Bitcoin’s momentum is attributed to anticipation of the U.S. Securities and Exchange Commission (SEC) finally approving a spot bitcoin ETF.
ARK Invest’s Cathie Wood Reveals Why Bitcoin Will Reach $1.48 Million
ARK Invest CEO Cathie Wood is no stranger to Bitcoin predictions given that the asset manager has previously said that BTC will go to $500,000 and even reach $1 million. As always, Wood remains steadfast in her Bitcoin predictions, coming out once more with an even more daring figure for the pioneer cryptocurrency.
Cathie Wood Says Bitcoin To $1 Million
Cathie Wood, who is the founder and CEO of ARK Invest, an investment firm with over $6 billion in assets under management (AUM) has come forward with a new price expectation for Bitcoin. The CEO had a chat with Natalie Brunell, hist of the “Coin Stories” podcast, where she made this new prediction.
As Wood explains, ARK Invest’s research team’s efforts have shown that Bitcoin’s growth will be largely driven by institutional adoption. They expect the digital asset to undergo a massive rally as the next decade begins.
Wood points to the adoption trend of new assets by these large institutional investors and how they often tend to allocate their portfolios. As the CEO points out, between 5% and 6% of institutional investors’ portfolios were allocated to assets such as real estate after the managers had tested the waters.
Bitcoin could be seen as being in the ‘testing the waters’ phase where institutional investors are still only putting around 1% into the digital asset to see how it turns out. Then gradually, they expand their allocation until they get to that 5% to 6% range. Now, when this happens, as Wood has pointed out before, BTC will cross the 7-figure mark.
Wood tells Brunell that she wants the Bitcoin price to cross $1 million by 2030. But this doesn’t mean that the CEO does not expect the digital asset to grow further as she puts it as high as $1.48 million in the next seven years.
The ARK Invest founder further points out that some companies are already starting to exceed the conservative 1% allocation. “Tesla, Square have Bitcoin on the balance sheets. But we make very cautious assumptions and I think the corporate treasury assumption is 2.5% of all cash and cash equivalent in Bitcoin.”
Wood stated:
If we’re right and the purchasing power of Bitcoin becomes so obvious in the years ahead, meaning the purchasing power goes up, instead of cash [dollars] staying pretty flat, if not, in real terms, deteriorating, then more and more corporate treasuries are going to be putting Bitcoin on their balance sheets.
She believes analysts at these companies will ask companies to put money into BTC rather than leave it in cash where the value continues to decline.
ARK’s amended spot Bitcoin ETF filing is a ‘good sign’ of future approval
ARK Invest and 21Shares amended spot Bitcoin ETF filing seemingly addresses earlier concerns highlighted by the SEC, which is a good sign of progress, according to Bloomberg’s ETF analysts.
Here’s Why Ethereum Price Barely Moved Following Ark’s ETF Application
The price of Ethereum seems to be back under the influence of the current market sentiment despite enjoying a relatively positive week. On Wednesday, September 6, Ark Invest filed for the first Ethereum spot exchange-traded fund (ETF) in the United States.
This ETF application had a tame impact on the price of Ether, with the cryptocurrency only climbing to $1,650 the following day. Moreover, the token has almost fully reversed the minor gains from the significant development.
Ethereum Price Registers 0.1% Rise Last Week – Here’s Why
Ethereum currently changes hands at about $1,628, according to data from CoinGecko. A negligible 0.1% price increase in the last seven days underscores the struggling market performance of the second-largest cryptocurrency.
A spot ETH exchange-traded fund is an investment vehicle that tracks the price of Ethereum on the spot market, allowing investors to buy and sell the crypto asset via a brokerage account. A product of this kind is expected to boost interest and investment in the Ether token.
Nevertheless, the price of ETH has remained relatively unmoved this week despite the optimistic news. A recent report by blockchain analytics firm IntoTheBlock has provided insight into why the news barely impacted the price of Ethereum.
‘Supply & Demand Balance’
According to the data analytics platform, the current supply and demand balance is one of the primary reasons why the ETH price continues to move sideways. “Large holdings are concentrated close to ETH’s current price, consolidating prices in a tight range,” IntoTheBlock said.
