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Title : WORST Behind Us?! Crypto Reports You have to see
link : WORST Behind Us?! Crypto Reports You have to see

WORST Behind Us?! Crypto Reports You have to see

WORST Behind Us?! Crypto Reports You have to see

nerve-wracking that's one of the best ways to describe the crypto markets. In January, we saw some of the largest falls and the lowest prices that we have had in a while; however, as February came around, we had a glimmer of hope that the worst may be behind us or is it well, that's exactly what I'm going to be exploring in my tape today I'll be taking a look into two recent institutional reports and giving you my take on where we could be heading don't go anywhere 

okay, pendejo I got some news for you. If you came here for financial advice and forget it, your little friend guy ain't no financial advisor. He's just some punk on youtube making his videos for education and entertainment, huh so if you want to make money, then you talk to a financial advisor, or maybe you want to come work for me, huh so yourself, let me tell you something though, you better press that subscribes button and ring that little bell huh cause if you don't know you're gonna make tony very angry trust me you'll not like it, okay you wanna skip ahead to different sections of the video yeah be my guest timestamps 

are down there mango nuts but if you don't watch till the end i find out about it huh i got my eye on you you know thanks tony there's never a dull moment when you're around now the first report that i want to take a look at was the February market analysis by the folks over at Bloomberg intelligence I'm sure that most of you know about Bloomberg one of the largest financial news organizations in the world however Bloomberg intelligence is a professional service that it distributes to all those organizations that have purchased subscriptions for the Bloomberg terminal service now while the terminal service itself costs an arm and a leg Bloomberg do sometimes release these intelligence reports to the general public and they are a treasure trove of information titled the buck bitcoin and Ethereum this report took a look at crypto from a high level perspective comparing it to some global macro trends and other factors and this starts on the very first page where it reaches the investment cases and performance of cryptocurrencies 

through traditional commodities, it compares the Bloomberg galaxy crypto index with those of the commodities index. The reports authors are calling this a digital decarbonization quite simply. The demand and supply trends for these traditional commodities differ greatly from those of cryptocurrencies, apart from the fact that things like oil are being replaced by rapidly expanding clean energy. It's just not a solid investment either they have high costs of carrying and have strong supply elasticity. Now for those who don't know, supply elasticity is the concept where supply can expand or contract easily; for example, oil supply is quite tightly controlled by OPEC and other producers. This supply will adjust based on the market price. If prices are low, they will restrict demand and vice versa for higher prices, so if you invest in commodities, the higher the price goes, the more likely new supply is to come on the market new collection that could place downward. 

pressure on those prices now while oil is perhaps the most elastic in supply nearly all commodity supply schedules have degrees of elasticity even gold which is often seen as a safe haven will have supply from the miners adjust up or down based on the price of the asset on the contrary however bitcoin and ethereum are supply inelastic irrespective of price the amount of outstanding btc or eth is protocol defined these inflation rates cannot be adjusted and are in fact decreasing in the case of bitcoin that's because of the regular halving events and in the case of eth that is because of eip 1559 and the upcoming proof of stake merge back to the report though something else that it raises is the demand side factor for commodities like oil higher prices mean that demand is likely to be impacted they will pivot to lower priced alternatives and substitute out of it however when it comes to cryptocurrencies like bitcoin and ethereum the price has very little impact on demand either to hodl it or even to use it for example despite the high cost of gas on the ethereum network it is still overwhelmingly popular as the leading layer one this points to an inelastic demand for these assets it's these factors that the author think will contribute to more upside price potential for assets like bitcoin and ethereum moving on though something else that the authors point out is that there may be quote some purging of the speculative excesses of 2021 now i also happen to think that this is coming for the market there were a lot of coins and mean coins that rallied to unsustainable and quite frankly ridiculous valuations it's in times of market consolidation like this that there is a flight to quality and better established cryptocurrencies this is something shown on this next slide over here 

