Real estate is risky and bonds are overvalued, boosting Bitcoin bull case: Blockstream CEO
Due to the implementation of increasingly easy monetary policy into the repertoires of the world’s central banks, an “everything bubble” has formed over the past decade. Effectively all asset classes — from stocks and real estate to bonds— have been boosted because of low-interest rates and large-scale asset purchases by central banks. As Ray Dalio, a legendary hedge fund manager, explained: “There are a lot of parallels between now and the late 1930s. From 1929 to 1932 we had a debt crisis — interest rates hit zero. Then there was a lot of printing of money, and purchases of financial assets brought their prices higher.” According to a prominent industry executive, the overvalued and thus risky nature of financial assets is making Bitcoin look attractive in comparison. Bitcoin is one of the only investments that make sense: Adam Back Speaking to Bloomberg in a recent interview, Blockstream CEO Adam Back said that Bitcoin is on track to explode higher in the coming five years due to macro trends. According to him, real-estate investments are poor due to the work-from-home shift in society that may dramatically devalue urban real estate and prop up rural real estate. And bonds, due to central-bank purchases, might be “overvalued,” meaning a Bitcoin investment makes that much more sense for consumers. Back’s comment is eerily reminiscent of one made by Raoul Pal, a former hedge fund manager turned prominent macro analyst and crypto bull. Last year, Pal told Bitcoin podcaster Stephan Livera that the most popular asset classes make no sense for millennials because they’re overvalued. At the time, equities were pushing all-time highs, even though they were extremely overvalued with relatively little profit and upside potential. Bonds weren’t much better due to low or negative rates, alongside with high prices due to central-bank bond purchases. And real estate was (and still is) largely “unaffordable.” Enter Bitcoin: “So what the hell does a millennial do to save for your future, when almost all assets have negative imputed returns for the next 20 years, 10 years? And the answer is well, you take the optionality of cryptocurrency and Bitcoin,” Pal explained. Preserve wealth through BTC The poor risk-return profile of other asset classes isn’t the only trend that is making Back bullish on Bitcoin. Back remarked that with the ongoing recession, which has forced central banks to print a record amount of money, people need ways to preserve their wealth. Back explained: “It is causing people to think about the value of money and looking for ways to preserve money.” Due to the fact that Bitcoin has a fixed supply cap of 21 million coins and a known inflation schedule, Back and others believe that the cryptocurrency can emerge as a hedge against the debasement of fiat money. He has such faith in this theory that he told Bloomberg that BTC could hit $300,000 in the coming five years.
4 Jun 2020
Here's why analysts say Bitcoin's 14% drop on June 2 is actually healthy for the medium-term trend
On June 2, more than $220 million worth of long and short contracts were liquidated on BitMEX. Analysts say it could be a healthy pullback for the medium-term trend of Bitcoin. In a single day, the price of Bitcoin rose to as high as $10,440 and fell to $8,600 within several minutes. The rapid price drop led to mass liquidations of BTC futures contracts. The Bitcoin futures market was heavily skewed towards longs Before the sudden pullback occurred, the Bitcoin futures market was dominated by long contract holders. Simply put, there were significantly more traders bidding on the price of BTC to go up in the short-term. When the futures market is heavily skewed to one side, it leaves Bitcoin vulnerable to either a long squeeze or a short squeeze. A long squeeze means a cascade of long contract liquidations causing a sharp decline in the price of Bitcoin, and vice versa. Data showed that about 70 percent of the Bitcoin futures market was holding long contracts. It pushed the funding rate of BTC to rise to 0.16 percent. The funding rate of a Bitcoin futures contract rises when there are more people expecting the price of BTC to go up. Usually, the funding rate of a BTC futures contract hovers at 0.01 percent. It was 16 times higher than usual. The drop to $8,600 flushed the market, shaking out overleveraged traders When the price of Bitcoin was hovering over $10,000, many long contracts were vulnerable to liquidations. 50x to 100x long contracts, which are traders who are borrowing 50 to 100 times of their funds to long Bitcoin, got liquidated at $9,900. Lower leverage long positions were liquidated in the $9,400 to $9,500 range, with BitMEX seeing liquidations of 10x longs at $8,600. The 5-minute 14 percent drop from $10,000 to $8,600 wiped out 10x to 100x positions, flushing the market of over-leveraged trades. The correction wiped out high leverage long contracts in the market, which are considered as liabilities by some because they raise the probability of an abrupt price drop as seen on June 2. Here’s why it may be healthy for the market Mohit Sorout, founding partner at Bitazu Capital, said that the liquidation of $123 million in shorts and $96 million in longs within 24 hours is a “healthy Bitcoin sentiment reset.” Sorout said: “A healthy BTC sentiment reset. Range a couple days, trap late bears then run it back up.” If Bitcoin continues its upward trend with the spot and institutional markets accounting for the majority of buy volume, it will create a fundamentally stronger base for the next extended rally. The futures market drove the rally of Bitcoin from the $8ks to $10,440 in the past two weeks. When the futures market pushes BTC upwards, it puts the dominant cryptocurrency at risk of a severe pullback. The recent trend and liquidations of highly-leveraged positions may create a clearer path for Bitcoin towards a newfound upsurge.