IntoTheBlock data shows that a total of 5.1 million ETH was acquired below the $1,600 mark to create support, while a total of 6.5 million ETH was purchased at a price above this level to establish resistance. The blockchain analytics firm concluded that traders agree to transact within a narrow range with a large concentration of ETH positions.
‘Automated Buying, Discretionary Selling’
Additionally, IntoTheBlock believes that while bullish traders seemed to have bought the news, “discretionary sellers” overtook the narrative not too long after.
“A key factor behind the discretionary selling is likely to be FTX’s upcoming liquidation of reportedly $3B in crypto holdings,” the report read.
While FTX has yet to disclose when it intends to execute these liquidations, it is likely that recent activity on the exchange’s wallets alarmed the market.
This sentiment also seems to be reflected in the performance of SOL after global payment giant VISA disclosed that it will use the Solana network for payment settlements. While the value of SOL jumped by more than 5% to trade above $20 immediately after the announcement, the cryptocurrency is back trading beneath $19.5.
With the Ethereum and Solana tokens constituting a significant portion of FTX’s holdings, it is likely that the slow market performance of these assets is driven by traders being cautious because of the impending liquidation.
Is Bitcoin A Buy Or Sell? Ark Invest Shares Market Analysis
In its new monthly report titled “The Bitcoin Monthly: Bitcoin Battles Resistance Around Its On-Chain Mean”, Ark Invest has provided an exhaustive analysis of the current market landscape. The report categorizes its findings into bullish, neutral, and bearish perspectives, providing a holistic view of Bitcoin’s current and potential future stance.
Bullish Arguments For Bitcoin
Grayscale Spot ETF and GBTC’s Discount To NAV: On August 29, a pivotal decision was made by a US Federal Appeals Court. They ruled that the U.S. Securities and Exchange Commission (SEC) must revisit and reconsider its earlier rejection of the Grayscale Bitcoin Trust’s (GBTC) application to transition into a spot ETF. This legal development saw GBTC’s discount to NAV shift from -24% to -18% on the same day, indicating heightened market optimism. By the end of August, GBTC was at a discount-to-NAV of -20.6%.
Bitcoin’s General Cost Basis Recovery: Bitcoin’s realized capitalization, which encompasses both its primary (miners) and secondary (investors) markets, is a measure of the aggregate cost basis of BTC. Between Q4 2022 and Q1 2023, the realized cap drawdown stood at -19%, marking its steepest since 2012. This drawdown serves as a barometer for capital outflows from the network.
Ark’s analysis suggests that the deeper the drawdown, the higher the likelihood of Bitcoin holders exiting the market, potentially setting the stage for a more robust bull market. The realized cap has improved from its all-time high in 2021, moving from a 19% low post the FTX collapse in November 2022 to 15.6%, indicating capital inflows over the past 8 months.
Futures Open Interest Collapse: August 17 witnessed a rapid liquidation of Bitcoin futures by 21.7%, the swiftest since December 2021. Ark Invest interprets this price correction as a “cathartic sentiment correction.”
Neutral Arguments
Bitcoin Price and the 200-Week Moving Average: August was a challenging month for Bitcoin as its price dipped by 5.4%, settling below its 200-week moving average at $27,580. This was the first instance since June 2023. However, Ark Invest posits that Bitcoin should find substantial downside support at its realized price of $20,300.
Bitcoin’s On-Chain Mean Resistance: The “on-chain mean,” also termed as the “active-investor price” or “true market mean,” reached $29,608 in August, establishing a potential significant resistance for BTC. This metric, a collaborative effort between ARK Invest and Glassnode, calculated by dividing investors’ cost basis by the number of active coins. These coins are determined based on the aggregate time they’ve remained dormant relative to the total supply.
Stablecoins Market Cap and Liquidity: Stablecoins, often viewed as a liquidity barometer for the market, have seen their 90-day supply drop over 20% from $162 billion in March 2022 to $120 billion currently, signaling a decline in onchain liquidity. However, net inflows during the same timeframe hint at a building bullish market momentum.
