Bitcoin has undoubtedly had an amazing week having made new all time highs on the largest bitcoin exchange by way of volume CME Group. The fact Bitcoin did not make a new all time high on retail exchanges and only on institutional trading platforms like CME points to who is really driving this bull run and why the Bitcoin bull run in my opinion is just getting going.This week we have had record institutional volume coming from institutions as CME surpassed OKEX as the largest crypto derivatives platform. This recent surge in volume has been caused by a lack of trading on Thanksgiving last week causing a slow end to the week followed by major news events such as the Guggenheim Partners $295 billion investment fund making a $500m investment into Grayscales GBTC, and of course the recent launch of Ethereum 2.0 bringing new eyes onto the crypto market as people really begin to understand that crypto is not fairy dust but in fact it is real, with real world value.
So all of this begs the question, what comes next? Well as a Cryptocurrency Trader and market analyst, from my perspective Bitcoin is far from done with its almighty rise yet. In fact I believe that we are just at the start of this bull run. This week Bitcoin made the significant move of breaking the high set last week and thus continuing the bullish trend.
Since making its new high at 11am on December 1st, the price of bitcoin has been consolidating between the $18,500-$19,500 level as we experienced large amounts of volatility that made for a great start to the week’s trading. Since this point as the volatility has reduced and the price has consolidated to the upside.
Going forward into the weekend Bitcoin will more than likely continue this consolidation period causing attentions to fade on bitcoin as institutions take the weekend off. Much of the attention will more than likely divert back to the Altcoin space that has consistently every weekend recently experienced huge price increases on most altcoins.
I trade Altcoins just as frequently as I trade Bitcoin because due to the increased volatility they experience I find just holding Altcoins in a bull market to be preferable to holding any stablecoin alternative. With the launch of Ethereum 2.0 this week there has been a lot more eyes on the Altcoin space and more will follow, Ethereum 2.0 will not cause the prices of everything to go to the moon overnight.
The updated protocol will have a delayed price effect as applications like coinbase safely install the staking functionality within their app. This will allow holders of 32 Ethereum or more to stake in a coinbase wallet and earn passive income on their holdings. You can stake without going via a centralised exchange like coinbase but most users of cryptocurrency generally avoid anything complex such as depositing into the Ethereum deposit contract for fear of losing funds. There are currently 1,003,906 Ethereum in the Ethereum deposit contract proving that people are adopting ETH 2.0 but not on a mass scale with that being approximately 1/113 of the total supply of ethereum.
When staking ethereum becomes more accessible to the every day cryptocurrency holder, this is when I expect the price of ethereum to go crazy, much like the price of bitcoin started to go crazy when institutional demand began to outpace supply on a grand scale. We are simply waiting for the balance to tip and the new tokenomics model to kick in, when the number of staked ethereum rises, the volatility on the markets will increase due to a reduced amount of liquidity making small buy orders more powerful and thus the balance will tip in favour of demand outpacing supply due to the passive income that can be earned from staking.
So going forward into the next week, what do I expect to happen? After Bitcoin completes its daily close today I expect a fairly slow weekend followed by a bullish breakout next week by all cryptocurrencies. Buying power is far larger than selling pressure at the moment, Grayscale added over 7,000 Bitcoin to their trust just this week. I believe if Bitcoin drops below $18,200 then we will close the CME gap that formed at $16,925 but any kind of dip would be short lived as institutions just cannot get enough bitcoin at the moment! If Bitcoin breaks above $19,625 then we will more than likely head in for a retest of the all time high, and third time lucky we should break through!