Cryptocurrency

The Month in Review: Analyzing the Cryptocurrency Markets for October

Digitex Futures
• Dave Reiter
October 30, 2020

October was a very good month for the large cap crypto universe. The cryptocurrencies with the largest market capitalization turned in the best performance. Bitcoin led the way, with an impressive gain of 25.8%. Historically, it’s a good sign for the entire crypto space whenever BTC generates a healthy rate of return. It means that investors are increasing their exposure to digital currencies. NEO was the notable loser of the month, with a sharp decline of 19.5%. 

The Month in Review: Analyzing the Cryptocurrency Markets for October 1

What to Expect in 2021 and Beyond: BTC, ETH, DGTX

Bitcoin (BTC)

As we enter the final 60 days of 2020, it appears that BTC will deliver another spectacular yearly performance. Bitcoin has enjoyed a YTD return of 90.3% so far. As you know, BTC was launched in 2009. However, for the first two years of its existence, pricing information was rather sporadic. Reliable price data became available in late-2010. Since 2011, BTC has generated an average annual return of 965.9%. 

  • 2011 1,344.8% 
  • 2012 220.7%
  • 2013 5,586.5%
  • 2014 58.8% (-)
  • 2015 35.6%
  • 2016 123.4%
  • 2017 1,420.8%
  • 2018 74.6% (-)
  • 2019 94.7%

Where do we go from here? What’s in store for Bitcoin as the cryptocurrency approaches its 13th year of existence in January 2021? Without question, BTC is firmly on the path to mainstream adoption.

2020 will be remembered as the year that Bitcoin was first embraced by the global investment community as a major asset class. Although COVID-19 has unleashed a considerable amount of pain and distress all across the world, it has certainly pushed forward the adoption rate of digital assets like Bitcoin. Three major events have occurred in the Bitcoin space during the past few months which have laid the groundwork for mainstream acceptance of cryptocurrencies. Let’s take a closer look.

Comptroller of the Currency (OCC)

On July 22, the Office of the Comptroller of the Currency (OCC) published a letter allowing banks to provide cryptocurrency custody services for customers. Essentially, this ruling by the OCC gives banks in the United States the authority to offer their customers crypto lending, crypto deposits, crypto merchant services, and crypto custody services. This landmark decision by the OCC opens the door for the Securities and Exchange Commission (SEC) to allow investment banks to offer crypto products and services. Most likely, the SEC will give registered investment advisors permission to promote cryptocurrency products to their clients.        

The MicroStrategy Move

The second major crypto event occurred on August 11, when MicroStrategy purchased $250 million of Bitcoin from its corporate cash reserves. This marked the first time that a publicly-traded company used the cash on its balance sheet to purchase a cryptocurrency like BTC. MicroStrategy made another substantial purchase on September 14, when the company invested $175 million to acquire 16,796 BTC. The total investment was $425 million. 

Three weeks later, on October 8, Square announced an investment of $50 million in Bitcoin. This is just the tip of the iceberg. Very soon, other publicly traded companies will follow the lead of MicroStrategy and Square by investing cash holdings in BTC. This will be the launchpad for much higher prices in 2021.

PayPal

The third major crypto event was the PayPal announcement on October 21, which allows PayPal customers to buy and sell Bitcoin. It also provides PayPal merchants with the ability to accept Bitcoin as a method of payment. This is huge news for Bitcoin because PayPal has over 346 million customers. The company has more customers than JPMorgan Chase, Bank of America, and Wells Fargo, combined. PayPal will introduce millions of new people to Bitcoin through its mobile app and online website. This is incredibly bullish for Bitcoin.

In addition to the bullish fundamental news, BTC also looks quite bullish from a technical perspective. The Bitcoin chart pattern turned bullish when it penetrated the important resistance level at 12,476 (Chart #1). 

The Month in Review: Analyzing the Cryptocurrency Markets for October 2

The next major resistance level for BTC is 14,557 (Chart #2). 

The Month in Review: Analyzing the Cryptocurrency Markets for October 3

How high will Bitcoin climb in 2021 and beyond? Let’s review the current Fibonacci numbers for Bitcoin.

  • Level 1 23,804
  • Level 2 26,242
  • Level 3 30,185
  • Level 4 42,946
  • Level 5 46,889
  • Level 6 63,593

These numbers are calculated based on the trading range between the ATH in December 2017 and the subsequent low in December 2018.

It certainly appears as though Bitcoin could be on the verge of having a breakout year in 2021. For the first time in its history, BTC is bullish from both a fundamental perspective and a technical perspective. Mass adoption of Bitcoin is finally becoming a reality, particularly at the institutional level. 

Ethereum (ETH)

ETH is following in the footsteps of BTC by generating a successful performance in 2020. In fact, Ethereum has substantially outperformed Bitcoin based on its YTD results. Through the first 10 months of 2020, ETH has gained 201.8%. It is the top-performing major cryptocurrency in 2020. Why has Ethereum enjoyed such a spectacular year? Let’s review the details.

