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Crypto Weekly Outlook: September 27, 2021



After a volatile weekend following China’s Friday announcement of it’s updated cryptocurrency ban, the crypto market has recovered somewhat with the total cryptocurrency market cap sitting at $1.93T as of this writing, almost the same level as one week ago. The market’s main source of concern appears to have moved quite quickly from the Evergrande Group debt crisis to the updated China crypto ban to this week’s expected vote on the bipartisan infrastructure bill with the threatening crypto provisions.



China’s Crypto Ban Update: The widely coordinated update explicitly states that virtual currencies are not legal in China and that any crypto-related transactions are illegal. The ban makes clear that in addition to financial firms being barred from working with crypto firms, other business areas ranging from IT to marketing are also included in the ban. Moreover, the new guidance also specifies that Chinese residents overseas are also banned from using crypto services - a blow to exchanges such as Huobi and Okex. What remains to be seen is how effective the Chinese government will be in enforcing the updated ban and how it will impact individuals who still hold crypto - something that has not yet been explicitly banned.



Bitcoin, as of this writing, is moving near the $43.2K support level. The next line of support is at the $42K and then the $41K area. Resistance is present at $44K as well as the $44.8K-$45K levels. It would be quite bullish if these levels were overcome. In positive news for BTC, according to the President of El Salvador, 2.1 million Salvadorans are now actively using the Chivo Wallet, more users than any bank in El Salvador - after only three weeks in operation. Most analysts still expect BTC to rally higher throughout the remainder of the year as the amount of BTC on exchanges continues to be near historic lows. Just recently, the head of asset management at Counterpoint compared Bitcoin to the South Park character Kenny - “he dies every episode, and is back again.” For the month of September, Bitcoin is currently down approximately 8.5%, not unusual performance for the month. However on Friday a new month begins and Bitcoin has historically had very strong performance in October.



Ethereum, as of this writing, is sitting just north of $3,050. Over the past ten days, the amount of ETH locked in DeFi apps has grown 12% to around 7.8M Ethers, further limiting the circulating supply. In addition, the ETH 2.0 deposit contract has nearly the same amount of Ethers pledged, at 7.7M ETH. Over the past month, more than 1.35M ETH has left exchanges, a 6.63% decrease. The supply dynamics still paint a bullish picture for ETH. Price wise, support is present at $2,900 and afterwards at $2,500.



Cardano held up well over the weekend due to its summit. As of this writing, it is trading at $2.20. Many positive announcements occurred over the weekend such as a new partnership with Chainlink that will integrate Chainlink oracles to better aid in building smart contracts. In addition, a partnership with DISH Network was announced aiming to introduce Cardano’s blockchain tech to DISH’s telecom services. Furthermore, IOHK also announced that they were partnering with Oasis Pro to create a bond issuance platform. And lastly, Emurgo, the commercial arm of Cardano, announced it would invest $100M into a fund focused on DeFi, NFTs, and education for the Cardano blockchain. ADA sure seems to be laying the groundwork for long term success. Crypto analyst Capo even recently announced to his followers that he could see ADA eventually going to $10.



Ripple has been on investors’ minds as of late. Currently sitting under $1 at $0.94 as of this writing, it remains an interesting crypto play. Macro guru Raoul Pal recently stated that XRP has a great risk-reward ratio despite the ongoing SEC lawsuit. He indicated that the price could potentially increase 10X. Once there’s resolution on the SEC side, XRP will again be listed on the exchanges and will be bought by the crypto ETFs in mass. Not to mention the fact that many people are actively using the XRP cryptocurrency - it has a very strong use case.



Infrastructure Bill Update:

According to House Speaker Pelosi, “Tomorrow, September 27, we will begin debate on the Bipartisan Infrastructure Framework on the Floor of the House and vote on it on Thursday, September 30, the day on which the surface transportation authorization expires.”

As a reminder, the bill has a provision that requires mandatory tax reporting for any entity linked to the crypto industry. It also has a very broad definition of “broker,” potentially causing problems for many 3rd party providers in the crypto space. However,the bill could be delayed past September 27th due to disagreements on the $3.5T economic package linked to the infrastructure bill. Investors should stay keenly aware of this crucial legislation.



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