What are crypto’s next catalysts?
It’s only the third week of 2024 and Bitcoin has already had a momentous year. What lies ahead? [Shubham’s Web3 via Unsplash]
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
What’s next for crypto markets? With BTC ETFs approved, here’s what else could shape markets in 2024.
Learn to read two key “moving averages.” The basics behind trading indicators commonly used by the pros.
This week in numbers. The price of Solana’s new crypto-powered phone, Ethereum’s record transaction rate, and more stats to know.
NEXT UP
What’s next for crypto after the ETF approval?
When the first spot BTC ETFs in the U.S. began trading last Thursday — with eleven new funds from firms including BlackRock, Grayscale, and Franklin Templeton — it marked a new era for crypto.
By almost any standard, the new investment products had a blockbuster launch, with the ETFs seeing around $800 million of inflows and nearly $10 billion in trade volume over the first three days alone. (Coinbase is the custody partner for eight of the new funds.)
So far, the impact on bitcoin prices has been mixed. BTC spiked as high as $49,000 after the SEC greenlit the new ETFs, but then prices dipped by around 12% in the days following.
Now that we’ve turned the page on the BTC ETF approval saga — which dominated crypto news stories for much of 2023 — you might be wondering what’s next.
Here’s what you need to know.
All eyes turn toward BTC’s next “halving”
Bitcoin is designed to be an inflation-resistant asset — and one mechanism it uses to achieve this is the halving, in which the amount of BTC generated by mining is reduced by half every four years until all 21 million BTC have been mined. (This is anticipated to be sometime around the year 2140.)
The next halving, which is expected to happen in April, has crypto watchers paying close attention. Historically, much of bitcoin’s gains have come in the 12 to 18 months after the halving — at times when the newly limited supply has faced surging demand. At the time of 2020’s halving, for instance, one BTC cost less than $10,000. By the peak in 2022, prices had climbed to more than $67,000.
But similar to what may have happened with the approval of BTC ETFs, some investors believe the impact of the halving has already been “priced in,” while others think that the impact could be indirect. As Coinbase Institutional noted in its 2024 outlook, the halving’s main significance could be its ability “to raise media attention around what makes bitcoin unique.”
ETH could be poised for a breakout year
Last week’s bitcoin ETF news proved to be a boon for Ethereum, which briefly spiked above $2,700 — reaching its highest price since May 2022.
And there are reasons to be even more optimistic about ETH’s near-term future. For one, several of the firms behind the BTC ETFs — including BlackRock and VanEck — are also plotting ether-based spot ETFs.
The Ethereum network also has some major updates planned. Ethereum’s Dencun upgrade began initial tests on Wednesday and in coming months is expected to implement EIP-4844 (“EIP” stands for “Ethereum improvement proposal”), which some ETH watchers predict could help reduce network fees by 90% or more.
According to a recent report from ETC Group, an institutional crypto firm, ETH has outperformed BTC consistently since its inception in 2015, with 2023 being an exception. That makes it likely, according to the report, that ETH will “mean revert,” or return to its typical outperformance in 2024.
“Alt season” could be approaching
A wide variety of altcoins saw double-digit gains in the wake of the BTC ETF news — potentially indicating that some traders took profits on their bitcoin and began rotating capital from BTC into altcoins.
Bitcoin dominance, which measures BTC’s share of the total crypto market, typically starts declining prior to altcoin rallies. After peaking at around 55% prior to the ETF approval, BTC’s dominance is down 6% in the past week as the total altcoin market cap continues to rise. The total altcoin market was worth around $837 billion last week, its highest level since May 2022, according to TradingView.
The bottom line…
The arrival of spot BTC ETFs is a major milestone for crypto that has the potential to bring billions of dollars of new capital into the ecosystem from a wide variety of investors, but we’ll have to wait and see what the ultimate impact will be on BTC markets. In the meantime, there are a number of storylines that could take center stage this year.
