Category: BTC

Bitcoin has picked up its bullish momentum in the last 24 hours. High levels of Institutional adoption, fundamentals, and on-chain indicators look bullish and point to an extension of the rally, at least, in the long term.

In a recent report, Senior Commodity Strategist for Bloomberg Intelligence, Mike McGlone, states that Bitcoin is in a “transition phase.” As a result, the benchmark cryptocurrency could move from being a “risk asset” to become a global reserve asset.

Comparing the “rhythm” of Bitcoin’s 2017 bull market to the current one, McGlone estimates that Bitcoin’s price could peak at about $400,000 by the end of the year. In the chart below, he notes a correlation between surges in the cryptocurrency’s price and a rise in its Liquidity Index.

In late 2020 and early 2021, it can be seen how the latter metric has seen two significant growths. Recent Bitcoin price action and the approval of several Exchange Traded Fund (ETF) in Canada have had an impact on Grayscale Bitcoin Trust (GBTC). This product has been one of the most favored for institutional adoption.

However, its premium has trended lower in recent days. On the relationship between BTC’s price and the drop in GBTC’s premium, McGlone concludes:

Bullish underpinnings for GBTC are gaining legs, as it outpaced Tesla by almost 50% this year. The increasing probability for Bitcoin ETFs in the U.S. is supporting the price…but contributing to the GBTC discount.

Where is Bitcoin price heading in the short term?

In the short term, the sideways trend Bitcoin price has seen recently could change and shift in the bulls’ favor. A “massive” amount of GBTC shares will be “unlocked” in the immediate future. The benchmark cryptocurrency could benefit, as analyst Ben Lily stated:

Which is creating a lot of uncertainty to its future. What I’d like to remind readers is each time a wave of large unlockings hit, not only does bitcoin’s spot price rise, but the share price of the Trust gains in value with respect to its underlying holdings (NAV). If we ignore the fact it’s at a discount then the likelihood of this measure to rise based on history is batting one-thousand-perfect.

Bitcoin’s Stock to Flow model creator, Plan B, has published estimates that coincide with Bloomberg’s analyst’s forecasts. In his latest chart based on the referenced controversial model, Bitcoin’s price could approach $500,000 by the end of 2021.

IMO we are only ~4 months into the bull market and nowhere near the end of it .. #bitcoin is just getting started pic.twitter.com/6n0B15rqyB

— PlanB (@100trillionUSD) March 26, 2021

Bitcoin is trading at $53,657 with gains of 3.4% on the last day. Although the monthly chart shows gains of 10.1%, the weekly chart is in the red with losses of 7.5%. The market capitalization stands at $1.01 trillion.

Senior Product Manager for Decentralized Identity at Microsoft, Daniel Buchner, has confirmed the release of ION. Deployed on the Bitcoin mainnet, this solution is a permissionless public network for Decentralized Identifiers (DIDs).

Implemented on Bitcoin’s blockchain, it operates as a second-layer solution to support a DIDs/DPKI (Decentralized Public Key Infrastructure) at scale, according to its Github repository.

This project began four years ago, its purpose is to give individuals, organizations and others control over digital exchanges with DIDs. The ION uses a Sidetree protocol to anchor DID/DPKI transactions interacting on the network.

Each transaction is encoded with a hash that allows ION nodes to categorize, store, process, and fetch the transactions associated with a specific DID. Buchner stated in the official release:

We are excited to share that v1 of ION is complete and has been launched on Bitcoin mainnet. We have deployed an ION node to our production infrastructure and are working together with other companies and organizations to do so as well. ION does not rely on centralized entities, trusted validators, or special protocol tokens – ION answers to no one but you, the community. Because ION is an open, permissionless system, anyone can run an ION node, in fact the more nodes in operation, the stronger the network becomes.

Why did Microsoft decide to use Bitcoin’s blockchain?

The ION network is connected to Bitcoin with the InterPlanetary File System (IPFS) and does not require an additional consensus mechanism.  Its nodes can process “tens of thousands of transactions per second.” Interested users can start generating their DIDs without having to use BTC or run an ION node on their own.

