Cryptocurrency Markets are Getting a Major Cash Injection

August 10, 2022

Cryptocurrencies: Weekly Update


This past week, the big news in the cryptocurrency market was the partnership between BlackRock (BLK) and Coinbase (COIN), which will see Coinbase serve as the $10 trillion asset manager’s main cryptocurrency trading platform.

This is obviously a huge development for not just Coinbase, but also the global cryptocurrency market thanks to BlackRock’s size, reach, and legitimacy as an established financial institution. The most comparable recent event was Fidelity's choice to allow crypto investing for IRA accounts, potentially exposing several trillion in equity to the cryptocurrency market.

COIN spiked nearly 44% on the morning of the announcement (8/4) before finding a more reasonable closing price around 10% higher than the previous day’s close.

Despite news of Cathie Wood selling her entire Coinbase position at a major loss last week, and not the strongest earnings report to start this week, COIN still looks to be consolidating at higher levels in order to make another move up. There is clear resistance at the $112.14 level, but even an intraday test of that level would result in a +21% trade from the current price of around $91.70.

Obviously, this partnership will see a new and potentially massive revenue stream for Coinbase which already makes a large majority of its current revenue from institutional transaction fees (76.05%). This also makes Coinbase’s image as a retail trading platform even stronger amidst a mess of fear, uncertainty, and doubt surrounding cryptocurrency lending and trading platforms. Keep in mind, Coinbase already exists as a publicly traded company abiding by SEC regulations, and you can be certain that the minds over at BlackRock made sure to comb through every detail of Coinbase’s operations before making this move.

The positive reaction in the markets and amongst industry experts regarding the Coinbase x BlackRock partnership tells us that institutional demand for cryptocurrency exposure is still strong behind all of the ambiguous regulations and bad actors that have been dominating crypto news headlines for most of 2022.

Fortunately, Wednesday morning came with a lower than expected CPI report of only 8.5%, boosting spec sectors in the stock market, and raising cryptocurrency prices across the board.

Our CryptoPulse Quant strategy is +14.89% YTD as of the universal close on 8/9 and looks likely to be up further after today’s close.

Bitcoin remains relatively unchanged, especially compared to the rest of the cryptocurrency market. BTC remains in a parallel trading range but does still have the 10-day (Red line) moving average above the 50-dma (Blue line) on both price and short-term momentum according to the RealMotion indicator.

Far more interesting this week is Ethereum (ETH), currently back within the May/June consolidation range upon Wednesday’s +7% move. 

So far ETH has only had a single close above the $1,727 previous range low, and upon  2-consecutive closes above that level you can take that as confirmation of a likely test to the top of the range or at the very least $2,000.

Ethereum and the rest of the altcoin market have been continuously outperforming Bitcoin since Mid-July, but that leadership is actually at a very tricky inflection point right now which is apparent by looking at the ETH-BTC pair:

1 ETH will buy you 0.077 BTC at current prices, which is a level that has served as the ratio’s ceiling for 2022. It is a tough call to make as to which way we expect this relationship to move from here, but Ethereum’s coming merge to Proof-of-Stake and the continued Growth > Value theme in both stocks and cryptos gives slightly better odds to the prospect of ETH continuing to outperform.

When ETH drastically outperforms BTC, it is typically also true that more speculative coins will even outperform ETH. We’ve seen the unlikely Celsius (CEL) token rallying hard over the past 30 days (+211%), very likely helped by the extended bear market rally we’re currently in the middle of.

One thing CEL has going for it right now is a strong breakout back above its 200-dma. There is also reason to believe that recent whale accumulation has encouraged traders to take a gamble on Celsius and their hopeful recovery from recent insolvency and bankruptcy.

A safe investor is likely to stay out of CEL for the time being as the smoke continues to clear, but a risky investor could consider taking a bet. However, a bet on CEL here would be comparable to buying UST or LUNA, you’re hoping that a phoenix can rise from the ashes.

The only top coin to outperform CEL over the past 30 days has been Lido (LDO) +308%.

Lido DAO manages 5 liquid staking protocols for 5 major networks that include Ethereum (ETH), Solana (SOL), Kusama (KSM), Polygon (MATIC), and Polkadot (DOT). Lido only offers its staking services for Proof-of-Stake tokens, and plays a pretty big role in Ethereum’s transition to POS.

LDO is not something you’ll find available for trading on Coinbase or Kraken yet but is likely to be available on those exchanges soon. In the meantime, it has been announced that trading for LDO will go live on on August 11th, but if you’re eager to get ahead of the rest of the market on buying an LDO position, Uniswap is always an option that will allow you to swap for the token right now.

There will surely be an impact on price upon LDO being listed for trading on, but it is anybody’s guess as to whether the new listing will see investors loading up on the token or unloading on a new layer of liquidity.

Either way, recent reports from Messari show Lido already being responsible for nearly ⅓ of all staked Ethereum, showing that this coin is no laughing matter and is worth keeping on your radar!

Check out our new CryptoPulse Twitter account @MGCryptoPulse for daily tweets and updates about the crypto space!