3 Jun 2020
Chainlink is “taking a shot” at another breakout as community growth skyrockets
The aggregated crypto market has seen another notable upswing today, and Chainlink is once again leading the way. Today’s bullish LINK performance comes as the crypto attempts what analysts are describing as another breakout rally that could allow it to begin its journey back up to its early-2020 highs. This momentum may be driven in part by the incredible community strength that has been established around Chainlink, even leading one billionaire Bitcoin advocate to praise the altcoin’s fervent supporters. Chainlink attempts another breakout as it leads market-wide rally At the time of writing, Chainlink is trading up over 6 percent at its current price of $3.70, which marks a notable upswing from daily lows of $3.45 that were set around this time yesterday. LINK’s upswing today has marked an extension of the momentum that was first incurred on April 16th when the crypto surged from lows of $3.00. This came about in tandem with BTC’s rally from $6,600, although Chainlink has been firmly outperforming the benchmark cryptocurrency in the time since. The only peer that has rivaled Chainlink’s mid-term momentum is Tezos, which is currently trading up nearly 10% against USD and 7% against its Bitcoin trading pair. One analyst on Twitter who goes by the name Big Cheds stated that today’s LINK rally marks the crypto “taking a shot at breaking out” while referencing the chart seen below. Will growing community strength bolster LINK? Tyler Winklevoss, the co-founder and CEO of Gemini and a prominent Bitcoin advocate, explained in a recent tweet that he “appreciates the passion” of the LINK community, noting that they are dedicated to a project with “real promise.” “I really appreciate the passion of the LINK Marines. Their fervor and dedication reminds me of the early Bitcoin and Ethereum communities. Unlike many other crypto armies, they are dedicated to a project that has real promise and technical merit.” His claims about the strength of the community aren’t unwarranted either, as data from blockchain research and analytics platform IntoTheBlock shows that the Chainlink community has seen tremendous growth in recent times across multiple social platforms. The data shows a steady climb in the number of Chainlink mentions on platforms like Twitter, Telegram, as well has a stable rise in the number of contributors on the crypto’s GitHub – all signs of a highly active and engaged community. Will this incredible community strength be enough to push LINK back to its all-time highs of nearly $5.00 though? Only time will tell.