Bearish Arguments For BTC (All Macro)
Real GDP vs. Real GDI Growth Rates: A record divergence has been observed between the YoY percent changes in real Gross Domestic Product (GDP) and real Gross Domestic Income (GDI). Historically, GDP and GDI should be on par, as income earned should equate to the value of goods and services produced. Former Federal Reserve economist, Jeremy Nalewaik, has posited that GDI might be a more accurate indicator than GDP.
Real Federal Funds Policy Rate vs. Natural Rate of Interest: For the first time since 2009, the Real Federal Funds Policy Rate has surpassed the Natural Rate of Interest, indicating a shift towards restrictive monetary policy. This theoretical rate, as conceptualized by New York Federal Reserve President, John Williams, is the rate where the economy neither expands nor contracts. With monetary policy’s impact on the economy being long and variable, lending and borrowing are expected to face increased downward pressure.
Government’s Employment Revision: Employment, a lagging indicator, has been pivotal in the Federal Reserve’s rate decisions. Despite the labor disruptions caused by the COVID-19 pandemic expected to have been resolved by now, the government has revised nonfarm payroll statistics downward for six consecutive months. This suggests a weaker labor market than initially reported. The last instance of such a trend, outside of a recession, was in 2007, right before the Great Financial Crisis.
In summary, Ark Invest’s report presents three bullish, four neutral, and three bearish arguments on Bitcoin and the broader market, emphasizing that the market could be at a crucial turning point. At press time, BTC traded at $25,789.
VanEck, ARK filings ‘officially’ start clock for spot Ethereum ETFs: Analyst
Bloomberg ETF analyst James Seyffart expects more spot Ethereum ETFs to be filed in the coming days.
Following SEC delays, Ark Invest and 21Shares file for spot Ether ETF
The two firms currently have a spot Bitcoin exchange-traded fund being reviewed by the SEC, and recently proposed listings of two Ether futures ETFs.
Cathy Wood’s ARK Invest Files for First Spot Ether ETF
The Ark 21Shares Ethereum ETF is the first attempt to list such a fund in the U.S. that directly invests in ETH, the second largest cryptocurrency by market capitalization.
Cathie Wood’s ARK Invest Joins Ethereum Futures ETF Race After Spot Bitcoin ETF Delay
The US Securities and Exchange Commission (SEC) had on August 11 moved to delay its decision on the ARK 21Shares Spot Bitcoin ETF application. Following this, Cathie Wood’s ARK Invest and 21 Shares has moved to apply for a separate Ethereum futures ETF in what many may consider a double-barreled approach for these firms.
ARK Invest Joins Ethereum Futures ETF Race
According to a filing with the SEC on August 24, ARK Invest and 21 Shares will act as sub-adviser and sub-sub-adviser respectively, on two separate funds that seek to invest in Ethereum futures contracts. These include the ARK 21Shares Active Ethereum Futures ETF on the one hand and Bitcoin and Ethereum futures contracts ARK 21Shares Active Bitcoin Ethereum Strategy ETF on the other hand.
This won’t be the first time ARK Invest and 21 Shares are partnering together to offer an ETF, as they had on different occasions jointly applied to offer a Spot Bitcoin ETF, with the most recent application delayed by the SEC.
If approved, the ARK 21Shares Active Ethereum Futures ETF (with ticker ARKZ) will invest in a “portfolio of ether futures contracts.” This will include futures contracts traded on regulated commodity exchanges like the Chicago Mercantile Exchange (CME).
The fund is focused on futures contracts and would not directly invest in Ether or have any direct exposure to the “spot” Ether. Futures ETFs are known only to track the underlying asset’s performance, while Spot ETFs involve direct investment in the asset.
Furthermore, the document noted that the fund’s remaining assets would be put into short-term cash instruments like US Treasury securities, money market instruments, and repurchase agreements. These investments will serve as a way to shore up the fund’s liquidity and hedge against its investments in Ether futures.
Meanwhile, ARK Invest and 21 Shares are also looking to offer the ARK 21Shares Active Bitcoin Ethereum Strategy ETF (with ticker ARKY). This fund will invest in both Bitcoin and Ethereum futures contracts.