Which has the rapidly increasing crypto market cap overlaid by bitcoin supply. There are now over 17 000 cryptocurrencies that are more than double the amount that last year. Some of these cryptocurrencies will indeed die, but the authors note that the market cap of eth BTC and stable coins will just keep growing over here. They talk about the increasing adoption and how that impacts the lower volatility of bitcoin. Here is a chart of the bitcoin futures open interest and the ratio of volatility on bitcoin with that of the s p 500. whereas in early 2017, bitcoin's 260-day volatility was 14 times that of the s p 500s today, it is barely more than five times. What's surprising though, is that this has also happened at a time when the amount of open interest in bitcoin futures has been on the rise. As we know, leveraged bitcoin markets have often been blamed for a lot of the volatility in crypto, so this is interesting, however, unlike what the authors are suggesting, I think it's more coincidental than causal that the bitcoin spot markets have just become that much deeper, which of course helps with execution and lowers volatility the authors do however think that this is a trend that is likely to continue this year something which I happen to think too now this chart over here actually annoys me if I'm honest it's the difference in performance 

Between spot bitcoin and the pro shares etf it's running at about four percent per year when annualized what that shows is that these instruments are offering sub-optimal returns to those who invested in something that i said would happen in my video when these launched in fact there have been a lot of institutional investors who've been embarking on a cash and carry strategy with these assets more specifically they would buy the underlying and they would sell the pro shares etf and earn an annualized return of almost 10 percent wall street profiting off retail again right now having said that we are still holding out the hope for a spot bitcoin etf something that the authors also posit while the sec still spent january of this year rejecting spot applications i think the tide is about to turn especially with the amount of pushback they've been experiencing on capitol hill moving on from here the next section of this report looks at ethereum and the rise of those dollar-backed stable coins it's pretty crazy to think that the global stablecoin market stands at over 170 billion dollars this is a 5x from the start of 2021 and it seems like the pace is unlikely to slow over the coming year and as we know increasing demand for these stablecoin assets will lead to more network use for the blockchains they're issued on while stablecoins are being issued on some of the alternative layer ones the overwhelming majority of the market cap of these are on the ethereum blockchain here you can see the market cap of these stablecoins overlaid with the price of eth since 2016. 

So why am i so confident that stable coin demand is likely to continue rising well it's because of two factors one is the increasing demand for these assets in the defy ecosystem and two is because of the us's goal to try and support the preeminence of the dollar this is something that i talked about in my coverage of the fed's stablecoin report linked to in the top right but u.s politicians are beginning to warm to these assets so long as they are the centralized types that they can control there's a prevailing sense that these dollar-backed stable coins could help to blunt the rise of china's cbdc the digital yuan this is something that the authors in this report also predict quote increasing dollar dominance through digital tokens jobs votes plenty of tax revenue and risks of falling behind are the top reasons we expect the us will embrace crypto assets with proper regulation of course there are still some risks with these stable coins and in this case it's the largest stable coin by market cap i am of course talking about tether this primarily comes down to the concerns around the collateral that backs tether i won't go into it here but feel free to watch my video on it later i'll leave a link to that in the description the point is that these concerns are probably why other stable coins like usdc are likely to overtake tether this year if you watched my video on my top predictions for 2022 this was one of them anyways apart from the general demand to use these stablecoins in d5 protocols? 

there is another interesting driver that i had until recently not appreciated and that is dollar demand itself while the fed's easy monetary policy over the pandemic had no doubt contributed to dollar weakness it seems as if things had turned around considerably since the middle of last year this was when the markets realized that the fed would indeed be increasing interest rates it's also coming at a time when china is cutting its interest rates to keep its economy growing the result of rising rates in the u.s and falling rates in china is leading to a dollar resurgence on a trade-weighted basis this is all shown in this chart over here what this means is that if people are looking to hold a crypto asset in a relatively stable cryptocurrency they are more likely to want to park it in a stablecoin pegged to a currency increasing in relative value moreover if i was a chinese citizen i would far rather hold an asset that's backed by dollars and issued by a company than hoddling that weaponized digital uin so that's stablecoin demand a really important driver in adoption and network demand for eth now i want to move on now to a few more charts that focus around price potential over the coming year over here we have a chart with the price of bitcoin with weekly candles and the 52-week moving average in the middle they've also placed bands above and below this moving average of 100 above and 30 below as you can see here since 2021 bitcoin has been trading in between the range of 30 and 60k this has been a boon for the range traders as they've been able to trade within this range however the authors think that it's likely not to hold true going forward this is because historically you've had previous periods of strong support at 30 below the 52-week moving average indeed about a week ago we saw bitcoin with a strong reversal from that lower level based on past trends these reversals tend to be much stronger and the authors suggest that we could see bitcoin breaking through the 60k range as it's less enduring than in november of last year 