18 Apr 2020
Bitcoin just hopped above $7,000 after 10% correction, convincing analysts of bull case
After a precipitous drop to start the weekend, Bitcoin has begun to mount a strong comeback over the past five hours, with the cryptocurrency rallying to $7,100 just minutes ago after falling as low as $6,750 on Apr. 10. This means that from the local lows, BTC is up over five percent. Although this move has just begun to transpire, analysts are already coming to conclusions about what comes next for this nascent market. And overall, they’re bullish. Why analysts expect Bitcoin to rocket even higher $7,000, notably, is seen as a very important price point for Bitcoin. Filb Filb — the pseudonymous trader who called BTC’s price action in Q4 2019 and January 2020 months in advance — recently shared that he thinks that $7,000 is a “decision point” for the cryptocurrency, whereas high time frame closes above this level could suggest more upside is imminent. With Bitcoin’s weekly close coming up in approximately seven hours, it manages to continue to trade above $7,000 could add credence to the argument that it is going to head higher. Indeed, as reported by CryptoSlate previously, Mohit Sorout of crypto hedge fund Bitazu Capital remarked that he expects BTC to “pop” due to the current composition of the BitMEX order books. More specifically, the trader revealed that what he’s expecting is for Bitcoin to undergo a short squeeze, whereas leveraged short positions are rapidly pushed out of their trades to cause a strong rally higher. His charts indicate that once Bitcoin returns to the $7,050-7,100 range, there will likely be a cascade of trades closing that could push the cryptocurrency toward its weekly highs of $7,400, maybe even higher. What’s behind the move? While it’s hard to tell exactly what the collective crypto diaspora is thinking at one time, the ongoing move in the crypto markets seems to be related in an overall bout of growth in the interest in and demand for Bitcoin and other digital assets. For example, it was recently observed that Google Trends shows that searches for “Bitcoin Halving” around the world are exploding higher, rallying to 12-month highs as the halving event moves ever closer. BTC rallied into its two previous halvings, responding to the uptick in social interest in the cryptocurrency. Bloqport tweeted: BREAKING: Google searches for “Bitcoin Halving” are trending worldwide. #Bitcoin The move may also be related to the fact that over the past week, altcoins have strongly outperformed BTC, which is about to finish the week flat. Certain altcoins, of course, are often seen as a bellwether for the rest of the cryptocurrency market.
12 Apr 2020
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Fund manager: Bitcoin price is poised to "pop" due to this reason
Over the past few days, the price of Bitcoin has slid lower after a strong multi-week rally to $7,470, marking a 100 percent increase from the “Black Thursday” bottom of $3,700. As of the time of writing this, BTC trades at $6,800, some nine percent lower than the aforementioned high. Though, a prominent cryptocurrency fund manager is expecting for Bitcoin to soon “pop.” How Bitcoin could soon pop On Apr. 10, Mohit Sorout — a partner at crypto hedge fund Bitazu Capital — remarked that it will “soon” be time for Bitcoin to “pop,” sharing the two charts seen in the embedded message below. Mohit Sorout tweeted: $BTC pop time soon Although it wasn’t initially clear to most what exactly he meant with these charts and the accompanying message, Sorout later revealed that what he’s expecting is for Bitcoin to undergo a short squeeze, whereas leveraged short positions are rapidly pushed out of their trades to cause a strong rally higher. More specifically, the charts indicate that once Bitcoin returns to the $7,050-7,100 range, there will likely be a cascade of trades closing that could push the cryptocurrency toward its weekly highs of $7,400, maybe even higher. This conclusion can be drawn from the above chart that the Bitazu partner shared. It shows that at $7,050-7,100 and $7,300, there are clusters of liquidation levels for BitMEX short positions that will cause Bitcoin buying if reached. Pressure is building While Sorout’s expectation for Bitcoin to “pop” is an expectation based on investors pushing prices to the abovementioned ranges, it is clear that pressure is building, with reports indicating that buyers are starting to enter the crypto market en-masse. Firstly, there’s been an uptick in buy-side volume with two altcoins, Tezos and ChainLink, which have rallied by 13 percent and 31 percent over the past week, respectively. This indicates a growing demand for cryptocurrency as an overall asset class. Secondly, Su Zhu of crypto and forex fund Three Arrows Capital observed that on Apr. 10, there was a large Ethereum buy wall on Bitfinex, with buyers putting up a jaw-dropping 250,000 ETH worth of bids between $159 and $162, amounting to a cost of around $40 million. Su Zhu tweeted: Large $ETH buy wall on bfx here, 200k ether filled and another 50k remaining in the order book To add credence to this, Bitfinex data indicates that its traders are starting to accumulate margin long Ethereum positions at a rapid clip. And lastly, multiple pieces of evidence — such as web traffic measured by Alexa, anecdotal stories from friends and family, and order book data — suggest that buy-side demand for Bitcoin is starting to ramp up. All this corroborates Sorout’s belief that Bitcoin is poised to pop.
