the cryptocurrency decentralized finance (DeFi) space, with multiple large-cap projects reaching new all-time highs over the past 2 weeks. This is a hot competition between several projects that essentially do the same thing, all hoping to be the next Ethereum.
Here are some of the most significant cryptocurrencies/projects looking to compete with Ethereum for a share of the DeFi space:
Over the years, multiple coins have been referred to as ‘Ethereum Killers’. In reality, Ethereum likely isn’t going anywhere anytime soon, so the probability of another DeFi project overtaking the rank as the #2 cryptocurrency by market cap is extremely unlikely.
More likely, a number of smaller DeFi projects will see major institutional adoption in the coming months and surge to market caps far closer to Ethereum’s $550 billion cap. Currently, the closest DeFi to Ethereum’s size is Solana (SOL) with a $70 billion market cap, ranking as the #5 largest cryptocurrency.
Solana touts the fastest transaction speeds of any blockchain in existence, with transaction fees being some of the lowest in the industry. I can personally corroborate this claim, as I have vast experience participating in both the Ethereum and Solana decentralized networks and can very confidently say that Solana is the most seamless interface and most efficient technology I’ve seen anywhere in the industry.
You may be wondering, how can you be so sure that Ethereum won’t continue to dominate the DeFi space like it has for the past year?
Well, let’s just say that Ethereum has suffered from significant growing/scaling pains as of late, with transaction speeds going down and fees increasing rapidly. Ethereum cannot efficiently handle the traffic and volume of their current global userbase, so the odds of Ethereum being the only major DeFi project are slim. Other cryptocurrency projects will need to emerge in order to handle a share of the constantly increasing demand for decentralized finance services and applications.
Just look at Apple and Microsoft. They are two very different companies that essentially offer the same services and create the same products, just in slightly different ways. The world would have been worse off having to choose between one or the other, so now we have both! Healthy competition in the DeFi space will inevitably benefit the space as a whole, as different cryptocurrencies are forced to adapt, evolve, or die.
Having said all of that, if you agree with my sentiment that Ethereum will not be able to hold onto its near-monopoly of the decentralized finance space, then you should start considering other potential investments to make besides just ETH.
From the list above, my two personal favorite DeFi projects are Solana and Polkadot. I’ll stop myself from going too deep on the technological crypto jargon regarding these projects and encourage you to perform your own due diligence and research into these coins and what they do.
Instead, let’s look at some charts and identify potential buying opportunities for SOL and DOT.
First looking at Solana (SOL), we can see a trading range with support at $220 and resistance at the new all-time high of $260.
You may also notice that Solana became overbought on November 6th, on both price and momentum according to the RealMotion indicator before a bit of mean-reversion. This move appears to have been a simple reset from new highs, with SOL looking to likely consolidate in its current trading range for a little while longer before looking to set another new all-time high. Keep an eye out for a daily close above the 10-day Moving Average before another potential test of the $260 level.
Polkadot (DOT) has grown significantly over the past several months as well, likely getting increased interest as a result of the platform's Parachain Auctions taking place this week. A parachain is essentially a carbon copy of a cryptocurrencies blockchain, designed for the purpose of offloading some of the network traffic from one singular blockchain. Note, there are several projects that are designed as Ethereum parachains, which aim to aid in the Ethereum network's ability to scale their ecosystem efficiently.
DOT exists as its own blockchain network, and is auctioning 5 parachains that will be run by other projects/companies in order to further decentralize and secure the Polkadot blockchain. Many crypto analysts are expecting this event to potentially 3x the price of DOT, with comparisons being drawn to a previous parachain auction put on by Kusama (KSM) that sent the coin skyrocketing.
All of that news aside, DOT has been trading in a clear channel for the past 2 weeks with support at $45 and resistance at $54 just below all-time highs. You can expect Polkadot to bounce back towards the upper end of this range in the coming week, with the potential of a parabolic move if resistance can be broken with strong momentum.
The last thing that I will leave you with this week is a brief note on the cryptocurrency market action this Thursday and Friday. Headlines about the SEC rejecting VanEcks proposal for a spot Bitcoin ETF seemingly came out of nowhere, and quickly saw the market selloff in response. I received countless texts and calls asking ‘was this a buy the rumor sell the news?
I would argue no, because this event saw a selloff after news broke, but very few investors were even aware this was going to happen in the first place (hence, no rumor). Those that were aware of VanEck’s application didn’t pay any mind to it over the past few weeks because we knew there was no way in hell that their spot ETF would be approved.
The VanEck application was filed at the beginning of 2021, long before the recently approved Bitcoin Futures ETFs were even being discussed. The application was dated, and not in line with the regulatory environment and expectations that have developed throughout this year.
However, with the recent approval of multiple Bitcoin Futures ETFs, it is looking more and more likely that Grayscale’s Spot ETF application may actually gain traction when the SEC is set to provide a judgement on January 2nd, 2022. Fingers crossed!