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Amazon Partners with Ava Labs, SEC Investigates Genesis and Gemini over Earn, and More!
Positive signals continue in crypto’s second all-positive week with the largest short squeeze in months. Bitcoin increased by 21% week-over-week and broke the 200-day moving average (SMA) threshold for the first time in 381 days. In the last bear market it took Bitcoin 386 days to trade above its 200-day SMA. Ethereum soared by 18% over the past week. Outliers of last week’s rally were Solana, Optimism, and Curve. Solana, which has increased by a whopping 46%, seems to be still enjoying the hype created by the meme token called BONK. Optimism stood out within major scalability solutions, soaring by 41%, which can be attributed to a surge in transaction volume that could have been made on the back of announcing the Shanghai testnet to be slated to take place next month. Finally, in DeFi, Curve was the first runner-up with a weekly performance of 33%.
Figure 1: Weekly TVL and Price Performance of Major Crypto Categories
Source: 21shares, CoinGecko, DeFi Llama. Data as of January 16 (close price).
Key takeaways
• Bitcoin increased by 21% week-over-week and broke the 200-day moving average (SMA) threshold for the first time in 381 days.
• SEC launches investigations and lawsuits on Gemini and Genesis.
• Polygon proposes a network incremental improvement to address fee spikes and mitigate chain-reorganization.
• BONK, a “meme coin” creates hype on Solana-based NFT marketplace Magic Eden.
Spot and Derivatives Markets
Figure 2: Total Crypto Liquidations
Source: Coinglass
Over the past week, we have seen the largest short squeeze in months of over $1 billion liquidated on Binance, OKX, and Bybit. This dynamic is an indication that there were more funds betting against Bitcoin and the recent positive rally disappointed their positions. The recent price action is simply a regression to the mean. We are back to levels where we were post the LUNA debacle and pre-FTX. In other words, as an industry we are better off without FTX and Alameda. However, it is important to note that this rally may not be long lasting as we may face mispriced headwinds. The silver lining is
On-chain Indicators
Figure 3: Ethereum’s Network Value to Transactions Signal
Source: Glassnode
The chart above measures the market sentiment of Ethereum, dividing its market cap by the 90-day moving average of daily transaction volume. NVTS signal closed at almost 87 on Monday, increasing by 14% week-over-week. This increase means that Ethereum’s market cap is outpacing its transaction volume, which aligns with the price movements of scalability solutions.
Next Week’s Calendar
Source: Forex Factory, CoinMarketCal
Read our full report here
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
• Global crypto asset adoption rates are significantly higher than previously estimated.
• The data generally suggest that both the US and Europe may be at the cusp of mass retail adoption – a situation often referred to as “Hyperbitcoinization” in the context of Bitcoin.
• Chances are that the growth of adoption will surprise to the upside due to the fact that we are most likely at the inflection point from ”Early Adopters” to ”Early Majority”.
Trump recently made a public statement implying that 50 million Americans already held ”crypto”. The most recent surveys among US consumers seem to support this number.
It is no surprise that cryptoassets have become a major topic during the US presidential election as the parties have become increasingly aware that cryptoasset users could play a significant role at the ballot.
Both Trump and Robert Kennedy Jr. are scheduled to deliver a pro-Bitcoin speech at the upcoming Bitcoin conference in Nashville over the weekend.
It seems as if cryptoasset users are not a small minority anymore that can be ignored.
Here are some recent US bitcoin and crypto adoption surveys for comparison (% of total population in brackets):
• Security.org: 93 mn (28%)
• Unchained: 86 mn (26%)
• Statista: 53.6 mn (16%)
• Morning Consult: 44.2 mn (13%)
• Finder: 38.4 mn (11%)
In general, cryptoasset adoption has been on the rise globally.
A recent global survey among institutional investors conducted by Fidelity even implies that 51% of surveyed institutional investors have already invested into cryptoassets such as Bitcoin.
Another recent consumer survey by Statista implies that approximately every 5th person (21%) worldwide has already invested into cryptoassets.
However, it’s important to highlight that among the top 10 regions with the highest adoption rates, 8 regions are developing countries.
So, cryptoasset adoption rates are even significantly higher among developing countries than in developed countries that often suffer from chronically high inflation rates and weak domestic currencies.
That being said, the data generally suggest that both the US and Europe may be at the cusp of mass retail adoption – a situation often referred to as “Hyperbitcoinization” in the context of Bitcoin.
The reason is that technological adoption in general tends to accelerate at the threshold from the so-called “early adopters” to the “early majority” which is around 16% adoption rate based on the model of technological adoption famously put forth by Rogers (1962).
Global adoption rates are already at 21% while adoption rates in the US and Europe are at around 16% and 14%, respectively. So, there is a strong case for an acceleration of adoption rates in these regions and globally over the coming years.
Recent political developments in the US also imply that Bitcoin and cryptoassets are gradually becoming mainstream.
Trump has recently endorsed domestic Bitcoin mining in the US and both Democrats and Republicans have started accepting crypto payments for campaign financing.
The big success of the spot Bitcoin ETFs this year and the fact that additional types of spot crypto ETFs are being launched marks a significant shift in sentiment among US regulators in this regard.
In short, chances are that the growth of adoption will surprise to the upside due to the fact that we are most-likely at the inflection point from ”Early Adopters” to ”Early Majority”.
Bottom Line
• Global crypto asset adoption rates are significantly higher than previously estimated.
• The data generally suggest that both the US and Europe may be at the cusp of mass retail adoption – a situation often referred to as “Hyperbitcoinization” in the context of Bitcoin.
• Chances are that the growth of adoption will surprise to the upside due to the fact that we are most likely at the inflection point from ”Early Adopters” to ”Early Majority”.
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