12 Apr 2020
Last time this on-chain trend occurred, Bitcoin rallied over 4,000%
Although Bitcoin has stalled dramatically since February’s $10,500 peak, data shows that large cryptocurrency investors have been unfazed. So unfazed, in fact, that they’ve begun to accumulate more and more BTC, stacking coins in seeming preparation for a bull run. On-chain data: Bitcoin whales are stacking sats like crazy Data shared by crypto analytics provider Glassnode on Apr. 9 indicates that the number of Bitcoin wallets with over 1,000 coins has seen large growth since December, rising from ~1,750 then to ~1,840, levels not seen since the previous halving in 2016, which came prior to Bitcoin’s 4,000 percent rally from $500 to $20,000 over two years. glassnode tweeted: The number of $BTC whales continues to grow, hitting 2-year highs - the last time we saw this many during an accumulation phase was in 2016. This becomes interesting when we compare it with the last #Bitcoin halving. Read more in The Week On-Chain Although not exactly an indicator of future market directionality, many see the trends in holdings of large cryptocurrency players as a good sign of what’s to come, as they’re considered “smart money” that has a good handle on what’s next. Glassnode explained further: “The number of whales (i.e. entities with at least 1000 BTC) increased leading up to last month’s market crash, and accelerated during and after the crash. This suggests that larger market players are accumulating BTC, providing an optimistic sign.” The firm further elaborated that the simple fact that such strong accumulation is taking place in such an “uncertain market environment” is a fair sign that there’s growth ahead for the Bitcoin market. Notably, this comes just weeks after CryptoSlate reported that from “Black Thursday” on Mar. 12 to Mar. 17, ETH whale addresses (top 100 holders) have “turned to accumulate,” adding 150,000 coins (then valued at $20 million, now valued at $24 million) to their holdings. Institutional adoption is happening It makes sense why the number of whale addresses is swelling: there is tangible evidence to suggest that institutional players are starting to enter back into the crypto-asset markets, despite the drop sustained in March. Fidelity Digital Assets — the crypto services division of Wall Street giant Fidelity Investments, a firm with trillions under management — has confirmed it has seen an uptick in interest over recent weeks. Speaking to Frank Chaparro of The Block, a spokeswoman for the firm said that: “From a trading perspective, we continue to onboard new clients every month and are seeing significant pipeline growth. [...] And in recent weeks, we’ve seen more momentum across our business.” The reporter’s sources confirmed this, purportedly stating that Fidelity’s cryptocurrency arm has been fielding an increase in “inbounds from pension funds, family offices, and macro global hedge funds” as investors look for better ways to invest amid the ongoing coronavirus outbreak. There’s also adoption in terms of large companies delving into creating crypto- and blockchain-based products. But that’s a story for another time.
