MCAN FINANCIAL GROUP ANNOUNCES 2022 RESULTS AND DECLARES $0.36 REGULAR CASH DIVIDEND
Canada NewsWire
TORONTO, Feb. 23, 2023
REPORTS STELLAR RESULTS FOR Q4 2022
TORONTO, Feb. 23, 2023 /CNW/ - MCAN Mortgage Corporation d/b/a MCAN Financial Group ("MCAN", the "Company" or "we") (TSX: MKP) reported net income of $24.1 million ($0.75 earnings per share) for the fourth quarter of 2022, an increase from net income of $16.1 million ($0.57 earnings per share) in the fourth quarter of 2021. Fourth quarter 2022 return on average shareholders' equity1 was 21.17% compared to 15.39% in the prior year. Year to date, we reported net income of $55.4 million ($1.77 earnings per share), a decrease from net income of $64.4 million ($2.40 earnings per share) in 2021. Year to date return on average shareholders' equity1 was 12.47% compared to 16.86% in the prior year. We reported lower total net income mainly as a result of unrealized fair value losses on our REIT portfolio due to the inflationary and rising interest rate environment, partially offset by growth in our core mortgage and lending business.
Our net corporate mortgage spread income1 increased by $5.5 million from Q4 2021 and $16.7 million from year to date 2021. We committed to a strategy going into these economic headwinds of working on controllable factors to protect our bottom line. Year to date, our unrealized fair value gains and losses on our REIT portfolio was a $10.3 million unrealized loss ($0.33 loss per share) compared to a $10.9 million unrealized gain ($0.41 earnings per share) in the prior year. Excluding the unrealized fair value gains and losses on our REIT portfolio, current net income would have been higher compared to prior year. We expect continued volatility in the REIT market. We are long term investors and continue to realize the benefits of solid cash flows and distributions from these investments.
The Board of Directors declared a first quarter regular cash dividend of $0.36 per share (holding dividends consistent with 2022 given the current economic backdrop). The dividend will be paid on March 31, 2023 to shareholders of record as of March 15, 2023. As a mortgage investment corporation, we pay out all of our taxable income to shareholders through dividends. Our regular cash dividends for 2022 are sufficient to cover our taxable income, and therefore we will not be distributing a special stock dividend in March 2023 along with the regular cash dividend.
"Our fourth quarter results from our core lending business surpassed our expectations and affirm our strategy of protecting our net mortgage interest. While inflation and interest rate increases may have peaked, the higher interest rate environment and related housing market challenges are causing uncertainty in the Canadian economy," said Karen Weaver, President and Chief Executive Officer. "Our business has various levers and attributes that are positive for managing net mortgage interest income in a higher interest rate environment, including the floating rates on our construction and commercial portfolios and realigning the duration of our term deposit funding. While we remain focused on achieving solid margins in our mortgage and lending business, we will also continue to look for opportunities to grow. Our shareholders showed strong support for our business and strategy, as we completed an oversubscribed rights offering in December 2022, raising $34.1 million of capital to fund our asset growth. I commend our entire team for their role in successfully responding to challenging change in the economy and mortgage and housing markets."
Highlights
Corporate assets totalled $2.28 billion at December 31, 2022, a net increase of $121 million (6%) from December 31, 2021:
Construction and commercial mortgages totalled $930 million at December 31, 2022, a net increase of $153 million (20%) from December 31, 2021. In 2022, the positive movement in the construction and commercial portfolios is attributed to net originations of $537 million in new construction and commercial mortgages, partially offset by maturities and repayments.
Uninsured residential mortgages totalled $829 million at December 31, 2022, a net increase of $45 million (6%) from December 31, 2021. Uninsured residential mortgage originations totalled $369 million year to date 2022, a decrease of $206 million (36%) from the same period in 2021. We actively managed originations in order to protect our net interest margins and our bottom line through the second half of 2022.
Non-marketable securities totalled $97 million at December 31, 2022, an increase of $32 million (50%) from December 31, 2021 with $80 million of remaining capital advances expected to fund over the next five years.
Marketable securities totalled $54 million at December 31, 2022, a net decrease of $9 million (14%) from December 31, 2021. In 2022, we saw REIT prices decline due to inflation and Bank of Canada rate increases. While we expect continued volatility in the REIT market, we have seen some recovery recently.
