Review of the current crypto-space news 01.02.2021
Another week has passed in the world of cryptocurrencies. Even althought it hasn`t brought any unprecedented price highs, it will still be remembered by many of its extraordinary events.
News Digest of the Past Week
Time flows inexorably and life dictates its terms. In the crypto-universe, things are changing so fast that it is sometimes difficult to keep track of events.
So this week was filled with events. And so, let’s run through the most interesting of them.
- From billions in losses to political appearances: GameStop soap opera
Millionaires losing money, remarks from politicians and crypto-enthusiasts praising the anti-Wall Street social movement is a GameStop saga that is far from over.
Wall Street, cryptocurrencies, the social media ecosystem and American politicians had busy days as the GameStop versus Wall Stret soap opera developed.
As incredible as it may seem, a group of people who have probably never seen each other’s face managed to bring large Wall Street funds to their knees, inflicting losses on them amounting to billions dollars, and artificially soar to the heavens of a company virtually irrelevant to this day: GameStop is a blockbuster gaming industry, a corporation dedicated to selling physical copies of games.
As previously reported, a group of people from the r/WallStreetBets subreddit decided to act against the shortest stocks in the US markets, turning them into a memorial for some, and the best weapon to transfer posts against wall street for others.
Social activism was so great that WSB became the most active forum on all of Reddit, with the most posts and comments per day and almost exponential subscriber growth. And all that for one common purpose: They just wanted to see a huge loss.
And it looks like they managed it. At least two big Wall Street investment firms have been forced to close their short positions, claiming huge losses. According to CNBC, Melvin Capital announced a sell-off in GME shares on Wednesday morning. The company announced “huge losses,” and while they did not disclose the amount, they had to receive financial aid of at least $2.75bn to stay on their toes.
Citron Capital (the supervillain that it all started with), also lost a lot of money. The company admitted defeat and closed positions at a 100% loss.
Politicians share their opinions
Government representatives, of course, have expressed their views. Senator Elizabeth Warren criticized the preferential treatment that large capitalists receive at the expense of the people:
“For years, the same hedge funds, private equity firms and wealthy investors concerned about GameStop trading treated the stock market as their own personal casino, in while everyone else was paying the price.”
The day ended with a joint statement from an angry SEC saying they were assessing the situation without disclosing details of what it might entail.
“We know and actively monitor current volatility in the options and equity markets and, in line with our mission to protect investors and maintain fair, orderly and efficient markets, we work with our regulatory colleagues to assess the situation and verify the activities of regulated organizations, financial intermediaries and other market participants.”
Censorship as it is
For its part, Discord blocked the WallStreetBets server, saying it was used to spread language feud. In an official statement first obtained by The Verge, the messaging platform assured it had nothing to do with share rates, although they described WallStreetBet’s activities as financial fraud.
The move has been criticized by many people inside and outside the crypto ecosystem. The main argument was that Discord censorship undermines free speech, and the move would likely protect hedge funds from losing even more money as people used the WSB to organization of their next actions.
Actually no one believes that Discord shut down WallStreetBets because of hate speech or misinformation. This could be done before the panic over Gamestop as well. No, Discord uses censorship to protect hedge funds from losing billions due to risky short bets.
Even Elon Musk denounced Discord’s ethics, criticizing Discord’s decision to side with corporations:
“Even Discord became a corporation.”
The cryptocurrency community has been very active in relation to GameStop. Although the r/WallStreetBets subreddit forbids any discussion involving cryptocurrencies, deeming them as “worthless securities subject to fraud or pumping and resetting schemes,” many crypto-traders felt at home.
If the guys from WallStreetBets find pleasure in destroying hedge funds, you need to wait until they figure out how to destroy central banks”, — said the veteran cryptocurrency industry and Casa startup technical director Jameson Lopp.
Cameron Winklevoss pointed out that retailers are beating Wall Street.
“I love how all the talking people call Wall Street Bets “amateurs” and “unsophisticated,” even though they are the ones who really understand gamma compression, as opposed to hedge fund lawsuits, who have been rejected,” he said.