10 Apr 2020
Here’s why data regarding Ethereum’s investor composition may be extremely bullish
The past few years have not been kind to Ethereum, with the cryptocurrency finding itself caught within an intense downtrend that led it to plummet from early-2018 highs of over $1,400 to lows in the $80 region. This intense selloff has left a trail of proverbial “bag holders” in its wake, with the vast majority of ETH investors currently being underwater on their positions. In spite of this, one venture capitalist is noting that the embattled cryptocurrency’s investor composition may actually be a highly bullish sign, as it suggests that it is comprised of “true believers” that have all passed on opportunities to exit their positions. 68% of Ethereum investors are currently holding underwater ETH positions According to data from the on-chain analytics platform IntoTheBlock, over 68 percent of Ethereum investors are holding tokens that are currently worth less than what they bought them for. This is compared to a mere 21 percent who hold profitable positions, and 10 percent whose positions are at a break-even. These numbers have shifted significantly in recent times due to the aggregated crypto market’s recent uptrend, as CryptoSlate reported in late-March that at the time 88 percent of Ethereum investors were underwater. In the nine days following this report, Ethereum has climbed from lows of $130 to highs of nearly $180, with this price rally coming about in tandem with that seen by Bitcoin and many other major altcoins. The rise in the percentage of profitable Ethereum investors has been disproportionate from the number of wallets that acquired their ETH between $130 and $180, which indicates that a large number of investors entered positions towards the bottom of the recent selloff. Here’s why ETH’s investor composition could be highly bullish Although the face value of there being a significant number of underwater investors seems to be overtly bearish, one prominent investor is noting that he believes it is a positive sign for ETH, emblematic of the crypto having an investor base comprised of “true believers.” Spencer Noon, the head of crypto investments at DTC Capital, mused this notion in a recent tweet, explaining that he believes it is emblematic of their optimism and enthusiasm for the crypto. “In the last 20 mths there were < 100 days when the agg. cost basis of ETH holders wasn’t underwater. The # of holders (unique addr) has 2x’d from ~19M to 37M over this span. You can try to spin this as bearish but it’s bullish. Everyone’s had a chance to sell—these are believers.” If investors continue buying Ethereum’s dips and holding onto their positions, the number of underwater positions is likely to steadily decline.
9 Apr 2020
Ethereum sees rocketing open interest and futures volume; here’s what this means
Ethereum has found itself caught within a firm and unwavering uptrend throughout the past 48-hours, with Bitcoin’s surge past $7,000 providing ETH with some significant momentum that has allowed it to outperform the aggregated market. This rally has led the cryptocurrency to see a massive surge in futures trading volume and open interest (OI) on popular trading platform BitMEX, with both of these things being a sign that the crypto will see further near-term volatility. Because ETH has underlying technical strength and has formed what is widely considered to be a bullish market structure, it is a possibility that the crypto will soon rally towards $200. Ethereum volatility unlikely to let up anytime soon, data shows Ethereum’s recent rally has allowed it to surge from multi-day lows of $140 to highs of nearly $175, with the crypto only trading down marginally from this level. This rally has allowed ETH to outperform Bitcoin, and data now seems to suggest that analysts anticipate it to see a further extension of this volatility in the near-term. According to data from research and analytics platform Skew, Ethereum saw a notable surge in its futures volume on April 6th, with this uptick in volume stemming from Binance, Huobi, and OKEx. As seen on the above chart, this led futures volume to rocket from roughly $1 billion on April 5th to $3 billion on the 6th, hitting levels not seen since March 20th, which is when the crypto rallied from $115 to $150. Concurrently with the rise in futures, open interest on Bitmex also rose sharply, a sign that retail traders are also anticipating further volatility. Which side will this volatility favor? As reported by CryptoSlate yesterday, a simple ascending triangle that Ethereum recently established and confirmed may allow it to climb towards $200 in the near-term, with this pattern being highly bullish. Furthermore, $200 is also where there is significant resistance and liquidity, making this an ideal region for long ETH traders who may be looking to exit their positions. Although Ethereum may remain closely correlated to Bitcoin, its outperformance of the benchmark cryptocurrency may give it room to run significantly further if BTC is able to continue inching higher. The massive increase in trader activity – per ETH’s rising open interest and futures volume – may also work to fan the flames currently fueling its uptrend.