Securitized mortgages totalled $1.75 billion at December 31, 2022, a net increase of $168 million (11%) from December 31, 2021 primarily due to continued originations and securitization volumes:
Insured residential mortgage originations totalled $588 million year to date 2022, a decrease of $212 million (27%) from the same period in 2021. This includes $228 million of insured residential mortgage commitments originated and sold compared to $76 million in 2021. We launched our insured adjustable rate residential mortgage product in the first quarter of 2022. Unlike traditional insured variable rate mortgages, payments on our insured adjustable rate residential mortgages increase or adjust as interest rates rise with no changes to loan amortization. We also underwrite our insured adjustable rate mortgages for credit quality accordingly and our borrowers expect their payments under this new product to change as interest rates rise. Insured residential mortgage securitizations totalled $426 million year to date 2022, a decrease of $297 million (41%) from the same period in 2021. We decreased our insured residential mortgage originations and securitization volumes and increased the volume of our insured residential mortgage commitment sales given the extremely tight and even negative securitization spreads during the year. We use various channels in the insured residential mortgage market, in the context of market conditions and net contributions over the life of the mortgages, in order to support our overall business.
Financial Update
Net corporate mortgage spread income1 increased by $5.5 million for Q4 2022 from Q4 2021 and increased $16.7 million for year to date 2022 from 2021 mainly due to a higher average corporate mortgage portfolio balance from continued net mortgage originations and an increase in the spread of corporate mortgages over term deposit interest and expenses mainly from our floating rate residential construction mortgages. On the term deposit side, we have had a greater focus on raising shorter duration deposits, therefore resulting in a smaller increase in our average term deposit rates.
Net securitized mortgage spread income1 decreased by $0.7 million for Q4 2022 from Q4 2021 and decreased $1.8 million for year to date 2022 over the same period in 2021 mainly due to a decrease in the spread of securitized mortgages over liabilities partially offset by a higher average securitized mortgage portfolio balance from originations of insured residential mortgages. We have seen the spread of securitized mortgages over liabilities decline on securitizations in 2022 mainly as a result of higher securitization liability interest expense from significantly increasing Government of Canada bond yields in 2022 in a rising interest rate environment.
For Q4 2022, we had a recovery of credit losses on our corporate mortgage portfolio of $1.1 million compared to a provision for credit losses of $0.8 million in Q4 2021. For year to date 2022, we had a recovery of credit losses on our corporate mortgage portfolio of $1.1 million compared to a provision for credit losses of $0.5 million for year to date 2021. For 2022, the recovery was mainly due to a more favourable provincial outlook and assumptions for our loans in Alberta, as well as improving economic forecasts from expectations that both inflation and Bank of Canada interest rate increases may be nearing a peak. For 2021, the provision was mainly due to growth in our portfolio.
Equity income from MCAP Commercial LP ("MCAP") totalled $6.9 million in Q4 2022, an increase of $0.7 million (10%) from $6.2 million in Q4 2021, and totalled $26.6 million for year to date 2022, an increase of $1.2 million (5%) from $25.5 million year to date 2021. The increase in both the quarter and year to date was primarily due to higher servicing and administration revenue resulting from higher assets under management, and higher financial instrument gains resulting from (i) hedge gains; (ii) favourable fair value adjustments; and (iii) lower hedge costs. These were partially offset by (i) lower net interest income on securitized mortgages due to compressed spreads as a result of the rising interest rate environment; (ii) lower mortgage origination fees from lower spreads and origination volumes due to market conditions; (iii) higher interest expense; and (iv) higher operating expenses mainly attributed to higher headcount.
In Q4 2022, we recorded a $1.7 million net unrealized gain on securities compared to a $3.4 million net unrealized gain on securities in Q4 2021. Year to date net realized and unrealized loss on securities was $12.1 million for 2022 compared to a year to date net realized and unrealized gain on securities of $14.8 million for 2021. In 2022, we saw (i) REIT prices decrease due to inflation and Bank of Canada rate increases; and (ii) a $1.8 million realized loss during Q1 2022, on one REIT in our portfolio that had a mandatory corporate action resulting in its privatization. For 2021, the net realized and unrealized gain was due to REIT prices increasing from 2020 lows due to the ongoing recovery from the pandemic. Year to date, we received distributions of $3.6 million (distribution yield1 of 6.01%) from our REITs compared to $3.5 million (distribution yield1 of 5.49%) in 2021.
