There’s never a dull moment on the blockchain. Here’s what you need to know this week:

Bitcoin

$95,968.13



0.13%

Ethereum

$3,354.60



0.34%

Tether

$1.00



0.04%

XRP

$2.17



0.53%

Solana

$189.18



0.33%

Dogecoin

$0.32



0.49%

See the latest prices

MARKET UPDATE

Market watchers on what’s driving crypto’s year-end rally — and what might happen next

For the first time since April 2022, bitcoin reached the $45,000 mark on Tuesday, gaining more than 150% so far this year. Ethereum, meanwhile, is up roughly 90% in the same period, with prices topping $2,300.

The crypto market’s major moves have left observers with some similarly big questions: What’s driving this rally? Is crypto winter over, or is this just a momentary spike? And what might happen next? 

Here’s what market watchers from major financial institutions, crypto companies, and more have been observing. 

Bitcoin ETF buzz keeps getting louder 

One of the big triggers behind crypto’s 2023 rally is the growing industry-wide confidence that spot BTC exchange-traded funds (ETFs) will soon gain SEC approval and potentially bring a huge influx of new capital into crypto. 

This week, a flurry of news items appeared around the ETF approval process, including reports that the SEC recently met with ETF applicants BlackRock and Grayscale, BlackRock received some seed funding for its proposed BTC ETF, and several firms amended their filings.

As Ledger CEO Pascal Gauthier told CNBC, “It feels that [2023] was a year to get ready for the bull run that is yet to come. But the sentiment is very hopeful for [2024] and 25. I think what the ETF means really is that bitcoin is going mainstream, and that’s what people were waiting for.”

When could approvals begin happening? As Reuters reports, “Investors are confident the SEC could approve multiple spot bitcoin ETFs as early as January, based on key public SEC filing and comment deadlines.”

How much new capital could ETFs drive into crypto?

ETFs are bought and sold via stock exchanges using conventional brokerages. Because they’re a vastly popular asset class and held by everyone from individuals saving for retirement to the world’s biggest hedge and pension funds, they’re seen as a uniquely powerful tool for increasing crypto adoption. By how much? Depends on whom you ask.

According to a recent Reuters survey, estimates ranged from $3 billion on the first day of trading to $55 billion over five years. As Dave Mazza, chief strategy officer at ETF provider Roundhill Investments, told Reuters, “the analogy that I’m looking at is to gold” — adding that the arrival of spot ETFs had been transformational for the gold market.

Bloomberg Intelligence pegs the market as even bigger: “[W]ith the likely involvement of respectable heavyweights like BlackRock, Fidelity, and Invesco, the spot-Bitcoin ETF market has the potential to grow into a $100 billion juggernaut in time.”

And some predictions go further than that. As Decrypt reports, researchers at blockchain data firm CryptoQuant “expect an ETF to double Bitcoin’s market cap, and potentially increase the overall crypto market by $1 trillion.”

“For context,” Decrypt added, “Apple’s market cap sits at a cool $2.9 trillion today.”

Market observers believe interest rates could fall 

Experts seem to be predicting that inflation will continue to cool (despite Federal Reserve chair Jerome Powell’s warning that such an assumption is “premature”). 

This would allow the U.S. central bank to roll back interest rates, which are currently set at levels last seen more than two decades ago. Historically, lower interest rates have helped boost assets like crypto and tech stocks.

As Reuters noted this week, “Riskier investments and other interest-rate sensitive assets, such as gold, have … rallied hard over the last few weeks as markets wager that the U.S. Federal Reserve has finished hiking rates and will start cutting early in 2024.” 

The bottom line…

While crypto is famously volatile at times — and nobody can predict the future — looking a little further out, there’s at least one more major reason traders are optimistic.

Bitcoin’s next halving is expected to happen in spring 2024. Approximately every four years, the amount of new BTC issued by the mining process decreases by half (until all 21 million BTC have been mined sometime next century). It’s a mechanism designed to make bitcoin an inflation-resistant asset, and the last three halvings all preceded major rallies. 