7 Apr 2020
Bitwise "increasingly bullish" on intermediate outlook for crypto, cites real money inflows
The Bitcoin price has made a V-shape recovery from $3,600, following a capitulation-esque fall on March 12. Since then, the crypto market has recovered rapidly, similar to gold in previous crises, cryptocurrencies could perform strongly in the medium to long-term. As CryptoSlate previously reported, gold demonstrated a close correlation with stocks in the early days of past financial crises. As time passed, gold broke out of the correlation, ultimately outperforming stocks. Bitwise Global Head of Research Matt Hougan said in a letter to investors that crypto may see a similar pattern as gold, which makes the medium to long-term trend of the asset class highly optimistic. Real demand, real buyers in crypto In 2008, after the subprime mortgage crisis swept across the U.S. causing financial wreckage, all asset classes plunged in a short period of time. In the next 12 months that followed, the price of gold increased sharply, making 2009 to 2011 the best performing years in gold’s history. Hougan wrote: “Toward that end, we are reminded of what happened to gold following the 2008 crisis. Although the initial deflationary impact of that crisis drove gold prices down sharply, prices rebounded rapidly in 2009 and beyond as the government’s response to the crisis rippled through the system. In fact, 2009-2011 was one of the strongest three-year return periods in gold’s history.” Bitcoin has seen a fast-forwarded version of gold’s swift recovery in the 2000s. When the U.S. equities market was still struggling to rebound, BTC began to see a firm recovery from $3,600. Within less than a month and a half, its price rose by more than two-fold. Based on the historical performance of gold in the aftermath of crises and the rising perception of Bitcoin as digital gold, Hougan said that Bitwise Asset Management remains increasingly bullish on the intermediate and long-term outlook for crypto. He wrote: “It is chiefly for this reason that we are increasingly bullish on the intermediate- and long-term outlook for crypto. We are in unprecedented times, seeing anomalous and unexpected developments in financial markets, including gold, and witnessing extraordinary fiscal and monetary responses to the coronavirus pandemic. In such an environment, a small allocation to crypto in a diversified portfolio seems increasingly prudent. We are hearing this from clients, and seeing it in our inflows.” Recovery is backed by actual retail demand The shift in the volume of major crypto assets from futures exchanges to spot trading platforms in recent weeks has shown that the market downturn was actively bought by retail traders, rather than by existing traders in the futures market using high leverage or debt to push up the market. The fast rebound of crypto assets, which many existing investors in the cryptocurrency market did not anticipate, could solidify the image of cryptocurrencies as a potential store of value and safe haven over the long-run.
7 Apr 2020
Here’s why this grim monetary trend may be highly bullish for Bitcoin
The events occurring throughout the early-part of 2020 have rattled the global economy, with mounting COVID-19 infection rates and soaring unemployment damaging all major markets – ranging from stocks and commodities to cryptocurrencies like Bitcoin. The actions taken by central banks across the globe – but especially those by the U.S. Federal Reserve – have seemingly vindicated cryptocurrency enthusiasts, proving the importance of having scarce decentralized digital assets. One prominent investor and economic historian is now noting that he believes the world will soon place a heightened focus on three specific assets – including Bitcoin – as the likelihood of the U.S. seeing negative interest rates grows increasingly likely. Data suggests Fed Fund and 10-year bond rates may soon dip negative Prominent investor and Bitcoin advocate Raoul Pal explained in a recent tweet thread that the “deflationary wave” that the global economy is currently experiencing is one of the largest in modern history, making that chances of a negative Consumer Price Index (CPI) turning negative incredibly high. He notes that a failure for the Fed to turn rates negative could lead monetary conditions to tighten into a crisis, making it a potentially imminent event. Pal explains that an analysis of the Fed Fund suggests FF rates could dive as low as 2% in the near-term, while 10-year bonds could also flip negative as well. “When I look at Fed Fund, it suggests that trend FF rates could go as low as -2%... And 10 year bonds would get to negative rates too...” Here’s why negative rates could be great for Bitcoin The implications of negative interest rates could be dire, as it will “nuke the pension system” while also destroying the value of money. This could prove to be positive for three assets in specific, including Bitcoin, Gold, and the US Dollar – as central banks besides the Fed will likely be forced to take even more extreme measures, thus making USD the strongest currency. Raoul Pal elaborated: “Dollars, Gold and Bitcoin make the most sense. Later, much later, just gold and bitcoin. This is an 18 month to 36 month view. Expect many counter-trend moves along the way. We will have to navigate those. Good luck.” Unless the rapidly growing Coronavirus pandemic concludes sooner than the world anticipates it to, it is highly probable that it will continue ravaging the global economy, and traditional investors may have to begin turning to decentralized assets like Bitcoin in order to preserve their capital.
4 Apr 2020