For his part, Eric Wurhiz, CEO of ShapeShift, spoke about his interest in development. For him, this is the beginning of a social movement (like taking over Wall Street):
“It’s becoming a very interesting social movement, and very fast”.
Former Trump Treasury Department chief Anthony Scaramucci said it was good for Bitcoins. But this time he went even further, saying the events were not a simple social movement, but a revolution:
“We are witnessing the French Revolution, only in finance.”
Only the guys at GameStop say nothing. Their latest tweet is an invitation to buy used games for $4.99.
- Bitcoin price could exceed $300,000
The ongoing correction of Bitcoin may soon end and open the path of the cryptocurrency to 300K $, according to two indicators.
BTC correction will soon be completed
Although Bitcoin has fallen by more than $10,000 compared to a record level of 42,000, historical network data at CoinMarketRate suggest the asset could grow significantly in next months.
At the same time, another indicator implied that BTC correction has passed the most dangerous stage and may soon end.
After a substantial price hike that led to a new record high in early January, the main cryptocurrency fell.
This price reduction of more than 10K$ has sparked discussions if this bull cycle is over and BTC is heading for a long correction, as in the bear market in 2018 after the previous ATH.
However, Glassnode’s data suggests otherwise. The ratio of spent output profit dividing the realized value (in US dollars) by the cost when creating the expended output output, is usually used to determine the status of BTC correction during bull movement.
After the recent sharp decline, the rate fell to near-neutral levels, indicating that the recovery is almost complete.
BTC’s bullish run will resume with growth of 900%?
If the recovery does end, further Glassnode data will see impressive gains, according to the net unrealized gain/loss (NUPL) metric.
By examining the price when UTXO (unspent transaction withdrawal) was created, compared to the current price of the asset, the NUPL determines whether the coins in this UTXO are in a state of unrealized gain or loss .
In other words, the metric looks at the difference between an unrealized gain and an unrealized loss to infer whether the network as a whole is currently in a state of profit or loss.
Glassnode measures it from -2, which is the most significant loss level, to +1, representing a zone of “euphoria” when almost all positions are in a state of unrealized gain. The analytics company said that if the figure rises above 0.75, it is part of so-called euphoria, which is usually followed by a sharp pullback.
[caption id=”attachment_1127" align=”alignnone” width=”1200"]
Bitcoin NUPL metric.[/caption]
As the chart shows, BTC fell almost immediately after the NUPL climbed above 0.75. This time, however, Bitcoin was rejected and history shows a possible impending price spike.
The last time NUPL BTC was rejected at this level, during a bull cycle in 2017, the cryptocurrency “grew by about 900% before peaking,” Glasssnow said. If the asset now grows by that percentage, it will increase the price to $300,000.
- VISA could add cryptocurrencies to its 70 million trading network
Visa, a multinational financial services company, with hundreds of thousands of retailers in its community and many hundreds of thousands of customers, can add cryptocurrencies to its financial community.
In the company’s earnings statement for the first quarter of fiscal 2021, the company’s CEO, Al Kelly, noted that they could make cryptocurrencies more “secure, useful and relevant ».
“In this we see ways in which we add differentiated value to the ecosystem. And we believe we have unique opportunities to help make cryptocurrencies more secure, useful and relevant to funds, thanks to our international presence, our method partnership and our reliable model. We look at the crypto market in two segments.”
This statement became much more interesting when Visa’s CEO called Bitcoin digital gold.
“First, these are assets that characterize new things similar to Bitcoin. Second, there are secure digital currencies that can be immediately supported by current fiat currencies. We view all currencies at this first stage as digital gold.”
Visa is far from the first company to view cryptocurrencies as a respectable payment method, regardless of the regulatory hurdles they face.
In the last 12 months, PayPal has mentioned that it will allow its customers to carry, buy and promote Bitcoins and various cryptocurrencies using fiat money. Keeping true to its wording, the company did so and even noticed that the volumes of its purchases and sales were skyrocketing.
Of course, 2020 was a great year for adopting cryptocurrencies. In addition to the above, large public corporations like MicroStrategy have incorporated BTC into their portfolios, pushing institutional adoption to a whole new level. Apparently, 2021 will bring even greater implementation of the crypt.