Credit Quality
Impaired corporate mortgage ratio1 was 1.66% at December 31, 2022 compared to 0.00% at September 30, 2022 and 0.05% at December 31, 2021. At December 31, 2022, we have two impaired construction mortgages where asset recovery programs are being initiated and we expect to recover all past due interest and principal.
Impaired total mortgage ratio1 was 0.89% at December 31, 2022 compared to 0.01% at September 30, 2022 and 0.03% at December 31, 2021. The increase at December 31, 2022 is the same as described above.
Arrears total mortgage ratio1 was 1.57% at December 31, 2022 compared to 1.11% at September 30, 2022 and 0.46% at December 31, 2021. The increase in the arrears total mortgage ratio is primarily due to three construction and commercial mortgages where either asset recovery programs are being initiated and we expect to recover all past due interest and principal or we expect these mortgages to be brought current in the next quarter. We have a strong track record with our asset recovery program should the need arise. Our realized loan losses on our construction portfolio have been negligible in the last 10 years.
Average loan to value ratio ("LTV") of our uninsured residential mortgage portfolio based on an industry index of current real estate values was 62.1% at December 31, 2022 compared to 58.1% at September 30, 2022 and 60.3% at December 31, 2021.
Capital
To support our continued growth and maintain our targeted capital requirements, we initiated a capital raise by way of a rights offering in December 2022 which was oversubscribed and raised $34.1 million of capital. In 2021, we raised $53.2 million through two oversubscribed rights offerings.
In 2021, we filed a Prospectus Supplement to our Base Shelf prospectus establishing an ATM Program to issue up to $30 million common shares to the public from time to time over a 2 year period at the market prices prevailing at the time of sale. The volume and timing of distributions under the ATM Program are determined at our sole discretion. We began issuing shares under the ATM Program in Q1 2022. During 2022, we successfully sold 236,600 common shares at a weighted average price of $17.88 for gross proceeds of $4.2 million and net proceeds of $4.1 million.
We issued $7.4 million in new common shares through the Dividend Reinvestment Plan ("DRIP") in 2022 compared to $5.8 million in 2021. The DRIP participation rate was 28% for the 2022 fourth quarter dividend (2021 fourth quarter dividend - 16%). The DRIP participation rate for 2022 dividends was 20% (2021 - 17%).
We issued $28.8 million in new common shares on March 31, 2022 from our 2022 first quarter special stock dividend to shareholders (with fractional shares paid in cash) at the weighted average trading price for the five days preceding the record date of $18.9326. In 2021, we raised $21.1 million from our 2021 first quarter special stock dividend.
Income tax assets to capital ratio3 was 4.93 at December 31, 2022 compared to 5.76 at September 30, 2022 and 5.29 at December 31, 2021.
Common Equity Tier 1 ("CET 1") and Tier 1 Capital to risk-weighted assets ratios2 were 19.60% at December 31, 2022 compared to 18.35% at September 30, 2022 and 20.26% at December 31, 2021. Total Capital to risk-weighted assets ratio2 was 19.83% at December 31, 2022 compared to 18.64% at September 30, 2022 and 20.54% at December 31, 2021.
Leverage ratio2 was 9.83% at December 31, 2022 compared to 8.88% at September 30, 2022 and 9.41% at December 31, 2021.
1Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial Measures" section of this new release. Non-GAAP and other financial measures and ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers.
2 These measures have been calculated in accordance with OSFI's Leverage Requirements and Capital Adequacy Requirements guidelines. Effective March 31, 2020, the total capital ratio reflects the inclusion of stage 1 and stage 2 allowances on the Company's mortgage portfolio in Tier 2 capital. In accordance with OSFI's transitional arrangements for capital treatment of ECL issued March 27, 2020, a portion of stage 1 and stage 2 allowances that would otherwise be included in Tier 2 capital are included in CET 1 capital. The adjustment to CET 1 capital will be measured each quarter as the increase, if any, in stage 1 and stage 2 allowances compared to the corresponding allowances at December 31, 2019. The increase, if any, is subject to a scaling factor that will decrease over time and was 70% in fiscal 2020, 50% in fiscal 2021 and is set at 25% in fiscal 2022.
