Publisher’s Note: Happy Chinese New Year! First Mover will not be released on Monday February 15th, Presidents’ Day in the US Cryptocurrency markets.
Bitcoin (BTC) was lower after early Friday was pushed to an all-time high of $ 48,925 based on CoinDesk prices.
Market activity was calm According to Craig Erlam, senior market analyst at foreign exchange brokerage firm Oanda, due to New Year celebrations across Asia and the upcoming US Presidents’ Day holidays on Monday. (It’s the Year of the Ox, by the way, which some traders consider bullish in case you missed the story of CoinDesk’s Muyao Shen last week.)
In traditional markets, US stock futures were lowerAn investor told Bloomberg News that “investor exuberance has subsided somewhat”. Gold fell 0.5% to $ 1,817 an ounce.
JPMORGAN FEELS BITCOIN BURN: JPMorgan employees followed senior management of the trading department during an internal town hall meeting about when the largest U.S. bank could get into bitcoin, CNBC reported.
RESERVE CURRENCY STATUS? ECB President Christine Lagarde said it was “very unlikely” that central banks will hold Bitcoin in the near future. “I’d say it’s out of the question,” Lagarde said during a conference call from The Economist.
Give people what they want: US Securities and Exchange Commission Hester Peirce, sometimes known as “Crypto Mom” for its optimistic views on the digital assets industry, said the country’s capital markets were ready for an exchange-traded Bitcoin product. The SEC has refused to approve an exchange-traded Bitcoin fund despite multiple requests. People are already eager to trade a Bitcoin ETP and “if we don’t give them the natural way I think an ETP is, they will look for other (less optimal) ways to do it,” Peirce said Thursday on CoinDesk TV.
CANADA IS NOT WAITING: The first North American Bitcoin ETF was approved by the Ontario Securities Commission on Thursday. “Maybe they’re normal and the SEC is too conservative,” tweeted Eric Balchunas, senior ETF analyst at Bloomberg. “Either way, the US usually follows shortly thereafter.”
FINANCE EXECS DEMUR ON BITCOIN: According to the Wall Street Journal, top finance executives at Verizon, Cisco Systems, and Mozilla see risks and accounting challenges in putting corporate money in Bitcoin. Such anecdotes challenge the investment narrative that cryptocurrency will benefit from a wave of new corporate demand.
BAIR IS A BEAR: Bitcoin prices are at “nosebleed levels,” said Sheila Bair, former chairman of the US Federal Deposit Insurance Corp. and now chairman of the state-owned mortgage finance company Fannie Mae. “Stay away from it,” she said in an interview with Bloomberg Radio late Wednesday. “It’s volatile. It’s nosebleed now. We don’t know how sustainable that is. ”
INDIA GRACE PERIOD: Policy makers in India will put in place a transition period if a proposed ban on the use of cryptocurrencies is passed as expected, Bloomberg reported. After that, the use of cryptocurrencies will be banned in all aspects by a new law that will be introduced in the current parliamentary session on the Law on Cryptocurrency and Regulation of the Official Law on Digital Currencies of 2021.
How Bitcoin will rise to $ 1 million in 11 years in an analyst scenario
First Mover did some calculations on the back of the envelope Earlier this week to illustrate how tight Bitcoin could be in supply for the throng of new institutional investors and corporate treasurers allegedly considering an allocation to cryptocurrency after Tesla made a $ 1.5 billion purchase earlier this week -Dollar announced.
Now comes Charlie Morris, ByteTree Asset Management’s chief investment officer, who did his own calculations in a similar manner so that First Mover’s amateur endeavors look like a toddler’s doodles.
This year around 363,500 bitcoins will be given out to cryptocurrency miners Morris estimates that he is helping to secure the blockchain network. He assumes that the miners “will probably sell the most, because that’s their business”.
Another extrapolation leads to a number of $ 18.17 billion: That is the amount of new bitcoin demand it would take this year to “maintain a BTC price of $ 50,000,” said Morris.
For the context Morris writes that exchange-traded gold funds attracted $ 41 billion last year. “Given the counter-currents in Bitcoin at the time, the evidence suggests gold investors are switching to Bitcoin,” writes Morris. “If Bitcoin can attract $ 41 billion in 2021, like gold last year, the average Bitcoin price can be expected to reach $ 100,000.”