Interestingly, this is similar to what Valkyrie was trying to do when it applied to the SEC to include ETH futures contracts as part of its Valkyrie Bitcoin Strategy ETF (BTF).
According to the filing, there will be an “Active Bitcoin Futures ETF” and “Active Ethereum Futures ETF” known together as the “Underlying ETFs” under the fund. That will suggest that this fund is a two-in-one approach whereby there will be a standalone investment in Bitcoin futures and another for Ethereum futures.
The remaining net assets of the fund will be allocated to cash or cash equivalents with a primary focus on US government securities.
Bullish Or Something Else?
Several traditional finance institutions have filed to offer a crypto ETF (both futures and spot). Some of these firms, including ARK Invest and Grayscale, have filed to offer both futures and spot ETFs. As such, it raises questions about whether these firms are truly bullish on the crypto space or whether other factors are involved.
Nate Geraci, the President of ETF Store, pointed out that the total BTC futures ETF market is valued at less than $1.5 billion in Assets Under Management (AuM). So, it might not be profitable, especially for those looking to enter the market.
However, if the market doesn’t provide many profits for these firms, why are they looking to gain crypto exposure at all costs?
Former BitMEX CEO Arthur Hayes, for one, stated that these firms are simply looking to become the “gatekeepers” of crypto in a bid to balance their deposit base. He doesn’t believe that these firms are bullish on the fundamentals of the crypto industry and are simply to make maximum profits when cryptocurrencies disrupt the economy.
ARK Invest, 21Shares join queue to offer Ethereum futures ETF
The co-filing comes just a week after reports emerged that the SEC is likely to greenlight Ethereum ETF applications.
Want A Bitcoin Spot ETF? Then Prove BTC Is Not Manipulated, Says SEC
With multiple applications for a spot Bitcoin ETF already filed, many have continued to speculate when the SEC is likely to give its approval or otherwise. To further add to speculations, Galaxy Digital CEO Mike Novogratz, citing his sources, stated that approval was likely to come within four to six months. However, recent developments seem to suggest that the wait could be longer.
SEC Stalling?
In a release dated August 11, the US Securities and Exchange Commission (SEC) has moved to delay the ARK 21Shares Bitcoin ETF in a move that could be seen as a delay tactic by the regulator.
Cathie Wood’s ARK Invest and 21Shares had collaborated again to refile for a spot Bitcoin ETF earlier this year after the SEC rejected previous applications. Following the standard procedures, the SEC was meant to approve or disapprove the application by August 13. However, with its latest order calling for public input on ARK 21 Shares application, this deadline is consequently extended.
With this, the general public has three weeks to give further comments on the proposal, while the SEC has another five weeks to respond to any comments it may receive. Furthermore, the SEC can choose to extend the deadline by 240 days at the maximum (a move that could potentially delay a final response until Jan 10, 2024).
This news would most likely not come as a surprise to ARK Invest’s CEO Cathie Wood, as she had predicted a delay when speaking to Bloomberg on August 7. She also forecasted that the SEC might approve multiple Bitcoin ETF applications. However, nothing is certain, as the regulator could also deny all applications as it has done in the past.
Concerns Over Bitcoin Manipulation & Regulation
While the crypto community swallows the hard pill of the SEC’s latest move, some experts have called attention to the SEC’s multiple uses of the word “manipulation” in its latest release. This is worrisome, considering that the SEC had previously rejected spot Bitcoin ETF applications on the grounds of potential market manipulation.
Furthermore, the SEC’s continued reference to this word may also mean that the regulator, maybe in a bid to frustrate these applications, could ask that they prove that Bitcoin is not a manipulated asset class.
That will undoubtedly be a huge ask considering that, over time, there have been instances that raised speculations that the crypto market can be manipulated by major players. Furthermore, Bitcoin is a borderless and decentralized currency, and even if the SEC were to move to regulate its use in the US, the ETF market could still be manipulated by external activities from outside the US.
The SEC also made raised concerns about Bitcoin not having a “regulated market or significant size,” something which could hinder the approval of any spot-traded Bitcoin ETF. The agency pointed out the fact that Bitcoin Future ETFs were approved because they were regulated by the Commodity Futures Trading Commission (CFTC). Meanwhile, Bitcoin isn’t regulated by any agency.