The driving force behind the big rally in Ethereum has been decentralized finance, more commonly known as DeFi. For those of you who may not be familiar with this topic, DeFi is a merger of traditional bank services with decentralized technologies like blockchain. The goal of the DeFi community is to completely disrupt the legacy financial services industry by offering decentralized financial products. These products include checking, savings, lending, debit cards, insurance, merchant services, and more. DeFi separates itself from traditional financial services based on the fact that it removes all intermediaries from the equation.

DeFi has exploded in popularity during the past 12 months. In fact, DeFi is currently the fastest growing sector in blockchain. The future growth potential is mind-boggling because the financial services industry is so large. Based on data provided by the World Bank, by 2022, the size of the global financial services industry will be $26.5 trillion. This figure does not include banking or insurance, which has a combined global market capitalization of $13.1 trillion. If we combine financial services, banking, and insurance, the total global market cap is $39.6 trillion. This is a massive amount of money and it highlights the future growth potential of DeFi. 

As of August 2020, the current size of DeFi is only $9.1 billion. This is a “drop in the ocean” compared to $39.6 trillion. As you can see, DeFi has enormous upside potential. This is very bullish for ETH because the vast majority of DeFi applications are built on top of Ethereum. DeFi is the reason why ETH has easily outperformed BTC in 2020. It also explains why many crypto investors believe that ETH will continue to outperform BTC over the course of the next several years.

Ethereum TA

In terms of technical analysis, ETH generated a bullish breakout when it penetrated the 2019 high @  363.69 (Chart #3). 

The Month in Review: Analyzing the Cryptocurrency Markets for October 4

The next important resistance level is 628.11 (Chart #4). 

The Month in Review: Analyzing the Cryptocurrency Markets for October 5

Let’s review the current Fibonacci numbers for ETH.

  • Level 1 1,735
  • Level 2 1,930
  • Level 3 2,246
  • Level 4 3,268
  • Level 5 3,583
  • Level 6 4,920

These numbers are calculated based on the trading range between the ATH in January 2018 and the subsequent low in December 2018.

Based on Fibonacci calculations, ETH has substantially more upside potential versus BTC. A weekly close above 628.11 opens the door to much higher prices. Without question, the major catalyst for Ethereum will be the continued growth of decentralized finance which has the potential to completely disrupt an industry valued at $40 trillion. 

Digitex Futures (DGTX)

Digitex Futures achieved great success in 2020. The company made history on April 27 by successfully launching the first-ever zero-fee crypto futures exchange. The public launch occurred on July 31, providing traders with a state-of-the-art user interface, combined with a commission-free trading experience. The first two markets available on the exchange were BTC and ETH. However, that was just the beginning. 

DGTX TA

Based on technical analysis, DGTX has penetrated a few important support levels during the past few weeks. Currently, the momentum is in favor of the bears. The next important support level is the 2020 low @ .0135. In order to recapture the momentum, the bulls need a weekly close above .0470. Let’s review the current Fibonacci numbers for DGTX.

  • Level 1 .1944
  • Level 2 .2153
  • Level 3 .2490
  • Level 4 .3584
  • Level 5 .3921
  • Level 6 .5352

As you examine these Fibonacci numbers, keep in mind that this is an intermediate-term price forecast. These numbers are calculated based on the trading range between the ATH in October 2018 and the recent low in October 2020. 

Personal Comments

The first time I heard about Digitex Futures Exchange was in July 2018, when I stumbled across Adam Todd’s white paper describing a commission-free crypto futures exchange. I was immediately impressed with Adam’s concept of minting a native currency in lieu of charging transaction fees. This was an incredibly novel idea to level the playing field in favor of the customer by removing burdensome fees and commissions. Based on my research in 2018, Adam was the only person in the crypto space who was working on such a project. This is a true testament to Adam’s innovation and ingenuity, which has become part of the culture of Digitex.

In late-2019, each of the major legacy brokerage firms adopted a commission-free model. This included Charles Schwab, E*Trade, Fidelity Investments, and TD Ameritrade. Adam was way ahead of the curve. In 2018, he was already positioning Digitex as a commission-free exchange based on his belief that the industry was headed in this direction. 

Based on my experience from being involved in the internet mania of the late-1990s, the long-term winners in the crypto revolution will be the companies that are pushing the envelope in terms of product innovation and product expansion. Digitex is a step in the right direction, as the company positions itself in this new era of decentralization and crypto innovation.     

Digitex Futures writers and/or guest authors may or may not have a vested interest in the Digitex Futures project and/or other businesses mentioned throughout the site. None of the content on Digitex Futures is investment advice nor is it a replacement for advice from a certified financial planner. 