It’s pretty bullishin other words, but not crazy far-fetched. As First Mover reported earlier this week, $ 2.02 billion has already flowed into Bitcoin-focused investment products this year, based on a report by digital asset manager CoinShares on Tuesday. And the CoinShares report doesn’t even cover demand from investors or treasurers buying Bitcoin directly from their own accounts, or purchases from retailers looking for some of the action.
Take into account the four-year halving of the Bitcoin blockchainHere, miners’ rewards are halved and the investment barrier is reduced every four years. “After that, it keeps falling, which means that high prices are easier to sustain in the future than they are today,” writes Morris.
What does this mean for bitcoin prices? Morris estimates that Bitcoin will be priced at $ 1 million by 2044, with a rate of $ 41 billion in new inflows per year. Bitcoin will hit the $ 1 million mark by 2036, when consumer price inflation averages 2.5%, or by 2032, when inflation averages 5%. That’s only 11 years left, which is 20 times the profit compared to the current price level.
Mastercard / BNY Mellon Reax
Gavin Smith, CEO of the Panxora Group: “The entry of BNY Mellon and Mastercard into the cryptocurrency space brings Bitcoin two big steps closer to mainstream adoption.”
David Mercer, CEO of the LMAX Group: “Financial institutions are now preparing to follow their customers.”
Don Guo, CEO of the Broctagon Fintech Group: “We hope that increasing adoption will push the industry to prioritize liquidity provision by improving crypto infrastructure. This ensures that both existing and new participants always have access to the best prices and that the industry reaches the next level of maturity. “
Edward Moya, Senior Market Analyst at Oanda: “The improved acceptance of cryptocurrencies in the mainstream alleviates most of the regulatory concerns completely for the time being.”
Anthony Pompliano, Morgan Creek Digital, in a tweet: “At some point every company will join the revolution.”
According to CoinDesk’s Omkar Godbole, the number of large Bitcoin addresses is swelling
Bitcoin’s supply distribution shows an increase in addresses with large balances.
Source: Coin Metrics
Bitcoin blockchain data supports the popular narrative that Bitcoin’s rally was fueled by increased institutional demand.
- According to data source CoinMetricsThe number of bitcoins that are blocked in addresses between 1,000 and 10,000 BTC has increased significantly since the end of 2020. The group now has coins valued at over $ 5 million, or 30% of the total supply of bitcoins. This is a sign of increased participation by wealthy individuals and institutions.
- Retailers also took part In the rally, addresses between 0 and 10 BTC have been gaining share since mid-2020.
Ether (ETH): Joel Kruger, cryptocurrency strategist at Exchange LMAX Digital, offered Muyao Shen of CoinDesk some price points: “A pause upstairs [$1,840] will open the door to a test of the massive resistance at $ 2,000, which is a critical psychological barrier and measured upward movement, ”said Kruger. “We’re seeing the first level of support at $ 1,680, with a pause below to take immediate pressure off the upside and open the door for a correction back towards the $ 1,500 area.”
Avalanche (AVAX): According to the Avalanche development team on Reddit, the network almost comes to a standstill after a “bug in cross-chain functionality” fails under heavy loads. The price of the AVAX token has already risen 15 times this year.
Tether (USDT): Dollar-linked stablecoin’s market cap exceeds $ 30 billion.
REMOTE WORK PIECES: Another year of remote working looms as companies postpone office reopening plans to September or beyond and in many cases refuse to commit to certain dates, the Wall Street Journal reports. As First Mover wrote in November: “A secular transition to internet commuting could take place, perhaps one of the biggest transformations in the workforce since the industrial revolution that drew people into cities…. Governments and central banks are likely to have to provide a great deal of help and input to ensure that the transition goes smoothly, that society stays together, and that people can make it. “
US DEBT> 100% of GDP: The government debt burden is well on its way to exceed the size of the entire US economy this year, largely due to the $ 4 trillion emergency spending approved since March to fight the pandemic and stimulate production . Debt is projected to hit 107% of GDP in a decade.
The US Congressional Budget Office’s latest federal debt projections show that the country’s liability burden will grow from an already elevated level of more than $ 1 trillion a year over the next decade.
Source: Congress Budget Office
Opinions and observations
PAY NOW OR PAY LATER: Mohamed El-Erian, chief economic advisor of the German financial group Allianz, writes in a column for Bloomberg Opinion: “What is favorable for politics and markets now increases future risks, starting with financial instability. The shorter Wall Street advances, the more difficult it is to improve economic conditions in order to properly validate ever-rising asset prices. “
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