US Bitcoin ETF Approval Could See North America’s ETF Volume Rise To 99.5%
North America could see its share in the global trading volume for crypto-related exchange-traded funds (ETFs) grow even further if spot Bitcoin ETFs are approved in the United States, a Bloomberg analyst said.
This comes after the US Securities and Exchange Commission (SEC) issued a delay letter regarding Ark Invest’s application for a spot Bitcoin ETF. In a widely-anticipated delay, the SEC is asking for new written comments on the spot Bitcoin application.
Some of the issues raised by the commission include the suitability of Bitcoin as an underlying asset of an exchange-traded product, and the resistance of Bitcoin to price manipulation, amongst other things.
The Ark Invest spot ETF, proposed by leading asset management firm ARK Invest in conjunction with Swiss-based 21Shares, would give investors indirect exposure to Bitcoin, the largest cryptocurrency in the market.
This recent setback has raised questions about the fate of the spot Bitcoin ETF applications of other asset management companies, including Blackrock, Valkyrie, WisdomTree, etc.
North America’s Share Of Global ETF Trading Volume To Reach 99.5%?
In the event that the spot Bitcoin ETF applications get greenlighted by the SEC, Bloomberg ETF analyst Eric Balchunas said that the North American region may see its percentage of the crypto ETF trading volumes reach 99.5%.
According to his post on X (formerly Twitter), North America currently accounts for 97.67% of the total crypto ETF trading volume in the world. “If/when spot ETFs come out in the US this will likely go to like 99.5%,” Balchunas noted.
In another post, the Bloomberg analyst disclosed that most of the best-performing equity ETFs in 2023 are crypto-related. At the top of this list is $WGMI, the Valkyrie Bitcoin Miners ETF, with a year-to-date return of 227%.
This actively-managed fund invests in public companies in the Bitcoin mining industry, including Riot, Bitdeer, Cipher Mining, etc. Given the positive performance of these mining firms’ stocks, it is no surprise that investment products, like $WGMI, are doing well.
Other top-performing crypto-related exchange-traded products on this list include the VanEck Digital Transformation ETF, with a YTD return of 182%; the Global X Blockchain ETF, which has returned 168% so far in 2023; and the Bitwise Crypto Industry Innovators ETF, also up by roughly 168% year to date.
Pending Grayscale Lawsuit To Be Pivotal To Bitcoin ETF Approval
In 2022, Grayscale Investments sued the SEC for rejecting the application to convert its flagship product, GBTC, into a spot Bitcoin ETF.
According to Nathan Geraci, president of the ETF Store, the final judgment in this lawsuit could prove pivotal in the race for Bitcoin exchange-traded fund.
Geraci commented on the delay of Ark Invest ETF:
It all comes down to the outcome of the Grayscale lawsuit & SEC’s view of question #4 here (referring to the fourth subject the commission is seeking comments on).
Earlier in March, Grayscale argued against the commission, questioning the logic behind allowing Bitcoin futures ETFs while disapproving similar spot Bitcoin funds.
Subsequently, the Grayscale legal team submitted a letter in July, urging the Securities and Exchange Commission to approve all eight applications for Bitcoin spot ETF.
Ark 21Shares Bitcoin ETF Application Decision Pushed by SEC
The U.S. Securities and Exchange Commission (SEC) extended its review of the Ark 21Shares Bitcoin ETF application, as it continues to look at applications from traditional finance heavyweights like BlackRock and Fidelity.
ARK Invest’s CEO Says SEC Could Approve Multiple Spot Bitcoin ETFs Simultaneously
ARK Invest CEO Cathie Wood has sparked speculation with her recent prediction that the United States Securities and Exchange Commission (SEC) may potentially grant approval for multiple Spot Bitcoin exchange-traded funds (ETFs) simultaneously.
Deviation From The Norm For Spot Bitcoin ETFs
In a recent interview with Bloomberg on August 7, Cathie Wood shared her insight that the SEC might opt for a groundbreaking strategy by approving more than one Bitcoin ETF at the same time.