3 Tax balances are calculated in accordance with the Tax Act.
Annual and Special Meeting of Shareholders
The Company's Annual and Special Meeting of Shareholders will be held at 4:30pm (Toronto time) on May 9, 2023.
Further Information
Complete copies of the Company's 2022 Annual Report will be filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and on the Company's website at www.mcanfinancial.com.
For our Outlook, refer to the "Outlook" section of the 2022 Annual Report.
MCAN is a public company listed on the Toronto Stock Exchange under the symbol MKP and is a reporting issuer in all provinces and territories in Canada. MCAN also qualifies as a mortgage investment corporation ("MIC") under the Income Tax Act (Canada) (the "Tax Act").
The Company's primary objective is to generate a reliable stream of income by investing in a diversified portfolio of Canadian mortgages, including residential mortgages, residential construction, non-residential construction and commercial loans, as well as other types of securities, loans and real estate investments. MCAN employs leverage by issuing term deposits that are eligible for Canada Deposit Insurance Corporation deposit insurance and are sourced through a broker distribution network across Canada consisting of third party deposit agents and financial advisors. We manage our capital and asset balances based on the regulations and limits of both the Tax Act and the Office of the Superintendent of Financial Institutions Canada ("OSFI"). All of our capital ratios are within our regulatory and internal risk appetite guidelines.
As a MIC, we are entitled to deduct the dividends that we pay to shareholders from our taxable income. Regular dividends are treated as interest income to shareholders for income tax purposes. We are also able to pay capital gains dividends, which would be treated as capital gains to shareholders for income tax purposes. Dividends paid to foreign investors may be subject to withholding taxes. To meet the MIC criteria, 67% of our non-consolidated assets measured on a tax basis are required to be held in cash or cash equivalents and residential mortgages.
MCAN's wholly-owned subsidiary, MCAN Home Mortgage Corporation, is an originator of residential mortgage products across Canada.
For how to enroll in the DRIP, please refer to the Management Information Circular dated March 11, 2022 or visit our website at www.mcanfinancial.com/investors/regulatory filings/dividends - historical. Under the DRIP, dividends paid to shareholders are automatically reinvested in common shares issued out of treasury at the weighted average trading price for the five days preceding such issue less a discount of 2% until further notice from MCAN.
Non-GAAP and Other Financial Measures
This news release references a number of non-GAAP and other financial measures and ratios to assess our performance such as return on average shareholders' equity, net corporate mortgage spread income, net securitized mortgage spread income, impaired corporate mortgage ratio, impaired total mortgage ratio, and arrears total mortgage ratio. These measures are not calculated in accordance with International Financial Reporting Standards ("IFRS"), are not defined by IFRS and do not have standardized meanings that would ensure consistency and comparability between companies using these measures. These metrics are considered to be non-GAAP and other financial measures and are incorporated by reference and defined in the "Non-GAAP and Other Financial Measures" section of our 2022 Annual Management's Discussion and Analysis of Operations ("MD&A") available on SEDAR at www.sedar.com. Below are reconciliations for our non-GAAP financial measures included in this news release using the most directly comparable IFRS financial measures.
Net Corporate Mortgage Spread Income Non-GAAP financial measure that is an indicator of net interest profitability of income-earning assets less cost of funding for our corporate mortgage portfolio. It is calculated as the difference between corporate mortgage interest and term deposit interest and expenses.
(in thousands)
Q4
Q4
Change
Annual
Annual
Change
At December 31
2022
2021
($)
2022
2021
($)
Mortgage interest - corporate assets
$ 30,747
$ 20,436
$ 101,286
$ 71,823
Term deposit interest and expenses
13,189
8,389
44,222
31,430
Net Corporate Mortgage Spread Income
$ 17,558
$ 12,047
$ 5,511
$ 57,064
$ 40,393
$ 16,671
Net Securitized Mortgage Spread Income Non-GAAP financial measure that is an indicator of net interest profitability of income-earning securitization assets less cost of securitization liabilities for our securitized mortgage portfolio. It is calculated as the difference between securitized mortgage interest and interest on financial liabilities from securitization.
