Bitcoin price hits $50K after bullish outlook from Citigroup and Goldman Sachs

Bullish maneuvers from MicroStrategy, Goldman Sachs and Citigroup are just a few of the factors backing Bitcoin’s rally back to $50,000.

On March 1 cryptocurrency investors woke up to the sight of Bitcoin (BTC) rising from it weekend correction to $44,000 as the market found its bullish momentum and altcoins rebounded from their swing lows.

Data from Cointelegraph Markets and TradingView shows that the price of Bitcoin increased 16.6% from its low of $43,504 on Feb. 28 to the $50,000 level which bulls are attempting to flip back to support.

BTC/USDT 4-hour chart. Source: TradingView

Earlier in the day, MicroStrategy CEO Michael Saylor tweeted that the firm had purchased another $15 million worth of Bitcoin, bringing its total holdings to 90,859 BTC and further demonstrating that institutional demand for the top cryptocurrency continues to grow as firms buy each dip’

Analysis of key BTC price indicators also shows that bulls were eager to buy the $43,000 retest which occurred over the weekend.

Not every analyst is bullish

Bitcoin’s surge above $49,000 has some calling for new all-time highs in the near future, but according to veteran analyst Peter Brandt, nothing is certain when it comes to the cryptocurrency market.

Today Goldman Sachs announced that it would restart its crypto trading desk and Brandt was quick to tweet the following chart and point out that its launch didn’t work out so well for the cryptocurrency market in December 2017. 

BTC/USD 1-week chart. Source: Twitter

According to David Lifchitz, Chief Investment Officer of ExoAlpha, it’s still “too early to tell” if the pullback in Bitcoin is over but $44,500 appears to have provided strong support.

In terms of whether the top cryptocurrency could breakout to new highs in March, Lifchitz said he’s uncertain on exactly what might happen as March is historically a bearish trading month for BTC.

According to Lifchitz, tax season in the U.S. could put bearish pressures on the market as investors may need to “sell some of their holdings to pay for earlier realized capital gains.”

From a bullish perspective, the 20% correction during the second half of February may have signaled an “early start” to the usual March weakness, with the worst of the downturn already transpiring.

Lifchitz said:

“Despite the 20% pullback, we’re still in an upward sloping trend since the October $10K breakout. The big unknown is what the miners will do as they are net sellers. They are the real short-term risk.”

Analysis of Glassnode’s Net Unrealized Profit and Loss (NUPL) metric shows that while both 20% corrections experienced during this cycle have created the “signature sideways and choppy” price action typically seen during bull markets, buyers have been stepping in sooner than they had in previous bull cycles and fewer long-term holders are willing to sell their BTC. 

Bitcoin Entity-adjusted NUPL. Source: glassnode

Steadying yields help to stabilize traditional markets

The traditional financial markets also rallied on Monday as Treasury yields stabilized and optimism related to the COVID-19 vaccine rollout boosted investor sentiment about the future of the global economy.

The S&P 500, Dow and NASDAQ all closed the day in the black, finishing up 2.38%, 1.95% and 3.01% respectively. The strong performance from each index occurred as global central banks world continue to reaffirm commitments to accommodative policies that will support the global economic recovery.

Altcoins also recovered their recent losses as Bitcoin price broke out to $50,000.

Daily cryptocurrency market performance. Source: Coin360

Binance Coin (BNB) was the best performer in the top 10, increasing 21% to $248, while Ethereum (ETH) saw its price rise 9.46% to $1,525. PancakeSwap (CAKE) and Fantom (FTM) both rallied price 36% and currently trade for $12.30 and $0.558 respectively.

The overall cryptocurrency market cap now stands at $1.52 trillion and Bitcoin’s dominance rate is 61%.

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‘Sustained institutional buying’ will hold Bitcoin above $50K: CrossTower

New research from CrossTower argues institutional buyers will hold BTC prices above $50,000.

In a report shared with Cointelegraph, institutional crypto trading platform CrossTower asserts that large investors will not let Bitcoin (BTC) fall back below $50,000.

According to the report, addresses holding over 1,000 BTC rose to record highs in January on the heels of sizable retracements — evidencing strong dip-buying from whales despite the relatively high price of Bitcoin.