How high could prices go? Again, it depends whom you ask. Some say that all of this news has already been “priced in.” But many analysts see brighter days ahead. Futures markets show that traders believe prices will continue rising next year, and Standard Chartered predicts BTC will hit $100,000 by the end of 2024.

TECHNICALLY SPEAKING

Level up your crypto knowledge with candlestick charts

As prices spike, you might be giving more thought than usual to how you want to trade crypto.

There are lots of ways to go about it, from simple strategies like dollar-cost averaging (in which you buy a fixed amount of crypto every week or month) to more active ones like digging into technical analysis to gain as much information as you can about market movements. 

If you’re curious about the latter option, we’ve put together some guides about the major charts and indicators you can use to inform your moves. We’ll be rolling out these tutorials periodically — starting, this week, with a quick breakdown of candlestick charts.

Here’s what you need to know.

What is a candlestick chart? 

Candlesticks give you an instant snapshot of whether a price movement was positive or negative, and to what degree. Similar to more familiar price graphs, candlesticks show time across the horizontal axis and price data on the vertical axis. 

But unlike simpler graphs, candlesticks show way more information. In one glance, you can see the highest and lowest price that an asset hit during a given timeframe, as well as its opening and closing prices.

In the Coinbase app or on Coinbase.com, you can find candlesticks by exploring Coinbase Advanced.

How do they work?

These charts use a series of red or green “candles” — with green candles showing price increases and red candles showing price declines.

The “body” of each candle shows the opening and closing prices during a given timeframe.

The “wicks,” which are the thin lines that come out the top or bottom of bodies, show the highest and lowest prices during that same timeframe.

What can candlesticks tell us? 

Experienced traders look for patterns in candles in order to gauge market sentiment and make predictions about where the market might head next. Two key concepts related to candles are “support” and “resistance.”

In simple terms, support indicates that prices have fallen to the point where many traders are looking to buy, while resistance indicates that prices have risen to the point that many traders are looking to sell.  

Support levels are where prices historically stop falling and bounce back up, while resistance levels are where prices often stop rising and fall back toward support.

What are some of the patterns traders look for? 

A long wick on the bottom of a candle might mean that traders are buying into an asset as prices fall, which may be an indicator that the asset is on its way up.

A long wick at the top of a candle could suggest that traders are looking to exit — signaling a potential sell-off in the near future.

If the body occupies almost all of the candle, with very short wicks (or no visible wicks) on either side, that might indicate a strongly bullish sentiment (on a green candle) or strongly bearish sentiment (on a red candle).  

The bottom line… 

Understanding what candlesticks might mean in the context of a particular asset or within certain market conditions is a key way many professional investors identify trends and potential opportunities.

Always remember, though, that past performance isn’t indicative of future results — and even for people who do this for a living, spotting trends in candlestick charts isn’t easy. If you’re not sure what trading strategy is right for you, check with a trusted professional advisor.

NUMBERS TO KNOW

$10.8 million

Value of a “digital green bond” that France's third-largest bank, Societe Generale, issued on the Ethereum blockchain with goals of “increased transparency and traceability on ESG data … as well as improved … speed in transactions and settlements.” In a press release, the multinational firm said the bond’s smart contract will include carbon footprint information.

500

Number of NFT “heroes” that Final Fantasy maker Square Enix released on Monday for its hotly anticipated blockchain game, “Symbiogenesis.” The first batch of 10,000 total NFTs include characters with names like Condiment, Wastebasket, and Egg — who fetched $1,200 worth of ETH. The NFTs aren’t required to play Symbiogenesis, but will unlock extra content in the quest-based game.

15%

Proposed tax rate that Brazil would impose on certain earnings by citizens who hold crypto on international exchanges. Per Coindesk, if approved by President Luiz Inácio Lula da Silva, the new regulation would impact “Brazilians earning more than $1,200 from foreign exchanges.” Crypto is increasingly popular in Brazil, which recently ranked ninth in Chainalysis’ annual crypto adoption index.

TOKEN TRIVIA

Which of the following is not crypto slang?

Find the answer below.

Trivia Answer