(in thousands)
Q4
Q4
Change
Annual
Annual
Change
At December 31
2022
2021
($)
2022
2021
($)
Mortgage interest - securitized assets
$ 8,607
$ 7,295
$ 31,411
$ 28,671
Interest on financial liabilities from securitization
7,005
4,993
24,101
19,554
Net Securitized Mortgage Spread Income
$ 1,602
$ 2,302
$ (700)
$ 7,310
$ 9,117
$ (1,807)
A Caution About Forward-looking Information and Statements
This news release contains forward-looking information within the meaning of applicable Canadian securities laws. All information contained in this news release, other than statements of current and historical fact, is forward-looking information. All of the forward-looking information in this news release is qualified by this cautionary note. Often, but not always, forward-looking information can be identified by the use of words such as "may," "believe," "will," "anticipate," "expect," "planned," "estimate," "project," "future," and variations of these or similar words or other expressions that are predictions of, or indicate, future events and trends and that do not relate to historical matters. Forward-looking information in this news release includes, among others, statements and assumptions with respect to:
the current business environment, economic environment and outlook;
the impact of global health pandemics on the Canadian economy and globally;
possible or assumed future results;
our ability to create shareholder value;
our business goals and strategy;
the potential impact of new regulations and changes to existing regulations;
the stability of home prices;
the effect of challenging conditions on us;
the performance of our investments;
factors affecting our competitive position within the housing lending market;
international trade and geopolitical uncertainties and their impact on the Canadian economy, including the Russia/Ukraine conflict;
sufficiency of our access to capital resources;
the timing and effect of interest rate changes on our cash flows; and
the declaration and payment of dividends.
Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information reflects management's current beliefs and is based on information currently available to management. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by us at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information.
The material factors or assumptions that we identified and were applied by us in drawing conclusions or making forecasts or projections set out in the forward-looking information, include, but are not limited to:
our ability to successfully implement and realize on our business goals and strategy;
government regulation of our business and the cost to us of such regulation;
the economic and social impact, management, and duration of a pandemic;
factors and assumptions regarding interest rates, including the effect of Bank of Canada actions already taken;
the effect of supply chain issues;
the effect of inflation;
housing sales and residential mortgage borrowing activities;
the effect of household debt service levels;
the effect of competition;
systems failure or cyber and security breaches;
the availability of funding and capital to meet our requirements;
investor appetite for securitization products;
the value of mortgage originations;
the expected spread between interest earned on mortgage portfolios and interest paid on deposits;
the relative uncertainty and volatility of real estate markets;
acceptance of our products in the marketplace;
the stage of the real estate cycle and the maturity phase of the mortgage market;
impact on housing demand from changing population demographics and immigration patterns;
our ability to forecast future changes to borrower credit and credit scores, loan to value ratios and other forward-looking factors used in assessing expected credit losses and rates of default;
availability of key personnel;
our operating cost structure;
the current tax regime; and
operations within, and market conditions relating to, our equity and other investments.
External conflicts such as the Russia/Ukraine conflict and post-pandemic government and Bank of Canada actions taken, have resulted in uncertainty relating to the Company's internal expectations, estimates, projections, assumptions and beliefs, including with respect to the Canadian economy, employment conditions, interest rates, supply chain issues, inflation, levels of housing activity and household debt service levels. There can be no assurance that such expectations, estimates, projections, assumptions and beliefs will continue to be valid. The impact the COVID-19 pandemic or any further pandemics, variants or outbreaks, including measures to prevent their spread and related government actions adopted in response thereto, will have on our business continues to be uncertain and difficult to predict.
Reliance should not be placed on forward-looking information because it involves known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from anticipated future results expressed or implied by such forward-looking information. Factors that could cause actual results to differ materially from those set forth in the forward-looking information include, but are not limited to, the risk that any of the above opinions, estimates or assumptions are inaccurate and the other risks and uncertainties referred to in our Annual Information Form for the year ended December 31, 2022, our MD&A and our other public filings with the applicable Canadian regulatory authorities.
Subject to applicable securities law requirements, we undertake no obligation to publicly update or revise any forward-looking information after the date of this news release whether as a result of new information, future events or otherwise or to explain any material difference between subsequent actual events and any forward-looking information. However, any further disclosures made on related subjects in subsequent reports should be consulted.
Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer, and Router issued a joint statement criticizing the new token.
A new bridged token from cross-chain protocol LayerZero is drawing criticism from nine protocols throughout the Ethereum ecosystem. A joint statement from Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer, and Router on October 27 called the token’s standard “a vendor-locked proprietary standard,” claiming that it limits the freedom of token issuers.
The protocols claimed in their joint statement that LayerZero’s new token is “a proprietary representation of wstETH to Avalanche, BNB Chain, and Scroll without support from the Lido DAO [decentralized autonomous organization],” which is created by “provider-specific systems […] fundamentally owned by the bridges that implement them.” As a result, it creates “systemic risks for projects that can be tough to quantify,” they stated. The protocols advocated for the use of the xERC-20 token standard for bridging stETH instead of using LayerZero’s new token.
Lido Staked Ether (stETH) is a liquid staking derivative produced when a user deposits Ether (ETH) into the Lido protocol for staking. On October 25, LayerZero launched a bridged version of stETH, called "Wrapped Staked Ether (wstETH)" on BNB Chain, Avalanche, and Scroll. Prior to this launch, stETH was not available on these three networks.
Since any protocol can create a bridged version of a token, LayerZero was able to launch wstETH without needing the approval of Lido’s governing body, LidoDAO. In addition, both BNB Chain and LayerZero announced the token’s launch on X (formerly Twitter), and BNB Chain tagged the Lido development team in its announcement. Members of LidoDAO later claimed that these actions were an attempt to mislead users into believing that the new token had support from the DAO.
On the same day that LayerZero launched wstETH, they proposed that LidoDAO should approve the new token as the official version of stETH on the three new networks. They offered to transfer control of the token’s protocol to LidoDAO, relinquishing LayerZero’s administration of it. In response, some LidoDAO members complained that this move was intended to create a fait accompli to pressure the DAO into passing the proposal when they otherwise wouldn’t have.
“There appears to have been a coordinated marketing effort between Avalanche, BNB, and LayerZero with a series of twitter posts and slick videos implying that LidoDAO has already officially accepted the OFT standard,” LidoDAO member Hart Lambur posted to the forum, adding “How is this possible when this is just a proposal?”
Some members also argued that the new token could pose security issues. “Layer Zero is a super centralized option that exposes Ethereum’s main protocol to an unprecedented catastrophe,” LidoDAO member Scaloneta claimed, arguing that a hack in the protocol’s verification layer “would imply that infinite wsteth will be minted.”
Cointelegraph reached out to the LayerZero team for comment through Telegram and email, but did not receive a response by the time of publication. In April, LayerZero raised over $120 million to help build more cross-chain functionality into the Web3 ecosystem and partnered with Radix to bring cross-chain functionality to the Radix Babylon network.
Bitcoin is taking a breather after this week’s strong rally, but select altcoins may be getting ready to breakout over the next few days.
Bitcoin (BTC) has been trading above $33,600 for the past two days, indicating that the bulls are not rushing to the exit. After a sharp rally, if the price does not give up much ground, it may cause FOMO and ignite another round of buying.
That could push the markets further into overbought territory. However, such rallies are rarely sustainable. They eventually turn down and retest the breakout levels. Hence, Bitcoin’s drop to $32,000 can not be ruled out.
The rally of the past few days pushed Bitcoin’s dominance to 54%, its highest level in 30 months. The rise in market dominance shows that Bitcoin is leading the charge higher, which is a positive sign. This suggests that traders are favorably viewing the cryptocurrency space and select altcoins may join the party soon.
Veteran trader Peter Brandt said in a post on X (formerly Twitter) on Oct. 26 that Bitcoin’s bottom is in but he warns that new all-time highs may not happen until the third quarter of 2024. Meanwhile, Brandt predicts Bitcoin to enter a “chop fest.”
Will Bitcoin enter a corrective phase over the next few days or continue its upward march? Will altcoins join the party higher?
Let’s analyze the charts of the top 10 cryptocurrencies to find out.
Bitcoin price analysis
Bitcoin is facing resistance at $35,000 but the bulls have not given up much ground. This suggests that the buyers may soon try to resume the up-move.
The risk to a further rise is that the relative strength index (RSI) remains in the overbought area. This indicates the possibility of a minor correction or consolidation in the near term. If the price slides below $33,679, the BTC/USDT pair could retest $32,400 and then $31,000.