In the project’s FAQ section, the ION team rates Bitcoin as the most secure blockchain on two metrics: production of a single, independent, immutable record with no way to reverse it; inexpensive cost of attacking the system. Microsoft’s ION team stated:

Bitcoin is so far beyond all other options, it isn’t even close – Bitcoin is the most secure option by an absurdly large margin.

In terms of cost, Buchner said the solution’s protocol “It’s skewed toward bandwidth and storage.” Thus, it can support 40 billion DIDs in 2 TB of memory space with a lightweight configuration for the nodes. Buchner said the following via his Twitter handle:

This is the culmination of 10 years of work, beginning in 2011 when a few of us at Mozilla set aside some of our time to explore the core concepts of Decentralized Identity. Microsoft ultimately provided the opportunity to realize this dream, and for that I am eternally grateful.

MicroStrategy’s CEO Michael Saylor welcomed the announcement and predicted that similar second-layer solutions will be released more frequently on Bitcoin. Their use cases will be broad and applied in people’s daily lives.

Layer 2 innovation atop #Bitcoin is going to accelerate, providing us with a set of open, decentralized services for identity, trust, security, license, commerce, et al. that we can build into our devices, integrate with our software, & deliver at the speed of light. https://t.co/M4nYwVKB49

— Michael Saylor (@michael_saylor) March 25, 2021

Bitcoin trades at $52,347 showing a slight recovery in the 1-hour chart with 1.5% gains. On the 24-hour chart, losses are at 5.6% following an 11.1% correction on the 7-day chart.

According to a document filed with the U.S. Securities and Exchange Commission (SEC), banking giant Goldman Sachs has petition approval for a new Exchange Tradable Fund (ETF) with the option to add exposure to Bitcoin.

With an ARK innovation structure and a March 19, 2021 filing date, the financial product would be called Autocallable Contingent Coupon Coupon ETF-Linked Notes. Maturing on March 26, 2026, the product proposed by Goldman Sachs contemplates:

The ETF is an actively managed exchange-traded fund that will invest under normal circumstances primarily (at least 65% of its assets) in domestic and foreign equity securities of companies that are relevant to the ETF’s investment theme of disruptive innovation.

The fund’s primary investment strategy considers “companies” or disruptive technologies to be those that rely on and benefit from “products or services under development”. In addition, these “companies” may belong to multiple sectors (energy, transportation, genomics, among others) with scientific research that supports them. The document states:

The ETF may have exposure to cryptocurrency, such as bitcoin, indirectly through an investment in a grantor trust. The ETF’s exposure to cryptocurrency may change over time and, accordingly, such exposure may not always be represented in the ETF’s portfolio.

In addition to Bitcoin, the bank’s proposed product will invest in Fintech innovation companies, “next-generation” internet companies, artificial intelligence, energy transformation, and automation transformation entities. The ETF could also give exposure to Bitcoin to third parties, as the document indicates:

The ETF is permitted to lend its portfolio securities to brokers, dealers and other financial institutions desiring to borrow securities to complete transactions, in pursuing arbitrage opportunities or hedging strategies or for other similar purposes. In connection with such loans, the ETF receives liquid collateral equal to at least 102% of the value of the portfolio securities being lent. This collateral is marked to market on a daily basis.

Banking institutions continue to increase their stake in Bitcoin

Just a few days ago, Morgan Stanley announced that it will give exposure to Bitcoin to its clients. Interested investors must have more than $5 million in an account at the bank.

The exposure will be granted by giving access to three funds, in partnership with crypto firm Galaxy Digital and FS NYDIG will enable the product.

Bitcoin price records moderate losses on the one-day chart with 3.3%, trading at $54,257. In the last week, losses stand at 6.7% with 8% on the 30-day chart.

With Bitcoin’s price barely holding above its support level, indicators are turning more bullish. After this period of sideways movement, BTC could be poised for a big upside move soon.

Glassnode co-founders Yann Allemann and Jan Happel have shared data from the firm that points to a high appreciation in BTC price. This is due to the expiration of $6 billion in options contracts set to mature this Friday. Allemann and Happel stated:

Bitcoin price expectations for April are high with lots of investors placing their new bets on $80k.

