On the January 7 episode of Trading Pit…
Bitcoin is likely to test the $93K level and a close below this level on the daily chart would indicate significant weakness and open the door to a decline to $82K, or potentially lower.
Solana is showing concerning signs of weakness in its liquidity profile, making a test of the previous week’s low at $180-$185 likely. If Solana breaks the previous week’s low, a much steeper decline is possible.
Ethereum continues to show signs of weakness and a weekly close above $3600 is needed to improve the technical outlook.
Cardano is showing relative strength compared to Ethereum and Solana.
Elevated borrowing rates for USDC across various protocols including Aave, Compound, and Curve, suggest the market needs a cool-down period. The acceleration in borrowing rates in early 2024 coincided with a market top, as the cost of capital became too high and created conditions for a pullback.
While borrowing rates have come down from their highs, they are still elevated relative to historical levels. High borrowing rates act as a constraint on further price appreciation and suggest a pullback is likely.
Athena, a protocol that enables users to earn yield on their Ethereum holdings by taking a short position against it, is likely suppressing the price of Ethereum.
Athena has attracted significant demand, with over $3 billion worth of Ethereum locked in the protocol. This has effectively removed a large amount of ETH from circulation, limiting its upside potential.
Ethereum needs a fresh source of demand to overcome the price suppression from Athena, and this demand is most likely to come from Wall Street via ETFs. ETFs would introduce a new class of buyers who are not primarily focused on yield and could drive significant price appreciation.
Ethereum L1 gas fees have been declining, suggesting that concerns about network congestion may be overblown. Improved tooling and code optimization are contributing to lower fees. The focus on L2 scaling may be premature given the current low fees on L1.
The AI agent narrative has the potential to drive significant growth in the cryptocurrency market, but the market may not yet fully appreciate its potential. AI agents can be applied to various sectors of the crypto ecosystem, including DeFi, L2s, and ZK-rollups
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Disclosure Statement This content is for entertainment purposes only. Nothing shared during this broadcast is or should be considered financial advice. The views and thoughts shared here are simply opinions. Do your own research and consult a registered financial advisor before making any investments.
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