Taking a look at the eth charts, they claim that bullish fundamentals are intact; that's the supply and demand inelasticity I talked about earlier the technical fundamentals show that buyers have been benefiting around 4k and sellers have been helping around 2k while the authors think that it is likely that eth could revisit the 1700 level that it reached in the summer of last year I don't believe that this is expected prices have already snapped back above the moving average. Many of the short sellers were washed out in that massive rally last week now, there are a few more charts that I want to look at over here this compares the s p 500 index as a ratio of its 200-day moving average as well as bitcoins what you'll notice is the fact that the relationship between the two tends to approach one to one when there are breakdowns in the s p 500. 

Essentially when there's a stock crash, you'll have a crash in the price of bitcoin. This is something that we've seen play out over and over again, and it's what I talked about in my recent video on the fed tightening that's in the top right for your viewing pleasure; of course, the s p 500 is nowhere near the moving average discounts that we saw in 2020, so the authors conclude that the strength of this correlation is likely to be less severe this final chart over here takes a look at the price of bitcoin as well as the ratio of the cost to the 20-week moving average a previous level of support was around the 0.7 mark. 

Which appears to have once again been confirmed a few weeks ago. The authors conclude that quote more institutional-based, less leveraged, and responsive buyers seem to buy bitcoin for around thirty thousand dollars. This is indeed what appears to have played out over the past week, okay, so that's the Bloomberg report all around. I'll say it's rather bullish; although not too keen on the dog-themed cryptocurrencies, I'll leave a link to the account in the description. It's well worth your while. I now want to move on to the other information that I found particularly insightful this second report is the February monthly outlook written up by David dong from coinbase international I've read some of his research before and found it to be quite insightful, so in this report, David takes a look at the crypto markets in the context of global central bank liquidity he 

Also analyzes this in the context of where we are now compared with the crypto winter of 2018 and argues that movements today are more cyclical than structural. As I mentioned in my video on crypto winter, the markets have changed a lot since 2018. this is something that David drives home on the first page here the current inflow of liquidity into the crypto markets over the last two years will help to limit the extent of the drawdown in this tightening phase he notes that trying to judge the timing around this sell-off is going to be difficult as it's inherently due to fed policy however the improvements that have been made in price discovery and market-making could help keep the crypto markets efficient and reduce that volatility he also says quote the growth of stable coin volumes coupled with the wider adoption of smart contract platforms and improvements in underlying blockchain technology all set a foundation for this asset class to better weather market stress in the future on to the next page and this is quite telling while the sheer size of central bank liquidity injections is notable what's even more interesting is the fact that the ratio of the crypto market cap to this liquidity has been increasing it went from a negligible 0.1 to 2.8 in the crypto winter to over 9.4 percent in November 2021. 