ANALYZE THIS
How learning to read two key ‘moving averages’ can help you make smarter moves
With crypto prices on the move, you might be giving more thought than usual to how you want to trade.
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 been compiling some guides about the major charts and indicators you can use to inform your moves. In our final installment of this series (following tutorials on candlestick charts and the relative strength index), we’re covering a pair of “moving averages” that are good to know.
Let’s dig in.
What is the Simple Moving Average?
The Simple Moving Average (SMA) is exactly what it sounds like — it shows you the average price of an asset over a given period of time, and gives you insight into whether that asset is trending upward or downward.
On Coinbase Advanced (available in the Coinbase app and on Coinbase.com) you can check out SMA charts by exploring the “Indicators” drop down menu at the top of a price chart. (This is also how you get to the other indicator covered below.)
How do you read the SMA?
You can adjust the period to any length you want. In the screenshot below, for instance, we’re looking at a BTC-USD price chart using a 50-day SMA — the SMA is the blue line overlaid on the candlestick chart.
((INSERT IMAGE 1 HERE))
Some traders see an upward-sloping SMA trend and anticipate further gains in price.
If the price (indicated by the candlesticks) dips below the SMA trend line, this might be interpreted as a sign that the upward price trend may be reversing.
What is the Exponential Moving Average?
An alternative to the Simple Moving Average is the Exponential Moving Average (EMA), which is usually better for identifying short-term trends. Like the SMA, the EMA shows you the average price of an asset over a period of time — but the EMA puts more weight on the most recent days.
This means the EMA will both respond more quickly to new price movements and fluctuate more than the SMA — which is why the EMA may be better suited to quickly identifying a new shift in price. In the event of a significant price reversal, the EMA will slope sharply upward or downward more quickly than the SMA would.
Here’s a 50-day EMA line chart (in purple), overlaid across the BTC-USD candlestick chart:
((INSERT IMAGE 2 HERE))
There are a lot of ways to interpret the EMA, but some traders look for moments when the trend line begins to shift upward after a long downtrend — this may signal a bullish reversal.
The bottom line…
Advanced trading indicators might seem overwhelming at first, but you’ll get better at reading them the more you use them — and eventually you’ll be able to scan a screen (or screens!) packed with trends and indicators. You’ll be comparing signals, deciding which to follow, and feeling more confident about interpreting charts.
Always remember that past performance isn’t indicative of future results and no single chart tells the complete story — which is why most experienced traders’ strategies take multiple charts and indicators into account. If you’re not sure what trading strategy is right for you, check with a trusted professional advisor.
NUMBERS TO KNOW
100 million
The total number of inscriptions on the Avalanche blockchain since the token standard launched last summer, according to Dune Analytics. And as Unchained notes, the growing popularity of Avalanche-based inscriptions seem to put them on a “similar trajectory to those based on the Bitcoin Ordinals protocol.” As with Ordinals, inscriptions on Avalanche are used for activities like minting NFTs.
10,000
Approximate number of BTC (worth over $420 million) held by Tesla — making the company the third-largest publicly-traded bitcoin holder. In a recent post on X, Tesla CEO Elon Musk also revealed, “I still own a bunch of Dogecoin, and SpaceX owns a bunch of Bitcoin.”
$450
The preorder price for the Saga Chapter 2, Solana Mobile’s second generation crypto-enabled smartphone, which will include features like self-custody, and easy access to dapps. The original Saga cost $1,000, and after months of sluggish sales, quickly sold out in December as the price of BONK — a Solana token included on the phone — soared at the end of 2023.
22.7
The number of transactions per second (TPS) that Ethereum registered on January 14, a new all-time high that equated to 2 million transactions in 24 hours. “For comparison,” notes The Defiant, “Ethereum’s throughput has predominantly trended between 11 TPS and 14 TPS since mid-2020.”
TOKEN TRIVIA
Which of the following ticker symbols is not an active spot bitcoin ETF?
A
BTFD
B
HODL
C
BRRR
D
IBIT
Find the answer below.
Trivia Answer
A
BTFD
