On February 15, we had an Ask-Me-Anything session on Twitter with Brian, Director of Marketing at Santiment. Santiment is a comprehensive market intelligence platform for over 2,500 cryptocurrencies, focusing on cleaning reliable data feeds and low-latency signals.
During this AMA, we discussed with Brian how the whales influence the market, when to expect the next jump in prices, and how far U.S. crypto regulation will go. Below you can read the main insights from this talk, and here you can listen to the full recording.
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How prices are formed and what they depend on in the market
Do you expect a jump in prices somewhere soon?
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I would say no. It could happen, but it would be a surprise. And I think the notion of people planning for the price to go up on a specific date is a fallacy that people should shed from their trading strategies and expectations. Prices don’t just move up on a planned date.
For example, if Ethereum suddenly announces they’re integrating with Amazon and the official integration starts on June 1st, prices will not suddenly jump on May 31st (the day before) or on June 1st (when it’s released).
The Ethereum Merge is a perfect example. Leading up to the Merge from mid-August to mid-September prices were jumping quite a bit and then on September 15th, when the Merge happened, we started to see a big correction in Ethereum.
It was dropping really fast because people were like, “Okay, the Merge happened, so I’m going to sell ETH now and go get my Doge/Shiba/anything else and hope it goes better.”
How does whales’ activity influence the market?
I’ll give an example of FTX collapse.
The October 2021 dump was right around the FTX collapse back in November. A lot more whales and sharks began to accumulate Cardano which foreshadowed the inevitable 60% rise that it had in January (I think it’s still up about 45% on the year as far as 2023). And I think that was foreshadowed by a lot of accumulation that was going on since that FTX collapse.
Tons and tons of addresses for Bitcoin and Ethereum also were moved from like a hundred to one thousand coin addresses to just thousands or even millions of micro addresses. There was a big change that showed that there was a shift in the common trend that we saw throughout 2022. We bottomed out about two weeks after the FTX collapse, it flattened out the range in December before really just rocket launching right at the beginning of January.
We saw a huge movement of coins going into self-custody around that time. Binance was promoting TrustWallet and that coin skyrocketed.
And the result of all these processes now is the percentage of Bitcoin held on exchanges is 6.59% of Bitcoin supply. And the last time it was that low was right around October 2018. That’s considered a good sign because the less Bitcoin that is sitting on exchanges, the less that can actually be actionably sold off at the snap of a finger.
What is the prospect of Bitcoin in 2023?
A lot of that has to do with market cycles. Typically they last every four years and typically the year leading up to the actual having in Bitcoin is bullish for crypto. The last cycle started in 2020. The next one starts in 2024. That means that mid-2023 is historically a good time for Bitcoin to rise, but we need to monitor sentiment and average trading returns.
Also, we need to monitor what institutional and retail traders are doing. If they begin to accumulate, that’s a very good sign that we passed this dark 2022.
What do you think about metaverse coins?
I don’t see a ton of development for a lot of them and much depends on users’ interest. If traders continue to prop up assets like them, bigger and bigger teams come aboard to improve metaverse assets.
In a global sense, there is a future for them, though now sometimes they’re a little bit overhyped or underhyped. But we need to see some stability in Bitcoin before we can get too excited about altcoins that are outside the top 50 market cap.
Reasons for crypto-regulation in the U.S. and why the collapse of FTX is a good thing
What do you think about U.S. government attacks on crypto? It is obvious and they said that 2023 will be the year where they give lots of attention to crypto. So who will they attack next?
Though the government always has some issues with crypto, I think that if they wanted to ban it completely that would have happened a long time ago. Instead, they’re looking to profit off of it and use it to their advantage, so they like having it around.
- The most threat they see is obviously in stablecoins to the dollar, that’s why they want heavily regulate it as we saw with the recent BUSD situation. I don’t know if they’ll attack USDT or any other stablecoins. It depends on whether they think that the way Tether’s lack of auditing information might be impacting their citizens. But Tether’s been on the hit list of government rumors for a long time and nothing has changed other than a deep egging down to $0.95 very temporarily back in mid-2022. It is the top stablecoin by market cap in the world, it’s been around since 2017 and I don’t anticipate it going anywhere.
- The other essential question is taxes. As the government wants to be able to profit off of crypto, by getting missing taxpayers’ information, they can eventually collect the money. If they feel they’re making enough off of taxes, they probably won’t consider crypto as a security. If they are continuing to have trouble as people evade taxes or exchanges are not cooperating with them or their citizens are actually put in danger, then they might do something and try to file lawsuits all over the place.
Still, I think it would be a slow process for at least the next decade and not much is going to change in terms of labeling certain assets and security.
Will BUSD and BNB have a future after SEC attack?
BUSD is hemorrhaging quickly in terms of the shark and whale things, while Thether and USDC are benefiting, and we’re seeing more, and more positions increasing back into those two top stablecoins. The future of BUSD completely depends on the SEC. Right now its price is still pegged at a dollar as it should be. It had a little bit of wavering when the news broke and people were selling it off. But it has since recovered and it’s impossible to predict it.
In terms of BNB, there was some suspicion that it would struggle. But it is hovering right around $300 right now, and it doesn’t look as though it is in danger of going anywhere.
The U.S. market and global market influence the crypto market a lot. Will it ever change?
A lot of people are viewing crypto as a high-leverage tech stock at the moment that is fluctuating the way Google or Facebook but on a more high-leverage scale exactly because it is very correlated with tech stocks at the moment. It’s been that way pretty much since the beginning of 2022, right around the time that interest rates began to start hiking and crypto became sensitive to whatever the U.S. government was doing there.
It has a lot to do with 2021 seeing so many institutional investors coming over from equities and jumping into crypto at the same time. It means that when they decide to buy or sell and the stock market, they’re also buying and selling in crypto.
Still, historically there is always an eventual break in this correlation. And even if it happens in a way when equities are going up and crypto is going down, it is good because it is a signal that crypto is no longer at the mercy of what real-life tech companies are doing.
We saw a big correlation break right after the FTX collapse happened: stocks were way up in mid-November while crypto was dropping further and further as people were getting their money out of exchanges, thinking that crypto was no longer secure. And we expect an even bigger break at the start of a big bull run, just like we saw in 2020.