although it has recently fallen to about 6, it's still a pretty significant percentage, so what this shows us is that the expansion of global balance sheets had a substantial impact on the valuation of numerous cryptocurrencies; however, the main driver of crypto volatility is not the absolute levels of this debt but the changes in that debt this is illustrated in the next chart where David shows the relationship between the changes in global central bank liquidity and balances on exchanges as you can see the trading activity on these exchanges appears to be impacted by the rise and fall in that liquidity as the author notes understanding the speed of the withdrawal of this liquidity by the central banks is important if inflation remains high and sticky then there's a chance that the fed could be 

more aggressive in its quantitative tightening and, hence, further flows onto the exchanges. David thinks that based on the sentiment from the fed's January 26 meeting, the fed is staying the course with a gentle policy of letting the purchases lapse i.e. no defined schedule on tightening, although the market does expect this to take place in July and august of this year the report also notes that these driving factors by the fed have turned bitcoin into more of a global macro play one where policies by the fed have pushed up the correlation with other more traditional markets however this has had its benefits it's contributed to a less volatile and more efficient bitcoin market it's these factors that lead David to state that the downside volatility and risk that we saw in 2018 

are unlikely to play out in this market cycle. It will be either shallower, shorter, or both. This next chart here ties into some of the conclusions of the previous Bloomberg report the massive increase in central bank liquidity has also helped to drive a great deal of growth in the stablecoin market. This is also strong support for the crypto market in these times of stress as it helps to keep stable liquidity in the crypto markets. At the start of 2018 beginning of the last crypto winter, stable coins made up less than 0.1 percent of the global central bank liquidity; however, today, they make up a staggering 4.7 this stable coin liquidity. 

The wider adoption of smart contract platforms and improvements in blockchain tech quote set a foundation for the crypto asset class to better weather market stress in the future. He also makes a good point here that these d5 smart contract protocols allow crypto investors to earn a yield from keeping that stable coin within the ecosystem. In essence, why sell your used when you can make five times the interest in a lending pool? For example, the report then concludes by also stating that the market positioning now looks a lot cleaner given the de-risking that we saw in January, negative funding rates on perps and futures basis being further negative points to this ain't no crypto. 

winter this year, here's hoping, so those are the two reports that I have for you today, folks, but I did have some of my own thoughts that I thought I would like to share with those of you who saw my recent video about the crypto winter you'll know that I don't think it's on the cards that's why it's great to see that other research analysts with established credentials are saying the same things one cannot deny that crypto offers a unique investment case that other assets just cannot match a point which keeps demand high that coupled with an inelastic supply helps sustain those high prices the rapid expansion of the stablecoin ecosystem has also been a strong buffer that has kept liquidity in the system liquidity 

That has been heavily driven by the fed's monetary policy. While the tightening of that monetary policy is leading to volatility in the crypto markets, it's a lot less severe than it would have been having liquidity conditions were similar to 2018. what this shows is that the bitcoin markets are incredibly mature and are now traded as most another institutional risk on assets yes, this does mean that there is a correlation, but this correlation is falling the more investors realize that crypto offers a unique investment case that they can't get with other assets the less likely they are to place it in the same risk bucket having 

said all this, the markets will still be very volatile, especially if fed tightening turns out to be more aggressive than initially expected; however, as long as you're investing based on fundamental factors and aren't overextending yourself, you are well-positioned for the long run, so while I still think that we are due for some stormy weather in the crypto seas, I'm keeping my eyes on the horizon the island of financial freedom is just beyond the waves, and that's it for my video today 

Folks, but it wouldn't be complete without your all-important feedback, so where do you think bitcoin is going in the next two months? Do you believe that the fed tightening will take the shine off? I'd love to know in the comments below also. While you're down there, I have something extra special for you. Yeah, that's right, it's me again. I'm gonna tell you about all the other places you can find the guy you understand, okay, go to his telegram insider. 

Channel for daily market updates, go to his Twitter for all the ladies from the bureau, huh that's the coin bureau, not the dirty wrath of the FBI; okay, if you want to look behind the scenes, go to Instagram tick-tock. Finally, he also has a weekly newsletter. You can see his personal portfolio and shares crypto tips there, too. You better not be tipping off the freezer. Well, I'm gonna pop his ass; okay, if you want to find all that stuff, go to the dedicated social page below for all the official links. If you wish some merchandise from the coin bureau, check out the merged store too; if you want some merchandise from me, you better be ready to pay for it. You understand finally, don't forget to like and subscribe because you know there's smoker stuff coming to your way man okay, we're done here. Let's go to yale

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