Author: BTCLFGTEAM
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Bulls back on top, but all eyes on the Federal Reserve
Key Takeaways
- Crypto banks best January in nearly a decade
- 68% of the Bitcoin supply in profit, compared to 50% at the start of January
- Correlation between Bitcoin and risk assets is close to all-time highs, with Federal Reserve’s interest rate policy continuing to hold the key
It’s important to celebrate the wins, huh? And wow, did crypto investors need a win. Following a year filled with bankruptcies, arrests, layoffs and red charts, the new year has got off to a nice little start.
In fact, January is crypto’s best month since 2013. Let’s dig in and look at summary statistics from the banner month, and get the lay of the land as we turn the page into February.
Funding rate positive
Opening the month at $16,600, Bitcoin closed out January trading at $23,100 for a cool 39% gain.
The funding rate is the price which traders pay to either long or short an asset on the futures market. If the funding rate is positive, it means long trades are dominant and long traders are paying short traders for positions. The vice-versa also holds, meaning a negative funding rate implies short traders are paying long traders.
This means that, while far from perfect, it is a decent gauge of market sentiment. Looking at the rate throughout January, it was positive on all but two days, as bulls ruled the roost.
Bitcoin traders are back in profit
The best way to sum up the fortunes of the crypto market this month is to look at the amount of supply in profit. Things ended pretty acrimoniously last year, with half of the 19.3 million circulating supply of Bitcoin in profit.
Fast forward 31 days and this figure is now up at 68%.
Road back is long
Of course, I wrote only yesterday about how severe the damage caused in 2022 was. This is not the case of a little tender care flipping the fortunes of the market around. The industry is still besieged by bad news, with layoffs and bankruptcies far from over, if the past couple of weeks is anything to go by.
Crypto, more than ever, is simply following macro. There is nothing else causing this rally. And with the US Federal Reserve meeting this afternoon to outline its latest interest rate policy, the bounce could be reversed pretty quickly, or even boosted further, depending on the words of chairman Jerome Powell.
Correlations remain sky-high
Don’t take my word for it. A quick look at the correlations at play here shows quite how much Jerome Powell is holding Bitcoin’s hand.
There’s an irony in there somewhere; a legion of crypto traders waiting nervously on the words of the chairman of a central bank to discover where Bitcoin, and the rest of the market, is headed. What was that about a hedge narrative?
And if the correlation between the market and Bitcoin was steep, you can bet your bottom satoshi that its even higher between Bitcoin and the rest of the market. Ever since we transitioned into this new era of increased interest rates around April 2022, the Fed has been holding Bitcoin’s hand ever tighter, and Bitcoin has been holding the hand of every other crypto.
Final thoughts
It’s been a stellar month for crypto, throwing up memories of the explosive runs it was capable of back in the good old days of the bull market.
With the Federal Reserve announcing its latest interest rate policy this afternoon, markets could show volatility, with impetus to this latest rally, alongside an abrupt curtailment, both on the cards depending on the tone that chairman Jerome Powell strikes.
In the long-term, the space is still reeling from the numerous negative events of the past year, and Bitcoin trading like a levered bet on the Nasdaq is far from ideal.
Despite fundamentals appearing similar to a commodity, and big dreams about the future, Bitcoin remains a highly speculative asset for now. And as for the rest of the crypto? Just copy and paste the Bitcoin analysis, while ramping the volatility up a notch (or three).
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Analyst shares NOIA price outlook after 168% gain
- NOIA is the native token of Syntropy, a distributed routing protocol for the Internet.
- The token’s price surged 168% from its December lows and one analyst says bulls are likely to aim for more.
- Sentiment is bullish for Syntropy ahead of its public network launch.
Cryptocurrencies are looking to end January on a winning note, with most digital assets rocking huge gains in a month that saw Bitcoin break above $23,000.
On 31 July, the total crypto market capitalization was above $1 trillion, helped by Bitcoin’s market cap rising to $446 billion to account for a market dominance of 40.9%. A similar upside trend has been observed across altcoins, led by Ethereum’s breakout from lows of $1,200 at the beginning of the month.
Analyst says NOIA could do another 2x
Perhaps notable is the bullish sentiment for Syntropy that has been increasing since the team updated the token’s circulating supply schedule and as the platform edges closer to its public launch.
Less than a week until our important launch 👀
With the public network launch and revised @SyntropyStack website, we will reveal a completely new Syntropy Knowledge Hub designed for novice and experienced individuals to learn everything about #Syntropy and $NOIA in one place. pic.twitter.com/AfGS5jrfIP
— Syntropy (@Syntropynet) January 31, 2023
While tokens like Aptos and dYdX continue to outperform, crypto analyst Rekt Capital is pointing to one other coin that could benefit from the recent bull run.
