Crypto’s Last Week

This edition of “Crypto’s Last Week” accounts for the most notable, and crypto-related — institutional, investment, or regulatory — news published between Saturday, January 02, 2021, and Friday, January 08, 2021.

With the rise of the crypto market capitalization to $1 trillion within the first days of January 2021, the current bull market has blasted through many important all-time highs established during the 2017–2018 bull run that had set the goals so many within the industry saw as mere distance markers in this metaphorical marathon that is the growth of the industry and subsequently the market.

With Bitcoin and Ethereum leading the pack with 68.6% and 13.1% respectively, the market has used this milestone as fuel to build up buying pressure and push not only the aforementioned coins towards higher highs but also pull a group of “Alt-coins” to higher valuations.

And while December 2020 has been the record-breaker with a reported $379B monthly trading volume “eclipsing 2018 established high”, it seems January 2021 is on track to push the limits even further, with over $200B trading volume up to January the 8th and a bullish sentiment that doesn’t seem to be exhausted yet, somewhat proven by the continuously diminishing BTC reserves held in all exchanges’ wallets.

Another indicator that differentiates the previous bull runs of the market, which was non-existent during the 2017–2018 period, is the open interest in Bitcoin derivatives. These have also reached an all-time high during the first week of January. Aggregated open interest futures reached $10.7 billion and open interest options reached $7.96 billion with seemingly new all-time highs in sight.

Additionally, the DeFi sector of the industry has also seen the positive effects of this upwards trend with reiterating record highs on a regular basis for weeks, clearly indicating the healthy growth that DeFi projects are considered to have. The logic behind this assumption would be, with the rise of value in the main coin market has permitted retail and institutional investors cash out gains and allocate this capital into what is considered to be the most promising sector related to blockchain.

Similarly, Decentralized Exchanges (DEX) have also seen a sharp rise in monthly volumes, with December 2020 positioned as the 2nd highest month while January 2021 is nearly reaching the 50% mark of the highest DEX volume established in September 2020 after only 8 days of the month passed.

After all these technical details, we expect this bull run to be fundamentally different from the previous ones, due to a considerably different context in global financial and economic environments and more importantly as a direct effect of a more mature market that has been proven to withstand critical events.

Editor’s Note: James Wo is an active investor and the Founder of Digital Finance Group (DFG), a firm that manages investments in excess of $550M. He oversees a digital asset fund that is largely outperforming the market and a VC portfolio that includes Polkadot and its ecosystem projects such as Bifrost, Tidal, Crust, Acala, and more. He’s also managed investments in Brave, LedgerX, Bloq, and Circle. Additionally, James is the Founder and Chairman of Ethereum Classic Labs, the leading supporter of Ethereum Classic (ETC), a public blockchain with a market cap of $1.5B. He is Chairman of Matrix Exchange Ltd., a licensed virtual asset trading platform and custodian regulated by the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market in UAE.

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