Category: btcusd

Two key entities that affect the crypto market dynamics have announced the launch of new Bitcoin products on the same day. The Chicago Mercantile Exchange (CME) and Bakkt appear to be pursuing a common goal, the evolution of their crypto-based services to attract new investors.

The CME financial derivatives platform announced that it will offer micro-Bitcoin futures contracts. This new product will be rolled out on May 5, pending regulatory review, and will be worth one-tenth of a Bitcoin.

Backed with fiat money, the micro futures contracts are intended to give a new “tool to hedge against the price of Bitcoin” and its fluctuations in the spot market, according to an official statement.

The statement claims that this new type of futures contract was demanded by a large portion of the CME’s clients. Something similar was revealed by Morgan Stanley when it announced the launch of 3 funds to give access to Bitcoin: a massive demand from its customers.

The derivatives platform stated that its products have seen steady growth in the level of liquidity since its launch in 2017. Institutions represent the sector that has shown the most interest in this asset class, according to Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.

In parallel, Intercontinental Exchange (ICE) subsidiary Bakkt Holdings has launched a new Bitcoin wallet to “change the game.” Called Bakkt App it will allow its users to hold their funds in multiple cryptocurrencies under one platform.

The product will allow funds to be converted into fiat and will give users rewards in gift cards, loyalty points, and others. Users can download the app from the Google Play Store and the App Store. Bakkt CEO Gavin Michael said:

The average consumer holds a wealth of digital assets – from gift cards to loyalty points to bitcoin – but lacks the tools to adequately track and utilize their value. We’re thrilled to bring the Bakkt App to the public as a step along our journey to expand digital asset access to all.

PayPal made a similar announcement. The payment processor will allow its U.S. customers to use their cryptocurrency funds in a new checkout service. It is expected that in the coming months, the company will allow all its users globally to have access to this service.

Today, we are announcing the launch of Checkout with Crypto, a new way for PayPal customers to check out with #Cryptocurrency to pay for select online purchases. https://t.co/RbOe8aLtlz pic.twitter.com/zGWHgbwVlU

— PayPal (@PayPal) March 30, 2021

Bitcoin’s performance after recent announcements

Bitcoin price has reacted positively and shows gains of 1.5% on the last day’s chart. Trading at $58, 880, the cryptocurrency records gains of 8.3% on the 7-day chart, after two weeks moving sideways.

Data from the firm Glassnode indicates that over the past 6 months, more than 9.51% of the Bitcoin supply has “matured” to the 6 million age range. In other words, these coins have gone that period without being spent. Glassnode indicates that these coins were acquired during last year’s bull market.

Firm Santiment records an increase in the funding rate for BitMex. According to the firm, this indicates an increase in investors’ “greed”.

🤑 When #Bitmex funding rates get high, it’s one of the best public examples of crowd greed. Vice versa when funding rates go negative, indicating fear. Read about our new model that shows when local tops & bottoms are close with this very accurate metric! https://t.co/6fvirfq4ZJ pic.twitter.com/JDWmI9EmZF

— Santiment (@santimentfeed) March 29, 2021

In an interview for Fortune, Square CFO Amrita Ahuja made the corporate case for Bitcoin adoption. In Michael Saylor, CEO of Microstrategy, style Ahuja asserted that the cryptocurrency is part of an evolution of financial services globally.

Square, led by Jack Dorsey, and the Saylor-led company were among the first publicly traded companies in the U.S. to add BTC to their treasuries. Their adoption thesis, to protect the value of their companies in the midst of an inflationary macroeconomic environment. Ahuja told Fortune:

There’s absolutely a case for every balance sheet to have Bitcoin on it. The investment that we made on our balance sheet for Bitcoin represents about 5% of our cash; we intend to hold for the long term.

The executive stated that the company’s long-term plan is to maintain its investment in Bitcoin, following the strategy proposed by MicroStrategy and Tesla CEO Elon Musk. Recently, this company revealed the details for accepting BTC to purchase its products and, via Twitter, Musk stated that they would keep the funds in BTC.

Purchases of BTC by Square, MicroStrategy, Tesla, and others set off a domino effect that has propelled institutional participation to unprecedented levels. In Canada, 3 financial products were approved to give investors BTC exposure and, as analyst Lex Moskovski shows, their performance has exceeded any expectations.

The retail demand is still here.

Canadian #Bitcoin ETF hasn’t had a single day of outflows. That’s rare. pic.twitter.com/1zEVrrS0DB

— Lex Moskovski (@mskvsk) March 29, 2021

Bitcoin usage in Cash App accelerates

The Covid-19 pandemic has accelerated the adoption of digital payment methods and cryptocurrencies. In support of this claim, Square’s CFO said that in January of this year alone 1 million new consumers used Cash App to buy Bitcoin. In 2020, at least 3 million people used Square’s product to trade with the cryptocurrency.

The executive revealed that in support of Bitcoin adoption, they have eliminated transaction fees within Cash App for users of the cryptocurrency. In parallel, the company will continue to hand out grants to Bitcoin developers to support the growth of the ecosystem and its protocol.

Via Twitter, Square’s Crypto department announced that its scholarship recipients will be able to choose how they want to receive their funds. Scholarship recipients will be able to choose between BTC or fiat currency.

Starting now, Square Crypto grantees have the option to denominate funding in bitcoin, dollars, or calzones.

— Square Crypto (@sqcrypto) March 29, 2021

Bitcoin is trading at $57,675 with gains of 4.9% in the last 24 hours. In the last week, the cryptocurrency has moved sideways (0.2%) but holds its gains at 23.9% for the last month.

In February, one of the oldest financial institutions in the United States, Bank of New York Mellon, announced the launch of a custody service for Bitcoin and other cryptocurrencies. Claiming that BTC has become a widely accepted asset, the institution opted to get ahead in innovation.

