Morning Note: Japan GDP Surges, Ethereum Plans Scalability, and GameStop Eyes Bitcoin

Japan’s Q4 GDP Growth Beats Forecasts

Japan's economy grew 0.7% quarter-on-quarter in Q4, up from 0.4% in the previous quarter and above forecasts of 0.3%. On an annualised basis, this means that the GDP expanded 2.8% in Q4, as expected, rising from 1.7% in Q3. These strong figures build the case toward a hawkish monetary policy from the Bank of Japan.

(USD/JPY Daily Chart, Source: Trading View)

From a technical analysis perspective, the USD/JPY currency pair has been moving in a bullish trend since mid-September, as indicated by the higher highs and higher lows. Recently, it has formed another higher low, but the price action seems to struggle to go higher, as indicated by the rejection by a huge bearish force. Therefore, if the price breaks below the previous low point, the bearish force might regain control, driving the price downwards.

Buterin’s Plan for a Scalable & Decentralised Ethereum

Vitalik Buterin, co-founder of Ethereum, has proposed a long-term solution for improving the decentralisation and scalability of the Ethereum network. To solve the exceedingly difficult problem of light client management within a rollup-centred ecosystem, he adapted the Ethereum Improvement Proposal (EIP) 3668.

This approach would allow for optimising the state-proof verification in Layer 2 (L2) networks, allowing wallets and applications to handle multiple light clients above them without the need for interaction with centralised services. While some developers have raised issues regarding the inconsistency of provers and proofs across various rollup implementations, Buterin assured that with the format of the proof proposed being byte-based, decentralisation and modifiability in verification would be sustained.

(Ethereum Daily Price Chart, Source: Trading View)

From a technical analysis perspective, Ethereum has been in a bearish trend since mid-December, as indicated by the formation of lower highs and lower lows. It recently found support at a previous support zone and rebounded with a significant liquidity sweep, as seen in a candle with a long bottom wick. However, strong bearish pressure has prevented further upward movement, keeping the price in a consolidation zone. If the price fails to break above this range, it is highly likely to move downward and retest the support zone.

GameStop Eyes Bitcoin: A MicroStrategy-Inspired Move?

GameStop is exploring potential investments in cryptocurrency, particularly Bitcoin, as part of its strategy to diversify into alternative assets. Recently, this news has caused the share price of the new company to surge. The management of GameStop's investment portfolio will be conducted by CEO Ryan Cohen and some members of the board under the new investments policy agreed upon in December 2023. If GameStop follows through contemplatively on Bitcoin investments, it may function like MicroStrategy, which shifted from being a software firm to a predominant holder of Bitcoin.

(GameStop Stocks Daily Price Chart, Source: Trading View)

From a technical analysis perspective, the price broke above the downward trendline at the end of October, driving an upward movement and forming higher highs and higher lows. Recently, the price surged with a gap-up price action but was rejected at the previous resistance zone, closing with small gains for the day. If the price fails to break above this resistance zone, bearish momentum could regain control, pushing the price downward.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.