Wood’s assertion, “I think the SEC, if it’s going to approve a Bitcoin ETF, will approve more than one at once,” has captured attention, especially given her prior assurance that her firm would lead in securing approval for a spot Bitcoin ETF.
Wood’s projection deviates from the conventional practice of sequential ETF approvals. By envisioning a simultaneous approval scenario, she introduces a novel approach that could streamline the regulatory process. This potential shift aims to foster a balanced and inclusive investment landscape, catering to an expected demand of over $50 billion.
Implications For The Cryptocurrency Industry
Historically, the SEC has not granted approval for spot Bitcoin ETFs, while permitting the listing of ETFs tied to crypto futures. Wood’s forward-looking statement emerges amidst a surge in applications from major players like BlackRock Inc, Fidelity, WisdomTree, VanEck, and Invesco, all vying for the approval of similar crypto ETFs as ARK.
Wood’s forecast also emphasizes the significance of strategic marketing. Given the anticipated resemblance among various funds, Wood suggests that issuers’ marketing prowess will be crucial in setting them apart as a race for dominance is expected. This insight underscores the competitive edge sought by applicants in a rapidly evolving sector.
As Cathie Wood’s prediction reverberates through the financial realm, industry observers await SEC’s response. With a significant deadline for ARK’s application looming on August 13, amidst speculation of potential delays, Wood suggested that the deadline might pass and be extended but then the date will be eagerly waited on.
Although Ark Invest filed for its spot Bitcoin ETFs application on May 15, earlier than others like BlackRock who filed its application on June 15, this was thought to be a race for winners or losers according to Cathie’s “first in line” phrase to favor Ark Invest. However, her revised view makes the race for Spot Bitcoin ETFs and SEC ruling more interesting.
This innovative forecast accentuates the intersection of forward-thinking and regulatory dynamics, highlighting an era where digital assets are increasingly integrated within traditional financial frameworks, especially the recent push for ETFs.
Wood is known for her unwavering conviction in disruptive innovations and the companies behind them with her investment management firm ARK Invest boasting numerous high-value stocks like CoinBase Global (COIN), Tesla(TSL), and Block (SQ), among others.
Wood also reportedly bought $100,000 worth of Bitcoin years ago when it was sold for $250 apiece and the CEO revealed that she has never sold a single BTC.
Cathie Wood and Mike Novogratz Are Both Bullish on Spot Bitcoin ETF Approvals
Ark Invest CEO Cathie Wood and Galaxy Digital CEO Mike Novogratz are both optimistic about the imminent approval of a spot bitcoin ETF.
These Are The Factors That Could Lead To Another Bitcoin Rally: ARK Invest
In a report released on August 4, ARK Invest’s on-chain researcher David Puell reveals factors that could lead to another Bitcoin rally. The report, titled “The Bitcoin Monthly: July 2023,” provides an in-depth analysis and distinguishes between Bitcoin’s current situation and what the future holds for the largest cryptocurrency by market cap.
Some Positives For Bitcoin
Puell highlights how Bitcoin’s tepid 90-day volatility shares similarities with 2017 levels. According to the report, this prolonged low volatility usually represents the ‘calm before the storm,’ with Puell speculating that a significant price movement will likely happen soon. However, whether it will be a breakout or a breakdown remains uncertain.
There is cause for optimism, though, as the decrease in hash rate on the blockchain provides an optimistic signal. The decrease could signify oversold conditions – whereby Bitcoin is currently trading below its actual worth, and considering that it has traded at an undervalued price for a long while now, we could see an upward trend, which would signify a price reversal.
Additionally, there has been an increase in “liveliness” as selling pressure has reduced and more holders are choosing to ‘HODL.’ The report states that liveliness fell below 60% in July, the lowest selling pressure since Q4 of 2020.
The short-term holders’ profit/loss ratio also coincides with historical trend reversals, signifying that a breakout is more likely to occur.
The report states:
This breakeven level correlates both with local bottoms during primary bull markets and with local tops during bear market environments.