October 30, 2020
Digitex Futures

The Month in Review: Analyzing the Cryptocurrency Markets for October

Dave Reiter
Cryptocurrency

October was a very good month for the large cap crypto universe. The cryptocurrencies with the largest market capitalization turned in the best performance. Bitcoin led the way, with an impressive gain of 25.8%. Historically, it’s a good sign for the entire crypto space whenever BTC generates a healthy rate of return. It means that investors are increasing their exposure to digital currencies. NEO was the notable loser of the month, with a sharp decline of 19.5%. 

The Month in Review: Analyzing the Cryptocurrency Markets for October 6

What to Expect in 2021 and Beyond: BTC, ETH, DGTX

Bitcoin (BTC)

As we enter the final 60 days of 2020, it appears that BTC will deliver another spectacular yearly performance. Bitcoin has enjoyed a YTD return of 90.3% so far. As you know, BTC was launched in 2009. However, for the first two years of its existence, pricing information was rather sporadic. Reliable price data became available in late-2010. Since 2011, BTC has generated an average annual return of 965.9%. 

  • 2011 1,344.8% 
  • 2012 220.7%
  • 2013 5,586.5%
  • 2014 58.8% (-)
  • 2015 35.6%
  • 2016 123.4%
  • 2017 1,420.8%
  • 2018 74.6% (-)
  • 2019 94.7%

Where do we go from here? What’s in store for Bitcoin as the cryptocurrency approaches its 13th year of existence in January 2021? Without question, BTC is firmly on the path to mainstream adoption.

2020 will be remembered as the year that Bitcoin was first embraced by the global investment community as a major asset class. Although COVID-19 has unleashed a considerable amount of pain and distress all across the world, it has certainly pushed forward the adoption rate of digital assets like Bitcoin. Three major events have occurred in the Bitcoin space during the past few months which have laid the groundwork for mainstream acceptance of cryptocurrencies. Let’s take a closer look.

Comptroller of the Currency (OCC)

On July 22, the Office of the Comptroller of the Currency (OCC) published a letter allowing banks to provide cryptocurrency custody services for customers. Essentially, this ruling by the OCC gives banks in the United States the authority to offer their customers crypto lending, crypto deposits, crypto merchant services, and crypto custody services. This landmark decision by the OCC opens the door for the Securities and Exchange Commission (SEC) to allow investment banks to offer crypto products and services. Most likely, the SEC will give registered investment advisors permission to promote cryptocurrency products to their clients.        

The MicroStrategy Move

The second major crypto event occurred on August 11, when MicroStrategy purchased $250 million of Bitcoin from its corporate cash reserves. This marked the first time that a publicly-traded company used the cash on its balance sheet to purchase a cryptocurrency like BTC. MicroStrategy made another substantial purchase on September 14, when the company invested $175 million to acquire 16,796 BTC. The total investment was $425 million. 

Three weeks later, on October 8, Square announced an investment of $50 million in Bitcoin. This is just the tip of the iceberg. Very soon, other publicly traded companies will follow the lead of MicroStrategy and Square by investing cash holdings in BTC. This will be the launchpad for much higher prices in 2021.

PayPal

The third major crypto event was the PayPal announcement on October 21, which allows PayPal customers to buy and sell Bitcoin. It also provides PayPal merchants with the ability to accept Bitcoin as a method of payment. This is huge news for Bitcoin because PayPal has over 346 million customers. The company has more customers than JPMorgan Chase, Bank of America, and Wells Fargo, combined. PayPal will introduce millions of new people to Bitcoin through its mobile app and online website. This is incredibly bullish for Bitcoin.

In addition to the bullish fundamental news, BTC also looks quite bullish from a technical perspective. The Bitcoin chart pattern turned bullish when it penetrated the important resistance level at 12,476 (Chart #1). 

The Month in Review: Analyzing the Cryptocurrency Markets for October 7

The next major resistance level for BTC is 14,557 (Chart #2). 

The Month in Review: Analyzing the Cryptocurrency Markets for October 8

How high will Bitcoin climb in 2021 and beyond? Let’s review the current Fibonacci numbers for Bitcoin.

  • Level 1 23,804
  • Level 2 26,242
  • Level 3 30,185
  • Level 4 42,946
  • Level 5 46,889
  • Level 6 63,593

These numbers are calculated based on the trading range between the ATH in December 2017 and the subsequent low in December 2018.

It certainly appears as though Bitcoin could be on the verge of having a breakout year in 2021. For the first time in its history, BTC is bullish from both a fundamental perspective and a technical perspective. Mass adoption of Bitcoin is finally becoming a reality, particularly at the institutional level. 

Ethereum (ETH)

ETH is following in the footsteps of BTC by generating a successful performance in 2020. In fact, Ethereum has substantially outperformed Bitcoin based on its YTD results. Through the first 10 months of 2020, ETH has gained 201.8%. It is the top-performing major cryptocurrency in 2020. Why has Ethereum enjoyed such a spectacular year? Let’s review the details.

