Nickel Research Centre

Nickel News Roundup - Week 49

Market Overview:

The market recovered strongly from the Thanksgiving holiday pullback, led by a resurgent Bitcoin and Ethereum.

  • Bitcoin achieved a new All Time High on Tuesday, as it rebounded strongly from the Thanksgiving holiday sendoff, registering over $19,982 on Coinbase.
  • Following the new high, there was a swift sell-off as traders took profits, pushing price down towards the $18,000 mark. BTC surged back to $19,490 within a few hours, and at the time of writing appears to be forming a base around $19,350.
  • Ethereum also recovered well, rising from Thanksgiving dip of $480 up to a new yearly high of $635 as the upgrade to Ethereum 2.0 began, before losing value alongside the BTC sell-off, which took it to a low of $560. ETH is currently priced at $612.
  • The overall cryptocurrency market cap recovered in tandem with the leading two cryptocurrencies, reaching its highest value since January 21st 2018, at over $587bn; around $7bn above the previous week’s high, but more than $100bn above the lows of Thanksgiving’s market-wide retrace. At the time of writing, the total market cap has dipped slightly to $578bn.
  • DeFi also hit a new ATH, recording $14.7bn Total Value Locked on Tuesday, approximately $300m above the previous week’s high. As of writing, it remains above last week’s high, at $14.6bn.

Bullish momentum returned to the market as Bitcoin recovered strongly from last week’s dip, rising to surpass its ATH on several major exchanges. However, as Bitcoin failed to continue, a retrace was experienced and the price consolidated. This was mirrored across the rest of the cryptocurrency market.


What happened: Visa makes inroads into cryptocurrency; joins BlockFi to launch a cryptocurrency credit card, and integrates Ethereum-based token into payment network

How is this significant?:

What happened: Major Investment Funds announce bullish endorse cryptocurrency

How is this significant?:
  • Both AllianceBernstein and Guggenheim Funds Trust declared support for cryptocurrencies as a legitimate financial vehicle this week.
  • Inigo Fraser-Jenkins, co-head of portfolio strategy at Bernstein research, believes that changes in the social and policy environment have made cryptocurrencies a more viable part of an asset diversification strategy; with Bitcoin cited as both an attractive medium of exchange and store of value.
  • Guggenheim Funds Trust meanwhile filed an amendment with the SEC, allowing it to invest up to 10% of its Macro Opportunities Fund into Grayscale’s Bitcoin Trust.

What happened: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

How is this significant?

What happened: Bitcoin Mining Difficulty approaches All-Time High

How is this significant?:
  • As Bitcoin continues its strong price performance this year, mining difficulty increases with more miners competing to generate new Bitcoins.
  • Mining difficulty is now within 5% of its previous ATH, set in October, indicating a continuous uptrend in people (and businesses) competing to mine BTC.
  • Increases in mining difficulty are viewed as indicators of previous bull cycles in 2013 and 2016, as they physically demonstrate increased interest and demand for Bitcoin. 

What happened: Ethereum 2.0 staking launches successfully, supported by major exchanges

How is this significant?:
  • The first phase of the Ethereum 2.0 blockchain upgrade successfully launched on Tuesday, beginning the transition to a full Proof of Stake consensus mechanism.
  • Those holding 32 ETH can act as “validators”; nodes securing the network in exchange for a shared of newly minted ETH created by the staking consensus.
  • Becoming a validator requires technical expertise; but major exchanges Coinbase and Binance have both announced plans to streamline the process for those who wish to participate as validators, pledging more details in early 2021.
  • Locking ETH for several years and moving towards staking on exchanges may lead to a reassessment of Ethereum as a store of value.

What happened: “Libra” rebrands as Diem, distances self from Facebook

How is this significant?:
  • The original “Libra” incarnation of the planned international stablecoin raised concerns from regulators citing concentration of power in Facebook’s hands.
  • The rebrand to Diem follows an organisational revamp, aimed at reducing reliance on Facebook, with a new white paper clarifying Facebook holds no special rights.
  • Despite the departure of some association members during Libra’s regulatory issues, there is still significant business backing to spread adoption, with the likes of Uber, Shopify, Spotify, and Lyft all signed up.
  • The “Diem dollar” is now regulatory-compliant on a protocol level, and ready to launch on a technical level.
  • Diem’s approach differs from Libra in terms of plans to issue multiple stablecoins pegged to specific fiat currencies, rather than one coin pegged to a basket of international currencies.
  • The Diem Dollar is expected to launch in 2021, but no specific date has been provided.
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