As the image above shows, a large portion of investors on Deribit’s platform are confident that the cryptocurrency’s price will settle at those levels. Similarly, there is also a high volume of calls for a Bitcoin price at $120,000 for the same date, April 30th.

Does Elon Musk influence Bitcoin’s price?

In support of the bull case, Glassnode’s Reserve Risk metrics indicate “strong long-term holder conviction” in the current price. The firm stated in a recent report, pointing at big support for BTC’s to take a big jump:

The current risk/reward ratio to invest and hodl is still attractive compared to previous $BTC cycle tops. Current level: 0.008, Precious tops: > 0.02

Reserve Risk indicates a strong conviction of long-term holders at these price levels.

The current risk/reward ratio to invest and hodl is still attractive compared to previous $BTC cycle tops.

Current level: 0.008
Precious tops: > 0.02#Bitcoin

Chart: https://t.co/Pr4VA4QrXX pic.twitter.com/sPKtTp3FnH

— glassnode (@glassnode) March 23, 2021

Earlier, Tesla’s CEO Elon Musk announced that his company began accepting payments in BTC. The entrepreneur made two additional major disclosures: the company runs its own Bitcoin nodes, profits will be held in Bitcoin. Musk stated:

Tesla is using only internal & open-source software & operates Bitcoin nodes directly. Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency.

Analyst William Clemente believes Musk’s announcement strategically coincides with the $6 billion of options set to expire in a few days. Clemente believes that many investors will see their contracts expire worthlessly and on platforms that back their options with physical Bitcoin, bearish investors could buy more BTC “to cover their losses.” Clemente added:

It is worth mentioning that some of these puts are just hedging downside risk, more so referring to positions solely on the short end of the trade that don’t get rolled over.

Bitcoin price is at $56,904 with slight gains of 1.4% in the last day. On the 7-day chart, the cryptocurrency shows losses of 1.4%. The market capitalization stands at $1.4 trillion.

Bitcoin is wobbling in a critical support zone. New indicators are bullish and point to a continuation in the rally.

Moskovski Capital CIO Lex Moskovski shared data from Glassnode showing that a trend in Bitcoin miners has reversed. Since the beginning of March, this sector began to increase its level of Bitcoin sales.

According to the chart shown by Moskovski, when miners’ BTC selling levels have risen, Bitcoin has moved sideways. The December 28 rally was preceded by high BTC buying by this sector. Although buying levels still remain low, Moskovski said:

Miners have stopped selling and began accumulating once again, on average. It seems they expect the price to go higher.

Bitcoin supply on exchanges continues to decrease

A change in miner sentiment coincides with an increase in the amount of Bitcoin that has left exchanges. Moskovski also records 9,077 BTC pulled from Coinbase’s platform. Analyst Willy Woo believes that institutions are responsible for the outflow of BTC from exchanges:

coins being scooped off exchanges (it’s mainly Coinbase, meaning a US entity, and at the scale of the withdrawal it’s likely an institutional yet to be announced buyer). (…) coins moving to strong hands with minimal history of selling.

Adding that Bitcoin traders shorting BTC have gone “cray-cray”. In support of the above, Glassnode records a decline in BTC supply on exchanges, analyst William Clemente said:

This is what absolute scarcity looks like. It doesn’t take a genius to see what’s happening. Supply/Demand 101.

The above events coincide with an estimated $6 billion in Bitcoin options to be expired on Friday. With a high accumulation on Deribit’s platform, the Chicago Mercantile Exchange, and FTX, among others. The last time $4 billion of Bitcoin options expired, the price of the cryptocurrency rose by 80%.

In the long term, the macroeconomic outlook still favors the cryptocurrency with a possible issuance of $3 trillion in debt by the U.S. Government. On miners activity MicroStrategy CEO Michael Saylor stated:

It is rational for publicly traded Bitcoin miners to become net purchasers of BTC rather than sellers.

Bitcoin trades at $54,747 with slight gains in the last day of 0.2%. On the 7-day chart, BTC records losses of 2.0% and 3.0% in the last month.