However, it is not certain that the overbought levels on the RSI will cause a correction. Sometimes, during a trend change from bearish to bullish, the RSI tends to remain in overbought territory for a long time. That is because the smart buyers continue to accumulate on every intraday dip.
In this case, if the price turns up from the current level and breaks above $35,280, it will signal the start of the next leg of the uptrend. The pair may then skyrocket to $40,000.
Ether price analysis
Ether’s (ETH) long wick on the Oct. 26 candlestick shows that the bears are aggressively protecting the minor overhead resistance at $1,855.
The rising 20-day EMA ($1,674) and the RSI near the overbought zone indicate that bulls have the upper hand. If the price turns up from $1,746, the bulls will again try to shove the ETH/USDT pair above $1,855. If this level is surmounted, the pair may skyrocket toward the psychologically important level of $2,000.
If bears want to prevent the up-move, they will have to quickly send the price back below the breakout level of $1,746. The pair may then tumble to the 20-day EMA.
BNB price analysis
BNB (BNB) turned down from $235 on Oct. 24, indicating that the bears are active at this level. The sellers tried but failed to sustain the price below the strong support at $223.
This indicates that buyers are fiercely attempting to defend the support at $223. If the price rebounds off this level with strength, the BNB/USDT pair could once again try to rise above the overhead resistance at $235. If that happens, the pair may climb to $250 and subsequently to $265.
Contrarily, if the price once again turns down from $235, it will suggest that bears continue to sell at higher levels. A slide below $223 will tilt the advantage back in favor of the bears. The pair may then oscillate between $203 and $235 for a while longer.
XRP price analysis
XRP (XRP) has been witnessing a tough battle between the bulls and the bears near the overhead resistance of $0.56.
The bears are trying to pull the price to the 20-day EMA ($0.52) which is an important level to keep an eye on. If the price sharply rebounds off this level, it will suggest that every minor dip is being bought. The bulls will then again try to kick the price above $0.56.
If they succeed, it will signal the start of a new up-move. The XRP/USDT pair could then soar to $0.71. This positive view will be negated in the near term if the price turns down and plunges below the 50-day SMA ($0.51). That will indicate a range-bound action between $0.46 and $0.56 in the near term.
Solana price analysis
Solana (SOL) has been trading near the pattern target of $32.81 for the past few days. The bulls have not ceded ground to the bears, indicating that they anticipate another leg higher.
The RSI remains in the overbought zone, indicating that the SOL/USDT pair may spend some more time in consolidation or witness a minor dip. If the price stays above $30, the possibility of a rally to $38.79 increases.
On the other hand, if the price skids below $30, the bears will attempt to yank the price to the 20-day EMA ($27.20). If this support gives way, it will signal that the sellers are back in the game.
Cardano price analysis
Cardano (ADA) has been trading above the $0.28 level for the past few days but the bulls haven’t been able to start a strong relief rally.
Buyers tried to start a new up-move on Oct. 26 but the bears sold at higher levels as seen from the long wick on the candlestick. Encouraged by this, the sellers will try to tug the price back below the breakout level of $0.28. If they can pull it off, the ADA/USDT pair may slump to the 20-day EMA ($0.26).
Instead, if the price turns up from $0.28 and rises above $0.30, it will signal that the bulls have flipped the level into support. The pair may then start its northward march toward $0.32. This level may act as a stiff barrier but if cleared, the next stop is likely to be $0.38.
Dogecoin price analysis
Dogecoin (DOGE) has been in a strong recovery for the past few days, indicating aggressive buying by the bulls.
Buyers pushed the price above the nearest resistance of $0.07 on Oct. 26 but the long wick on the candlestick shows selling at higher levels. The bears are trying to pull the price back below $0.07 on Oct. 27. If they succeed, the DOGE/USDT pair could slide to the 20-day EMA ($0.06).
On the contrary, if the price turns up from $0.07, it will suggest that the sentiment has turned positive and every minor dip is being purchased. That could propel the price to $0.08.
That may have attracted selling by the bears who have dragged the price back below the moving averages on Oct. 27. The TON/USDT pair may slide to the crucial support at $1.89. Such a move will suggest that the pair may consolidate between $1.89 and $2.31 for a few days.
