Hello and welcome to another edition of Overbit News, where we at Overbit.com try and bring you some of the top headlines around the financial industry, both for emerging and traditional markets.
For our first story of the day, we look at Bitcoin and a multi-billion-dollar catalyst on the near horizon for the world's first cryptocurrency.
After beginning the new year on a high note, Bitcoin has struggled to stay afloat, continuing to make lower highs since the local peak of $42,000. Though it may be disappointing for some investors, this is not an uncommon occurrence for Bitcoin, an asset that runs up by tens and hundreds of percentage points at a time and then retraces by 30% or even more.
That being said, this most recent price action is still rather typical of past corrections and would be much closer to consolidation than a full-out blowoff top. However, it seems this downward consolidation may be headed for an apex this Friday, 29 January, when more than $4 billion of Bitcoin options are set to expire according to a report from Forbes. This will be a new record, almost 50% more than the previous record set at $2.4 billion.
Though it's hard to say which direction this record expiration will drive Bitcoin, it's probably a safe assumption that it will provide enough of a catalyst to drive Bitcoin out of its current downward consolidation.
Our next story of the day takes a look at Ethereum's price action and the surrounding DeFi markets, which are painting quite a different picture than Bitcoin at the moment.
After almost two weeks of teetering near its all-time high, Ethereum finally busted through the resistance and set a new all-time high on Sunday, 24 January. Despite the monumental moment, it was relatively short-lived, as ETHUSD soon retraced the move back to near the $1265 level. Investors who expected instant price discovery were probably discouraged, yet it's important to remember the more times a level is breached, the weaker it often becomes. On top of that, the ETHBTC chart finally managed to break through the massive resistance of .04 as Ethereum continues to stay afloat better versus Bitcoin.
Despite the short-lived all-time high, this bullish price action by Ethereum gave more than enough room for its surrounding DeFi market to run wild. Coins like Aave, Sushi, and Uni, to name a few have put in more than 50% in the last few days. Although their upside is capped given how Bitcoin and Ethereum react, these recent days should serve as a stark reminder of how hard altcoins can move in the right market.
Closing out this week's edition of Overbit News, we're going to reference a report by CoinShares stating that investment flows into cryptocurrency funds and products hit a record of $1.31 Billion last week. Grayscale, the world's largest cryptocurrency manager, posted it had $24 Billion under management this, slightly down from $28.2 Billion on 8 January, 2021.
CoinShares, the second-largest cryptocurrency fund, managed $2.9 Billion, down from $3.4 Billion on 8 January. James Butterfill, investment strategist, at CoinShares stated that "We believe investors have been very price-conscious this year due to the speed at which prices in bitcoin achieved new highs".
According to the same report, approximately 97% of inflows went to Bitcoin. The total assets under management (AUM) are at $29.7 billion as of 22 January, up from $2 billion at the end of 2019 - showing the industry's astronomical growth. It's easy to see record growth in the cryptocurrency world, and rest assured Overbit.com is here to provide the solutions necessary to stay on top of these trends.