Bitcoin finishes the week close to where it began, around $16,700. Bitcoin is above its 10 day and 50-day moving average, which is a bullish sign. Katie Stockton, a technical analyst for Fairlead Strategies, believes we’re likely to soon see a “test of August’s high” above $17,500. Bitcoin has only spent 93 days in its history above US$11,500 (A$16,278) according to data from Skew. This means virtually every BTC holder is now in profit. Bitcoin Cash gained 3.2% and Stellar was up 9.3% this week but most other coins lost ground, including Ethereum (-3.7%), XRP (-4.1%), Chainlink (-7%), Litecoin (-6.2%) and EOS (-3.4%).
In Headlines
Correlations weakening
On Monday in the US, when Bitcoin gained more than 2% even as the S&P 500 fell 1.6%, in an encouraging sign the correlation between the two is weakening. The correlation between the Bitcoin price and bad news is also lessening, with the price shrugging off recent FUD over BitMEX, OKEx suspending withdrawals and the UK banning crypto derivatives. Danny Masters, executive chairman of CoinShares, says this is a bullish sign. “In my 30 years in trading my top golden rule was to act when the news was not matched by price movement,” Masters wrote.
Stats a wrap
Cumulative Tether volume has surpassed US $600B and it now dominates trading on exchanges. Bitcoin’s daily transaction volume varies between $20B-$25B, while Tether is closer to $35B. Around 70% of exchange trade volume is denominated in USDT pairs and a recent Bloomberg Report predicts the USDT market cap will overtake Ethereum’s in 2021. Meanwhile, there is now 8.67 million Ether (7.67% of the supply) locked in DeFi protocols along with 160,500 BTC (0.87% of the supply). The number of Bitcoin addresses holding more than 100 BTC has hit a six-month record high of 16,159. Since the March crash, the amount of Bitcoin on exchanges fell from 2,950,000 BTC to 2,700,000 BTC, a drop of 250,000 BTC.
USDT trade volume surpasses $600M (source)
Revolutionary one-trick pony
Heath Tarbert, chairman of the Commodity Futures Trading Commission (CFTC), upset Bitcoin maximalists this week with his lavish praise for Ethereum. “Let me just basically say how impressed I am with Ethereum, full stop period,” he told a CoinDesk conference. “When I think about this as a regulator, I think of it as almost analogized to email versus the internet. If Bitcoin is email, a one-trick pony so to speak but obviously revolutionary, Ethereum goes far beyond that. It’s more like the Internet.” He suggested that staking on the forthcoming ETH 2.0 won’t fall under the definition of a security as long as Ethereum is sufficiently decentralized.
ETH 2: Electric Boogaloo
Ethereum 2.0 developer Ben Edgington says the deposit contract to stake on the new Proof of Stake ETH 2.0 blockchain is imminent. “As I understand it, we are good to go: deposit contract in the next few days; beacon chain genesis 6-8 weeks later,” he said, adding it was not an “official announcement”. Eth 2.0 phase 0 will require 500,000 ETH to start, worth close to $270 million. The genesis block will launch a week after the minimum amount is met. Meanwhile, on the original chain (which will be around for a long time to come), new figures suggest the much-discussed Ethereum Improvement Proposal EIP-1559 would have burnt 970,000 Ether in the last year if it had been implemented. The proposal, which seeks to reduce transaction fees by introducing flat fees alongside a burning mechanism, has majority support among teams building on Eth, however, eight out of nine mining outfits are against it.
Network effects of Bitcoin
Bitcoin last traded under $11K (A$15,569) on October 9 but Timothy Peterson, Global Macro Manager at Cane Island Alternative Advisors believes there’s now a “90% chance that Bitcoin will never again close below $11K.” He’s created an alternative model to Stock to Flow, using a variation on Metcalfe’s law that examines network effects to predict value. The model predicts BTC will be at or above $12K (A$17K) by November 30, hit $100,000 by 2024, and $1M by 2028.
Network effect for bitcoin price (source)
Upping the allocation
Podcaster Anthony Pompliano has upped the amount of Bitcoin in his portfolio from 50% last year, to 80% today. Though that allocation might change, as he tweeted on Monday: “I’ve been reading about DeFi all weekend.” Former Goldman Sachs hedge-fund chief Raoul Pal is another one doubling down on BTC – literally, doubling his allocation from 25% in March to 50% now. He predicts Bitcoin will be valued at $1 million USD within the next five years. “From all of the institutions, all of the people I speak to, there is an enormous wall of money coming into this … there’s going to be adoption by the real large pools of money.” This week Stone Ridge Asset Management followed Square and MicroStrategy’s lead and invested $163 million into Bitcoin.
Until next week, happy trading!