The driving force behind the big rally in Ethereum has been decentralized finance, more commonly known as DeFi. For those of you who may not be familiar with this topic, DeFi is a merger of traditional bank services with decentralized technologies like blockchain. The goal of the DeFi community is to completely disrupt the legacy financial services industry by offering decentralized financial products. These products include checking, savings, lending, debit cards, insurance, merchant services, and more. DeFi separates itself from traditional financial services based on the fact that it removes all intermediaries from the equation.

DeFi has exploded in popularity during the past 12 months. In fact, DeFi is currently the fastest growing sector in blockchain. The future growth potential is mind-boggling because the financial services industry is so large. Based on data provided by the World Bank, by 2022, the size of the global financial services industry will be $26.5 trillion. This figure does not include banking or insurance, which has a combined global market capitalization of $13.1 trillion. If we combine financial services, banking, and insurance, the total global market cap is $39.6 trillion. This is a massive amount of money and it highlights the future growth potential of DeFi. 

As of August 2020, the current size of DeFi is only $9.1 billion. This is a “drop in the ocean” compared to $39.6 trillion. As you can see, DeFi has enormous upside potential. This is very bullish for ETH because the vast majority of DeFi applications are built on top of Ethereum. DeFi is the reason why ETH has easily outperformed BTC in 2020. It also explains why many crypto investors believe that ETH will continue to outperform BTC over the course of the next several years.

Ethereum TA

In terms of technical analysis, ETH generated a bullish breakout when it penetrated the 2019 high @  363.69 (Chart #3). 

The Month in Review: Analyzing the Cryptocurrency Markets for October 9

The next important resistance level is 628.11 (Chart #4). 

The Month in Review: Analyzing the Cryptocurrency Markets for October 10

Let’s review the current Fibonacci numbers for ETH.

  • Level 1 1,735
  • Level 2 1,930
  • Level 3 2,246
  • Level 4 3,268
  • Level 5 3,583
  • Level 6 4,920

These numbers are calculated based on the trading range between the ATH in January 2018 and the subsequent low in December 2018.

Based on Fibonacci calculations, ETH has substantially more upside potential versus BTC. A weekly close above 628.11 opens the door to much higher prices. Without question, the major catalyst for Ethereum will be the continued growth of decentralized finance which has the potential to completely disrupt an industry valued at $40 trillion. 

Digitex Futures (DGTX)

Digitex Futures achieved great success in 2020. The company made history on April 27 by successfully launching the first-ever zero-fee crypto futures exchange. The public launch occurred on July 31, providing traders with a state-of-the-art user interface, combined with a commission-free trading experience. The first two markets available on the exchange were BTC and ETH. However, that was just the beginning. 

DGTX TA

Based on technical analysis, DGTX has penetrated a few important support levels during the past few weeks. Currently, the momentum is in favor of the bears. The next important support level is the 2020 low @ .0135. In order to recapture the momentum, the bulls need a weekly close above .0470. Let’s review the current Fibonacci numbers for DGTX.

  • Level 1 .1944
  • Level 2 .2153
  • Level 3 .2490
  • Level 4 .3584
  • Level 5 .3921
  • Level 6 .5352

As you examine these Fibonacci numbers, keep in mind that this is an intermediate-term price forecast. These numbers are calculated based on the trading range between the ATH in October 2018 and the recent low in October 2020. 

Personal Comments

The first time I heard about Digitex Futures Exchange was in July 2018, when I stumbled across Adam Todd’s white paper describing a commission-free crypto futures exchange. I was immediately impressed with Adam’s concept of minting a native currency in lieu of charging transaction fees. This was an incredibly novel idea to level the playing field in favor of the customer by removing burdensome fees and commissions. Based on my research in 2018, Adam was the only person in the crypto space who was working on such a project. This is a true testament to Adam’s innovation and ingenuity, which has become part of the culture of Digitex.

In late-2019, each of the major legacy brokerage firms adopted a commission-free model. This included Charles Schwab, E*Trade, Fidelity Investments, and TD Ameritrade. Adam was way ahead of the curve. In 2018, he was already positioning Digitex as a commission-free exchange based on his belief that the industry was headed in this direction. 

Based on my experience from being involved in the internet mania of the late-1990s, the long-term winners in the crypto revolution will be the companies that are pushing the envelope in terms of product innovation and product expansion. Digitex is a step in the right direction, as the company positions itself in this new era of decentralization and crypto innovation.     

Digitex Futures writers and/or guest authors may or may not have a vested interest in the Digitex Futures project and/or other businesses mentioned throughout the site. None of the content on Digitex Futures is investment advice nor is it a replacement for advice from a certified financial planner. 

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