Despite U.S. jobs data on Friday being better than expected, giving the Federal Reserve more reason to raise rates, global markets responded positively to the news, as investors admire the strength of the labour market.
This positive reaction ignited a bounce for the crypto markets too, as Bitcoin managed to overcome the downtrend dating back to the all-time-high – $270 million of short positions were liquidated leading to a bit of a “short squeeze”.
“Sentiment around the crypto market has dramatically improved over the weekend as Bitcoin has also broken out of a downtrend on the RSI dating back to October – Bitcoin broke out of two similar downtrends on the RSI within the past year, which both resulted in incredible rallies, hence potentially foreshadowing a Bitcoin rally to the upside,” noted Marcus Sotiriou, an analyst with GlobalBlock, the UK-based digital assets broker.
Green week ahead for altcoins?
Altcoins have reacted tremendously and are set for a green week ahead. Tezos has hit the headlines after partnering with Manchester United to become their training kit sponsor, with the football club receiving $27 million a year as part of the deal. It is important to note though that, should this rally continue, Bitcoin faces strong resistance at $44,000-$45,000, with uncertainty in the stock market remaining.
Last week, two American credit unions with over $10 billion under management announced that they will be allowing users to buy, sell and hold Bitcoin. UNIFY ($3 billion in AUM with 260,000 members) and Idaho Central ($7.3 billion in AUM with around 500,000 members) have partnered with Bitcoin software company NYDIG to offer a seamless and accessible solution for many Americans to invest in Bitcoin.
Positive noises from Capital Hill
Aside from more financial institutions adopting Bitcoin, U.S. senators spoke about Bitcoin positively last week. U.S. Senator Pat Toomey says that crypto assets are here to stay and “a thoroughly diversified portfolio should have some.” In addition, Senator Ted Cruz declared through a periodic transaction report on Friday that he bought Bitcoin, as he said, “cryptocurrency and bitcoin mining provide enormous opportunities”.
However, Cruz also warned about the possibility of congress “screwing this all up”, as he is worried that they do not understand what Bitcoin is but are trying to regulate it anyway. “I think that U.S. regulation is undoubtedly Bitcoin’s biggest risk, which we will hopefully gain more clarity on soon with a report from the Biden Administration on the regulation of Bitcoin, potentially getting published this month,” Sotiriou observed.
After the Wormhole hack last Wednesday, Jump Trading restored every user’s funds, totalling to over $320 million. This hack on Wormhole Bridge, which is a cross-chain bridge from Solana to other blockchains, could contribute to negative investor sentiment surrounding the Solana blockchain, which has had multiple outages over the past six months.
“I think the problem lies within bridges themselves, regardless of which blockchain they operate on,” Sotiriou explained. “Last week there was a different bridge exploit on the Ethereum BSC bridge called Qubit. This is clearly a major risk within crypto, which can be mitigated by withdrawing coins directly from exchanges where possible.”