Combined with positive business developments in the industry, such as Mastercard’s decision to integrate certain cryptocurrencies and BNY Mellon’s newly launched custody services, CrossTower believes the outlook remains bullish for the digital asset markets. The firm also described the growth of corporate Bitcoin treasuries, such as Tesla’s $1.5 billion BTC acquisition, as strengthening the bullish case.

“We believe the record amounts of addresses holding 1,000+ BTC in recent weeks is proof of rising institutional interest and likely reflects the many headlines in January and February of institutional investors becoming active in Bitcoin,” Martin Gaspar, research analyst at CrossTower, told Cointelegraph.

He continued:

“In our view, many institutional investors are entering with a buy-and-hold mentality given their understanding of Bitcoin as digital gold. The on-chain data suggests that these investors, traditionally seen as smart money, saw the January price weakness as an opportunity to acquire BTC or enter the space, which supports our bullish view of BTC.”

CrossTower also noted a sharp decline in the sum of Bitcoin held on centralized exchanges amid record stablecoin holdings and volume, describing the trend as providing further bullish momentum to the markets. Analyzing data from CryptoQuant, CrossTower found stablecoin volumes on crypto exchanges totaled $7.4 billion as of February — up nearly 159% from December 2020.

BTC price briefly fell below $50,000 on Monday but has since regained its footing above $53,000. Despite the sudden correction, Bitcoin has appreciated by more than 12% over the past week. Year-to-date, the BTC price is up almost 85%, according to CoinMarketCap data. 

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Here’s how multi-leg options allow traders to profit from $2K Ethereum price

Using multi-leg options can give traders a less risky way to invest in Ethereum price as it pushes above $2,000.

This week Ether (ETH) price finally broke through the $2,000 level as aggressive institutional inflow through Grayscale Investments products and declining exchange reserves signaled that buying pressure was increasing.

While many traders are skilled at using perpetual futures and the basic margin investing tools available on most exchanges, they may be unaware of additional instruments that can be used to maximize their gains. One simple way, albeit expensive, is buying Ether call option contracts.

Ether 60-day historical volatility. Source: TradingView

For example, a March 26 call option with a $1,760 strike trades at $340. In the current situation, the holder would only profit if Ether trades above $2,180 in 39 days, a 21% gain from the current $1,800. If Ether remains flat at $1,800, this trader will lose $300. This is certainly not an excellent risk-reward profile.

By using call (buy) options and puts (sell), a trader can create strategies to reduce this cost and improve the potential gains. They can be used in bullish and bearish circumstances and most exchanges offer easily accessible options platforms now.

The suggested bullish strategy consists of selling a $2,240 put to create positive exposure to Ether while simultaneously selling a $2,880 call to reduce gains above that level. These trades were modelled from Ether price at $1,800.

Two out-of-the-money (small odds) positions are needed to protect from the possible price crashes below 20% or Ether gains above 130%. Those additional trades will give the trader peace of mind while also reducing the margin (collateral) requirements.

Profit / Loss estimate. Source: Deribit Position Builder

The above trade consists of selling 1 Ether contract of the March 26 put option with a $2,240 strike while selling another 1 Ether contract of the $2,880 strike. The additional trades also avoid the unexpected scenarios for the same expiry date.

The trader needs to buy 0.73 Ether contracts of the $4,160 call in order to avoid excessive upside losses. Similarly, buying 1.26 Ether contracts of $1,440 puts will protect against more significant negative price moves.

As the estimate above shows, any outcome between $1,780 and $3,885 is positive. For example, a 20% price increase to $2,160 results in a $478 net gain. Meanwhile, this strategy’s maximum loss is $425 if Ether trades at $1,440 or lower on March 26.

On the other hand, this strategy can net a positive $580 or higher gain from $2,240 to $3,100 at expiry. Overall it yields a much better risk-reward from leveraged futures trading, for example. Using 3x leverage would incur a $425 loss as soon as Ether drops 8%.

This multiple options strategy trade provides a better risk-reward for those seeking exposure to Ether’s price increase. Moreover, there is zero upfront funds involved for the strategy, except from the margin or collateral deposit requirements.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Venus (XVS) rallies 900%, TVL hits $3.54B after Binance Smart Chain launch

Venus protocol becomes the top-ranked DeFi platform on the Binance Smart Chain as XVS price and the total value locked in the platform reach new highs.