According to the crypto trader, Syntropy (NOIA) is likely to do a 2x if it holds a crucial price level on the monthly close. In a tweet early Tuesday, the highly respected analyst noted that NOIA’s 168% rally from its lows in December has the Syntropy token at a crucial area.
“NOIA enjoyed a +168% rally from December’s lows & is now approaching a crucial area. If NOIA is able to turn the green box top (~$0.068) into support on Monthly Close, Syntropy could be well-positioned for another 2x rally,” he suggested.
Syntropy (NOIA) price prediction chart. Source: Rekt Capital on Twitter.If bulls hold the highlighted price zone ($0.068), Rekt Capital sees a 135% or more rally towards $0.15. That could open up the NOIA price for a potential retest of its all-time high price near $0.20. However, a negative flip could see bears push for $0.030 or even target $0.020.The Syntropy token was changing hands around $0.065 early afternoon on Tuesday, up 2.3% in the past 24 hours and 32% higher this past week.
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Core Scientific agrees $70M loan facility from B. Riley
- Core Scientific is seeking emergency relief from the bankruptcy court for it to secure a replacement loan facility.
- According to court documents, the miner has agreed to a $70 million credit facility from investment banking firm B. Riley.
- The company will use the funds to pay off an existing loan to avoid defaulting,
Core Scientific, a Bitcoin mining firm that filed for Chapter 11 bankruptcy orotection in December last year, says it’s agreed to a $70 million financing facility from B. Riley Commercial Capital, LLC.
Court documents the Bitcoin miner filed on Tuesday reveal that the crypto company seeks to use the loan facility from the investment bank to pay off an existing debtor-in-possession (DIP) facility.
Core Scientific seeks emergency relief
The miner seeks an emergency relief from the bankruptcy court, which it says is needed no later than 11:30 am CET on Wednesday, 1 February, 2023. As noted in the filing, the crypto miner would be in default under the terms of the original DIP facility.
The Core Scientific team says if approved, the first part of the facility will be $35 million before the rest follow. Securing the new credit facility from B. Riley is key to the miner continuing its operations as it navigates its bankruptcy process.
The past year proved to be particularly brutal for crypto mining companies, with the crash in Bitcoin prices and surging energy costs combining to hurt business. Core Scientific was one of the largest miners to seek bankruptcy protection as Bitcoin price collapsed once more following crypto exchange FTX’s implosion.
At the time of its bankruptcy filing, Core Scientific revealed liabilities of $1 billion to $10 billion.
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Tesla saw a net loss of $140 million on its Bitcoin in 2022
- Tesla recorded gains of $64 million and impairment loss of $204 million.
- The company has revealed it sold 75% of its Bitcoin holdings, and held BTC worth about $184 million as of 31 December 2022.
- The electric vehicle maker bought Bitcoin worth $1.5 billion in 2021.
Tesla has revealed that the company sold most of the Bitcoin it purchased in 2021, and suffered a significant loss on the digital assets it currently holds during the 2022 crypto crash.
In its Form 10-K filing with the US Securities and Exchange Commission (SEC) on Tuesday, 31 January, Tesla disclosed that it gained $64 million from its digital assets holdings when converting them into fiat currency.
However, according to the filing, the electric car maker’s Bitcoin bet also included a $204 million impairment loss for the year ending 31 December 2022.
All the gains recorded during the year were offset by the net impairment loss, which resulted from Tesla’s move to restructure its operations around the asset. This means the company reported a net loss of $140 million on its crypto trading in 2022.
“During the years ended December 31, 2022 and 2021, we recorded $204 million and $101 million of impairment losses on such digital assets, respectively. During the years ended December 31, 2022 and 2021, we realized gains of $64 million and $128 million, respectively, in connection with converting our holdings of digital assets into fiat currency,” the company reported.
Tesla has sold 75% of its Bitcoin
Elon Musk’s company revealed that it received or purchased an “immaterial amount” of crypto last year. The tech giant plashed $1.5 billion when buying Bitcoin in 2021.
As of 31 December, 2022, Tesla had sold roughly 75% of its Bitcoin. Per the filing, that left the company with around $184 million worth of digital assets as of the end of last year, down from $1.26 billion at the end of 2021.
While the fair market value BTC held as at 31 December 2021 was close to $2 billion (after Bitcoin price soared to highs of $69,000), the company’s total crypto holdings at the end of 2022 had a fair market value of approximately $191 million.
Notably though, that value could be much high given the price of Bitcoin has soared nearly 40% year-to-date. The company’s stock (think the Bitcoin vs. Tesla stock comparison) has also soared over the past 30 days, with TSLA up nearly 56% YTD on Tuesday morning.