Meanwhile, the Federal Reserve’s continued hike rate has been known to be a macro factor on Bitcoin and the crypto market. Puell believes that the Fed’s actions could significantly impact Bitcoin’s performance and the economy as a whole. A potential slowdown in CPI (consumer product index) inflation could see a surge in Bitcoin’s appeal as a non-inflammatory asset.
Binance Could Have A Domino Effect On BTC
The United States Securities and Exchange Commission (BTC) filed a lawsuit against Binance for trading unregistered securities, amongst other allegations. This ongoing legal tussle could affect Bitcoin’s performance and the crypto market.
According to the report, Binance’s BNB token ensures stability in the crypto market by providing significant liquidity for other cryptocurrencies, including Bitcoin. If sentiments begin to tilt in favor of the SEC and DOJ, it could trigger a “bank run,” which would see BNB’s price plummet, causing a domino effect on the crypto market.
While historical trends signify a bullish trajectory for Bitcoin’s price, the token might be marred by macroeconomic forces and regulatory concerns. It is believed that Bitcoin breaching the resistance level at $29,450 could shape its future outlook.
As Bitcoin continues to witness a downward trajectory, that resistance level might be the key to a sustained breakout or further consolidation.
Bitcoin Breakout Or Breakdown? Ark Invest’s David Puell Shares His Prediction
David Puell, an on-chain researcher at Ark Invest, today shared his insights in a detailed report, offering a nuanced perspective on Bitcoin’s current standing and future prospects. The report, titled “The Bitcoin Monthly: July 2023,” addresses several key topics that are central to understanding the current state of Bitcoin.
These topics include a comprehensive market summary, an analysis of Bitcoin’s low volatility and whether it indicates a potential breakdown or breakout, as well as a discussion on the impact of the Federal Reserve’s tightening policy as a leading indicator of price deflation.
Ark Invest’s Near-Term Bitcoin Price Prediction
Puell’s analysis reveals a mixed, but mainly bullish outlook for Bitcoin, with the cryptocurrency ending July at $29,230, above its 200-week moving average and its short-term-holder (STH) cost basis of $28,328. This suggests a strong support level for Bitcoin, indicating a potential upward trend, notes Puell.
However, Bitcoin’s 90-day volatility, which dropped to 36% in July, a level not seen since January 2017, presents a neutral outlook. Puell explains, “Based on its low level of volatility, we believe the Bitcoin price could be setting up to move dramatically in one direction or the other during the next few months.” This could mean a significant price movement, but the direction – up or down – is uncertain.
Puell also points to signs of miner capitulation as a bullish indicator. “During July, the 30-day moving average of Bitcoin’s hash rate dropped below its 60-day moving average, suggesting that miner activity had capitulated,” he states. Miner capitulation is typically associated with oversold conditions in BTC price, hinting at a potential bullish reversal.
The “liveliness” metric, which measures potential selling pressure relative to current holding behavior, also suggests a bullish trend. The analyst notes, “In July, liveliness dropped below 60%, suggesting the strongest long-term holding behavior since the last quarter of 2020.” This indicates that more holders are keeping their coins rather than selling them, which could drive the price up.
ARK’s own short-term-holder profit/loss ratio, which ended July at ~1, is also seen as a bullish sign. Puell explains, “This breakeven level correlates both with local bottoms during primary bull markets and with local tops during bear market environments.”
However, the future of Binance’s BNB token, which is facing increased regulatory pressure, looks bearish according to Puell. He warns, “As regulatory pressure increases on crypto exchange Binance, its native token, BNB, could be on the threshold of significant turbulence.” If BNB breaks down, it could potentially impact the overall stability of the crypto market, including BTC.
Macro Outlook
On the macroeconomic front, Puell discusses the potential impact of the Fed’s 22-fold increase in interest rates, which he views as bearish for Bitcoin and the broader economy. He states, “According to renowned economist Milton Friedman, monetary policy works with ‘long and variable lags’ that last 12-18 months, suggesting that the full impact of the Fed’s 22-fold increase in interest rates has yet to hit.”