As decentralized finance continues to increase it hold on the wider cryptocurrency market, Binance Smart Chain (BSC) is beginning to emerge as a suitable option for traders looking to escape from high transaction fees on the Ethereum (ETH) network. 

With more attention being paid to BSC, DeFi projects operating on the chain have also seen an influx of buying activity in recent weeks as token holders rush to supply liquidity for recently launched protocols. One such project is Venus (XVS), an algorithmic money market and synthetic stablecoin protocol designed specifically for the BSC.

XVS/USDT 4-hour chart. Source: TradingView

Data from Cointelegraph Markets and TradingView shows that XVS price has exploded 775% from a low of $10.04 on Feb. 2 to an all-time high of $82.86 on Feb. 18 amidst an increase in activity on BSC.

Total value locked grows as the list of supported assets expands

A scroll through the project’s Twitter feed points to a rapidly expanding ecosystem that has been systematically adding top cryptocurrency projects to its list of assets that can be deposited to earn interest, participate in the liquidity mining program, or use as collateral to borrow other assets.

Cardano (ADA) is the most recent addition, while the other projects currently available are Ethereum (ETH), Litecoin (LTC), Polkadot (DOT) and Chainlink (LINK)

Similar to the MakerDAO (MKR) platform and DAI, users of Venus can borrow against their assets and mint Vai, the stablecoin for the Venus protocol. Since Feb. 1, the supply of VAI has grown by 360% from 42 million tokens in circulation to a current count of more than 195 million VAI.

According to the Venus dashboard, there is currently $3.54 billion in total value locked in the Venus protocol, making it the seventh-largest DeFi protocol by TVL behind SushiSwap which currently has $3.7 billion in TVL.

Total value locked, total borrowed and available liquidity on Venus. Source: Venus

A survey of the top-performing assets over the past week shows that BSC projects have outperformed the competition and are beginning to attract liquidity away from projects on the Ethereum network.

XVS/USDT price compared against direct competitors. Source: TradingView

High gas fees on the Ethereum network are likely to continue for some time and this could catalyze further growth in chains like BSC and DeFi protocols that are able to capitalize on its lower transaction costs.

With an expanding list of supported tokens and a rapidly growing TVL, Venus is quickly establishing itself as a top contender in the decentralized finance space.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Whales profit as high Ethereum gas fees sideline retail DeFi investors

High gas fees on the Ethereum network are making it nearly impossible for retail investors to interact with DeFi protocols but the same doesn’t apply to whales.

Since early 2020 the decentralized finance sector has been recieved a lot of attention due to its cutting-edge innovation and the lucrative high yield opportunities offered to cryptocurrency holders. 

Despite these features, this week’s record-high gas fees show that the sector is still having growing pains and the absence of a suitable layer 2 solution could be pushing smaller investors away from DeFi.

Investors attempting to place a trade on Uniswap or simply approve a new token on their favorite DeFi platform will have noticed the dent these actions have put on their ETH wallet.

Average Ethereum gas price. Source: Etherscan

Data from Etherscan shows that while gas prices have not reached as high as they were in 2020, they are noticeably higher since December of last year. This rise in gas fees also coincides with the surge in Ether price.

Analysis of different time zones shows that the cost for transactions occurring during the Asian trading session are comparable to those during the U.S. trading session. This shows that the fees are a factor of network usage and highlights the 24-hour nature of the cryptocurrency market.

Average Ethereum fees by day in 2020. Source: Flipside Crypto

There is one group, however, that has benefited from the sharp increase in network fees. fees brought on by the rise of DeFi: Whale token holders.

A closer look at wallets that contain at least 20 ETH throughout 2020 shows a higher number of Ethereum transactions than those coming from smaller wallets, which also correlated to an increase in fees.

Number of transfers by wallet size in 2020. Source: Flipside Crypto

Since gas fees are not calculated based on the size of the transaction but rather the cost to interact with smart contracts, large wallet holders are more likely to engage with the protocol during higher congestion times as a larger wallet balance is less affected by raising transaction costs.

Hypothetically, a $200 trade and a $20,000 trade on Uniswap could both cost roughly $50 in fees under current conditions, making it less likely that smaller wallets will engage as the cost of the trade is 25% of the total value traded versus 0.25%.

In order for DeFi to continue its explosive growth, the gas issues seen on the Ethereum network problem will need to be addressed before any level of mass adoption can be achieved.

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