What is Happening with Bitcoin Adoption?

Newsletter of the week 29 July - 5 August. In this week's newsletter we cover Price Action, Crypto Adoption, and Large Scale Layoffs.
by Yoaquim Boom
September 18, 2022

In This Week’s Newsletter:

  • Bitcoin faces noteworthy resistance at 24k
  • Ethereum attempts at another market-leading breakout
  • Institutional adoption continues to rise, but at what cost?
  • Retail attention for Bitcoin remains stagnant on numerous indicators
  • Large-scale layoffs continue in the Tech and Crypto sectors
  • BlackRock partners up with Coinbase in favor of their investors

Bitcoin Price Analysis

Bitcoin continues to consolidate within the flag pattern. Bitcoin is facing a lot of resistance at the 24k level and has been unable to break through the crucial resistance level for numerous days now, forming long wicks above the level (See Fig. 1).

The longer Bitcoin takes to break out to the upside of the flag pattern the more wary investors get.

Fortunately, Bitcoin has broken its daily trend of seven red candles in a row, currently finding support at the 34 MA, and is possibly setting up another attempt at breaching that 24k level.

In last week’s newsletter, we covered the three flag patterns Bitcoin has been in since its November highs. This week we wanted to show you an inverted look at the chart (See Fig. 2), if this were a bull trend, as bullish investors we would certainly be expecting a retest of that 12k level. Therefore, we should remain diligent for the time being.

Fig. 1 1D BTC May 2022 - Aug 2022 (TradingView)

Fig. 2 1W BTC Jun 2019 - Aug 2022 (TradingView)

Ethereum Price Analysis

The outlook for Ethereum remains relatively unchanged since last week’s newsletter in which we extensively covered Ethereum's relative strength.

Ethereum has continued to show its relative strength in relation to the rest of the Crypto market and remains in a great position for a potential breakout.

Ethereum still sits right at the brink of breaking through the significant long-term support and resistance area of $1750 (See Fig. 3).

On the Daily chart, Ethereum has flipped a key pivot point ($1600) into support and has had a significant bounce from that area (See Fig. 4).

On the 4H Ethereum formed a bull flag, which can be seen testing the pivot point as support, after which it broke out to the upside of its recent flag (See Fig.5).

Fig. 3 3D ETH Nov 2021 - Aug 2022 (TradingView)

Fig. 4 1D ETH Jun 2022 - Aug 2022 (TradingView)

Fig. 5 4H ETH Jul 2022 - Aug 2022 (TradingView)

Political Attention, Regulatory Action, and Institutional Adoption

A Blockchain Expert in the Whitehouse
A recently introduced bill in the American senate that primarily addressed the possible upcoming semiconductor supply chain issues in the U.S also addressed the necessity for a Blockchain and Cryptocurrency specialist position in the OSTP.

Hidden somewhere in between the lengthy bill is a section that introduced a blockchain and cryptocurrency specialist position in the OSTP which would serve to “advise the President on matters relating to blockchain and cryptocurrencies.”

Portugal's Banks Crack Down on Crypto Exchanges

The previously renowned ‘Crypto Haven’ Portugal has begun to take back their support of the Crypto industry.

Some of Portugal’s biggest banks announced they were closing and freezing at least three licensed crypto exchanges’ bank accounts due to fear of money laundering facilitated by these exchanges.

The institutional adoption and regulatory action have been simultaneously drastically increasing in the past few bearish months.

Blackrock Partners up with Coinbase

On the 4th of August Blackrock announced their partnership with Coinbase in order to expand their clientele’s exposure to Bitcoin and the Crypto space despite the controversial probing the SEC is currently doing into Coinbase’s listing of possibly unregistered securities.

Coinbase stock saw an increase of over 40% in price Pre-Market after the announcement (See Fig. 6).

Currently Coinbase stock still sits a moderate 12% above the pre-announcement prices.

Fig. 6 COIN Jun 2022 – Aug 2022 (TradingView)

A Lack of Retail Scaling

Crypto.com projects Crypto adoption to skyrocket to around one billion users by 2024 (See Fig. 7). Yet, the eyes on Bitcoin have been diminishing in recent months since the bearish downturn.

Despite Bitcoin's numerous attention-evoking relief rallies of over 40%, Google searches have been decreasing substantially throughout July (See Fig. 8).

Although we are certainly seeing more Bitcoin adoption by institutions, retail users have shown little to no increase in the last few months.

This stagnation in activity on the Bitcoin network is also reflected in the number of active Bitcoin addresses not having grown much in number since the April 2021 65k~ top (See Fig.9).

Fig. 7 Crypto.com Technology Adoption Curve (Crypto.com)

Fig. 8 Interest in / Searches for  “Bitcoin” in Google Trends (trends.google.com)

Fig. 9 Number of Active Bitcoin Addresses 2010-2022 (glassnode.com)

Continued Large Scale Layoffs in Tech and Crypto

Many Tech and Crypto related companies are currently continuing to laying off a big chunk of workers.

These layoffs are occurring at big companies in the industries such as Tesla, JPMorgan, Netflix, Coinbase, Shopify, and Robinhood.

With a potential recession on the horizon, it is no surprise companies are carrying out these large-scale layoffs.

Investors want to see companies in which they've invested take preparatory action for the potentially tough times ahead and laying off workers is one form for companies to show initiatives toward capital protection.

The economic upturn since the COVID crash impelled companies to expand, this expansion coupled with the increased rate of remote work enabled employers to find new talent worldwide.

This economic growth and increased hiring potential started a hiring spree. Employers are now putting an end to their hiring sprees, and some are even having to decrease their headcount.

Another cause of layoffs is the decrease in demand due to the rising inflation. Consumers may be more reluctant to purchase goods and services.

At JPMorgan, this was certainly noted. Their employee cut of 1000~ employees in its home-lending department came largely due to the slowing demand for mortgages and refinances.

There are many reasons for companies to decrease their headcount in the current market space, yet the overall unemployment rate remains inverse to the tech and crypto layoffs.