Contrary to this assumption, if the price turns up sharply from the current level, it will indicate that the bulls are buying on minor dips. That will improve the prospects of a break above $2.31. The pair may then surge to $2.59.
Chainlink price analysis
Chainlink (LINK) has been facing selling near the $11.50 mark as seen from the long wick on the candlesticks of the past few days.
A minor positive is that the bulls have not given up much ground. This suggests that the buyers are in no hurry to book profits as they anticipate the uptrend to continue. Sometimes, when an asset breaks out from a long consolidation, it may remain in the overbought zone for an extended period. That is a possibility with the LINK/USDT pair.
The important support to watch on the downside is $9.50 and then the 20-day EMA ($8.97). Buyers are expected to defend this zone with vigor.
Polygon price analysis
Polygon (MATIC) broke above the $0.60 resistance on Oct. 22 but the bulls are struggling to maintain the up-move. This suggests hesitation to continue buying at higher levels.
The important level to watch on the downside is $0.60. If the price rebounds off this level with strength, it will signal that the bulls have flipped $0.60 into support. That will increase the likelihood of a break above $0.67. The MATIC/USDT pair may then soar to $0.77.
Meanwhile, the bears are likely to have other plans. They will try to sink the price back below the breakout level of $0.60. If they do that, several aggressive bulls may get trapped and the pair may plummet to the 20-day EMA ($0.57).
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Clear holographic imaging in turbulent environments
Holographic imaging has always been challenged by unpredictable distortions in dynamic environments. Traditional deep learning methods often struggle to…
Holographic imaging has always been challenged by unpredictable distortions in dynamic environments. Traditional deep learning methods often struggle to adapt to diverse scenes due to their reliance on specific data conditions.
Credit: X. Tong et al., doi 10.1117/1.AP.5.6.066003.
Holographic imaging has always been challenged by unpredictable distortions in dynamic environments. Traditional deep learning methods often struggle to adapt to diverse scenes due to their reliance on specific data conditions.
To tackle this problem, researchers at Zhejiang University delved into the intersection of optics and deep learning, uncovering the key role of physical priors in ensuring the alignment of data and pre-trained models. They explored the impact of spatial coherence and turbulence on holographic imaging and proposed an innovative method, TWC-Swin, to restore high-quality holographic images in the presence of these disturbances. Their research is reported in the Gold Open Access journal Advanced Photonics.
Spatial coherence is a measure of how orderly light waves behave. When light waves are chaotic, holographic images become blurry and noisy, as they carry less information. Maintaining spatial coherence is crucial for clear holographic imaging.
Dynamic environments, like those with oceanic or atmospheric turbulence, introduce variations in the refractive index of the medium. This disrupts the phase correlation of light waves and distorts spatial coherence. Consequently, the holographic image may become blurred, distorted, or even lost.
The researchers at Zhejiang University developed the TWC-Swin method to address these challenges. TWC-Swin, short for “train-with-coherence swin transformer,” leverages spatial coherence as a physical prior to guide the training of a deep neural network. This network, based on the Swin transformer architecture, excels at capturing both local and global image features.
To test their method, the authors designed a light processing system that produced holographic images with varying spatial coherence and turbulence conditions. These holograms were based on natural objects, serving as training and testing data for the neural network. The results demonstrate that TWC-Swin effectively restores holographic images even under low spatial coherence and arbitrary turbulence, surpassing traditional convolutional network-based methods. Furthermore, the method reportedly exhibits strong generalization capabilities, extending its application to unseen scenes not included in the training data.
This research breaks new ground in addressing image degradation in holographic imaging across diverse scenes. By integrating physical principles into deep learning, the study sheds light on a successful synergy between optics and computer science. As the future unfolds, this work paves the way for enhanced holographic imaging, empowering us to see clearly through the turbulence.
For details, read the original article by X. Tong et al., “Harnessing the magic of light: spatial coherence instructed swin transformer for universal holographic imaging,” Adv. Photon. 5(6) 056003 (2023), doi 10.1117/1.AP.5.6.066003.
Journal
Advanced Photonics
DOI
10.1117/1.AP.5.6.066003
Article Title
Harnessing the magic of light: spatial coherence instructed swin transformer for universal holographic imaging
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