- After a momentary slip, Bitcoin is back trading close to USD 9,300, well above the 200-MA at USD 8,867
- Binance is moving to give negative fees for market makers in its new Bitcoin futures platform
- Tom Lee predicts USD 27,000 in on the cards after May 2020
Bitcoin markets have been holding steady in mid-week trading, after slipping slightly yesterday. After first experiencing a spike above USD 9,600, it threatened to break the USD 9,000 support levels in American markets, but only managed a daily low so far of USD 9,072 (CoinDesk). That pullback was soon wiped out by the time Beijing slid into gear, and Bitcoin is now trading closer to USD 9,300.
This is still overall in the bullish territory, and Bitcoin is strongly above the 200-day moving average (200-MA) line at USD 8,867, which should act as a major support line. However, some analysts pointed to what is called a “doji” candle forming yesterday, a usual indicator of fatigue from buyers that could risk shifting into a stronger pullback.
Demand is certainly on the rise, however you see it, and Binance, the world’s largest crypto exchange by trading volume, is now changing its strategy to motivate even more people to offer trades in a bid to enhance liquidity, a longstanding issue with crypto trading.
Binance seeks to do so by changing its free structure to in fact reward market makers on its new futures platform. Its revised Binance Futures Market Maker Program will incur not just small or zero fees for market makers (those who open offers) but a negative fee, effectively giving them back some crypto on top of their trade if settled.
A market maker is a user who places buy or sell limit orders, basically asking to buy or sell somewhat above or below the current market in the hopes of attracting a market taker. In the system, makers add liquidity, and takers remove liquidity, since an offer is gone after it is settled.
It is not uncommon for crypto exchanges to enhance liquidity by offering lower fees to makers, as opposed to takers, but Binance has now seemingly gone one step further by rewarding market makers on selected pairs once the orders are filled.
Detaills have not been fully disclosed, however, although it has been made clear that market makers must have traded volumes over 1,000 BTC on Binance over 30 days in order to have “quality market maker strategies”. Proposals of similar trading volume outside of Binance will also be considered.
The post further promises other benefits, including higher APIs, ultra-low latency connectivity and support services, and a weekly performance review for market makers. It explained:
“Binance Futures Market Maker Program covers perpetual futures on the market making list. We will provide daily and weekly reports detailing your results to help you analyze your performance. Qualifying market makers will have negative maker fees and this will be updated on a regular basis to reflect participants’ market making performance.”
It appears the crypto derivatives market is truly heating up with more regulated services joining those of the Chicago Mercantile Exchange (CME) and Intercontinental Exchange’s Bakkt.
In other developments, crypto analyst and influencer Tom Lee, who is also a partner of investment fund Fundstrat Global Advisors, has predicted Bitcoin to breach its all-time high price this summer, to record possibly a valuation of USD 27,000.
Highlight: “We’re really optimistic on crypto and bitcoin this year,” @fundstrat’s Global Advisors Managing Partner & Head of Research Tom Lee says. “Whenever bitcoin breaks back into its 200 day, its average six-month gain is 197%.” pic.twitter.com/2tqzsuOV0m
— Yahoo Finance (@YahooFinance) February 4, 2020
He believes this almost three-fold gains is possible because of a single bullish technical factor, he told Yahoo! Finance yesterday, and that’s also what we frequently point out: the 200-MA. Lee stated:
“Notably in January — January is usually a week month, it was a great month for Bitcoin, up 26% — but it also recovered its 200-day moving average… That’s a big deal as you know, as anyone who’s a trend follower knows — when you’re back above your 200-day, you’re back in a bull market. Whenever Bitcoin breaks back into its 200-day, its average six-month gain is 197%.”
He isn’t the only analyst to think so, and the fact that this is already the best start to the year since 2013 suggests that the next parabolic bull cycle could already be underway. Lee said the year should see bigger gains than in 2019, even though at its peak, last year actually delivered 300% returns.
Lee does believe that this May’s upcoming Bitcoin block reward halving will help this price climb, since it not only reduced new supply by 50%, but will take inflation rate well below that of gold and most national fiat currencies in the world.
Image Courtesy: Pixabay