The Zillow Rent Index, which leads the Owners’ Equivalent Rent (OER) by roughly nine months, suggests that Consumer Price Index (CPI) inflation could decelerate significantly below 2% by year-end. Puell views this as a bullish sign for Bitcoin, as it could potentially increase the attractiveness of non-inflationary assets like Bitcoin.
Lastly, Ark Invest takes a neutral stance on the falling US import prices from China, despite the yuan’s depreciation by ~12% since February 2022. He notes, “All else equal, China exporters should have increased prices to offset the depreciation of the yuan. Instead, they have cut prices, harming their profitability.”
In conclusion, Puell’s report presents a complex picture for Bitcoin. While there are a lot of signs for a potential bullish trend, there are also significant risks and uncertainties that could lead to bearish outcomes.
At press time, the BTC price was at $29.152. The most crucial resistance at the moment lies at $29.450. If BTC can overcome this resistance, a breakout from the multi-week downtrend might be possible.
Bitcoin Set To Accelerate As A Store Of Value In Wake Of Bank Collapses, Cathie Wood
ARK Invest CEO and crypto proponent Cathie Wood says that Bitcoin is set to grow massively as a store of value following the recent bank collapses. She believes that Bitcoin’s stability and a huge rally in the wake of US regional banks collapsing is a major testament to the fact that Bitcoin is the future of money.
Cathie Wood Remains Bullish On Bitcoin
In a recent interview with Barron’s, Wood maintained that she remains bullish on digital assets and highlighted three reasons she won’t be backing down on her investments. According to her, Bitcoin stood tall and rose by 60%, from $19,000 to $30,000, when regional banks like First Republic, SVB, and Signature Bank collapsed. She attributed this run to investors seeing the asset as a safe alternative for storing their wealth.
Wood explained:
We see three revolutions taking place because of crypto. Bitcoin will dominate the first one, the money revolution. The biggest proof is that when regional-bank stocks were falling apart earlier this year, Bitcoin went from $19,000 to $30,000. That was a flight to safety, and we expect it to accelerate. The centralized monetary system we have today is an aberration. We could be going back to the future – before the Federal Reserve existed – under a digital, rules-based monetary system with no government oversight.
The other reasons for her bullishness on digital assets relate to decentralized finance (DeFi) and digital property rights involving tokenizing several physical assets in real estate and other relevant industries.
“The second revolution is in financial services, or the so-called DeFi, which will be Ethereum-based. There are a number of infrastructure providers out there. It’s the survival of the fittest, and I’m excited to see who wins,” the CEO said.
Last but not least, according to Woord, “is digital property rights, or what many call NFT or the metaverse. People are already buying real estate in virtual worlds. Our young research associates come into the office wearing jeans and T-shirts with no logos, but they are getting their status in the virtual world.”
Weighing In On Coinbase’s Battle With SEC
During the interview, Cathie Wood also discussed Coinbase’s ongoing battle with the United States Securities and Exchange Commission (SEC). Wood’s ARK holdings are one of the largest holders of Coinbase’s stock. She believes that the crypto exchange will ultimately get victory in the SEC’s lawsuit against it for the sale of unregistered securities.
According to her, the court will rule that the SEC has gone beyond its regulatory purview, and in the long run, the US Congress will pass crypto-friendly bills.
“Meanwhile, the legislative branch has awakened to the fact that crypto is a new asset class and we might need new legislatures to give the regulators some guidance,” the ARK Invest CEO added.
“Those two branches of government have given us great confidence that Coinbase will come out of this as a winner. Many Coinbase competitors either haven’t entered the US or moved out because of our regulatory system. Coinbase has stayed to fight. We think they’ll be rewarded accordingly.”
Cathie Wood’s ARK had bought $21.6 million worth of Coinbase’s stock in early June, just immediately after the SEC filed a lawsuit against the crypto exchange.
Crypto investors cool on Bitcoin funds, turning to Ether and XRP
Bitcoin-related funds saw outflows of $13 million over the past week, reversing five weeks of bullish inflows, according to Coinshares analyst James Butterfill.
Crypto investors cool on Bitcoin funds, turning to Ether and XRP
Bitcoin-related funds saw outflows of $13 million over the past week, reversing five weeks of bullish inflows, according to Coinshares analyst James Butterfill.