Now, BNY Mellon has published a valuation on Bitcoin comparing the characteristics of gold to the cryptocurrency in an attempt to give tools to determine its value. The BNY Mellon analysts recognize the unique properties of BTC and how difficult it can be to calculate its value when using metrics applied to national currencies. The analysts claimed:

it should be considered as part of the valuation mosaic. At the beginning of May 2020, a single Bitcoin was worth roughly $8,8001 and the total market value of all Bitcoin was worth $160 billion2, accounting for 0.4% of total global currencies. At current rates, if Bitcoin replaced 5% of the world’s currency it would yield over $100,000/Bitcoin.

When comparing Bitcoin’s and gold valuation, BNY Mellon analysts referred to the Stock-to-Flow (S2F and S2FX) model created by Plan B. While acknowledging this model has flaws, they also referred to it as “elegant” with a “much more established gold market framework”. The analysts added:

The implication from this model is that as Bitcoin gains more mainstream momentum and is viewed more like gold, the scarcity value (as measured by S2F) and subsequent halving will ultimately drive prices to the gold dot cluster and implied total market value

However, the report claims valuation is “more art than science” and therefore emphasizes that all models have to reach Bitcoin’s “fair” price will be a “constantly” evolving work.

Bitcoin’s price in the short and long term

Bitcoin is trading at $54,420, at the time of writing, retaking this important support zone. In the 24-hour chart, BTC is moving sideways but still is on a bullish trend in the 30-day chart with 17.8% gains. In recent weeks, Bitcoin’s price action was determined by large investors.

As indicated by analyst Lex Moskovski, the number of Bitcoin whales holding around 1,000 BTC has dropped to the trend line after peaking on February 21 when a massive sell-off began. Moskovski stated:

However, the price has risen since the start of the dump. This is bullish and also benefits decentralization. Text-book consolidation.

Co-founders of research firm Glassnode, Yan Allemann, and Jan Happel, noted that the cryptocurrency’s near-term performance will be correlated with the level of retail investor spending. BTC’s price could rise if a portion of the recipients of the stimulus package approved by Biden decides to invest in the cryptocurrency.

Many households now have an extra buffer of income to spend, due to new stimulus checks and decreased spending during lockdowns.

Will they invest this into markets or pay off debt?#Bitcoin‘s April performance will depend on it. https://t.co/UJdLxnfqva pic.twitter.com/xXbEICPjqM

— Jan & Yann (@Negentropic_) March 28, 2021

In the long term, Bitcoin’s supply shock will play an important role as crypto exchanges continue to register high levels of BTC outflow. This supply is turning illiquid, as analyst William Clemente noted. Predicting a rise in BTC’s price for Q3-Q4 this year, Clemente said:

the increase of negative-yielding bonds will leave fixed-income investors desperately searching for yield. With everything being manipulated in the fiat world, all roads lead to the free and open Bitcoin market.

In an interview on CNBC’s Squawk Box, former head of the Office of the Comptroller of the Currency, Brian Brooks, spoke about the regulatory hurdles for Bitcoin. Referring to a recent speech given by the chairman of the U.S. Federal Reserve, Brooks stated that people have “migrated to Bitcoin” because of the risk of inflation in the U.S. dollar.

Fed Chairman Jerome Powell gave a speech at the Bank of International Settlements Innovation Summit, claiming Bitcoin could be a substitute for gold. However, Powell’s statements were contradictory, asserting that the precious metal is not a store of value, like the U.S. dollar.

The former OCC chief claimed that the Fed has increased the money supply by 40%, therefore, that country’s currency has become “at least 40% less good as a store of value.” Brooks then highlighted the difference and possible fundamental weakness in the dollar:

The dollar may not actually be backed by anything … cryptocurrencies actually are backed by something. They’re backed by underlying networks and what you are buying when you buy a crypto tokens, whether is Bitcoin or anything else, is you are buying a piece of a financial network build to transact all kinds of stuff.

Over the past two years, the market and technology behind cryptocurrencies have matured. Brooks believes this explains the rise in the market capitalization of this sector to nearly $2 trillion. The former OCC chief added:

I think there are forces of the future at work and forces of the status quo. I think the crowds are telling you that this networks are where finances are going in the future…

"The dollar may not actually be backed by anything … cryptocurrencies actually are backed by something. They’re backed by underlying networks," says @BrianBrooksOCC on #bitcoin #btc #cryptocurrencies pic.twitter.com/wnNeWzcNY5

— Squawk Box (@SquawkCNBC) March 26, 2021

Americans will push for Bitcoin’s adoption

For Brooks, Bitcoin’s value also lies in having demonstrated that its use case could be met without financial institutions. Therefore, the adoption of the cryptocurrency goes beyond speculation, Brooks added:

Bitcoin was the first token to show you that finance could be done on a networked basis as opposed to at the bank … there was $61B worth of bitcoin transacted yesterday is because that network has been adopted by people who used to go to the bank.

Innovation in the crypto market has faced opposition from regulators such as the SEC and the Fed. Brooks believes that even if U.S. authorities try to stop Bitcoin, U.S. citizens will exert enough pressure for it to gain regulatory approval. Comparing Bitcoin and cryptocurrencies to the on-demand transportation service Uber, Brooks said:

You can absolutely fight City Hall. Remember, every mayor and every taxicab commissioner tried to stop Uber. But 50 million Americans wanted it and now we have it. It’s going to be the same thing with crypto.

At the time of writing, Bitcoin trades at $56,012 with 4.7% gains in the 24-hour chart. In the last week, Bitcoin has retraced (-3.5%) to the low ranges of $50,000 but seems to have regained important bullish momentum.

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.