Bitcoin Moves #8: Bitcoin & the Macro Strategy

Bitcoin Moves weekly bitcoin market report OKCoin

Bitcoin Moves #8: Bitcoin & the Macro Strategy

Bitcoin is settling into a new trading range, as price action is now trading between $11,200 and $12,400 over the course of the last two weeks.  While the bulls have taken Bitcoin price well over the $8,000 – $ 10,000 trading range, we are seeing a tight trading situation with continued price trends in the $11,000 to $12,000 range.  

Daniel Koehler, Liquidity Manager at OKCoin says that “bitcoin $1M realized volatility remains elevated (58%) because of the jump that made it to the $11,000 – $12,000 level that happened two weeks ago. I think the $12,000 resistance level is still probably the more interesting thing, especially how bitcoin cannot seem to break out of it.”

When Bitcoin settles into a price range, traders can expect smaller amounts of volatility in the short term trading range as Bitcoin explores supply and demand at a new price point. Traders often use these price ranges to scalp profits before big macro price moves. Having a timeframe for a trade is a crucial component to having a clean exit from a position while taking gains. When you lose scope of time with regards to your position, you may end up like Dave Portnoy from Barstool Sports, who ended up selling his Bitcoin investment for a loss after a short term price depreciation.

We want to know where you think BTC is going — tell us on Twitter.

Here’s your market snapshot: 

All prices are in USD and time zones are PT.

Bitcoin price movements

  • Current Bitcoin price: USD $11,310 (1:15 pm PT), down 4.95% from last week (USD $11,747)
  • 24hr high: USD $11,785
  • 24hr low: USD $11,110
  • 24hr change: -5.727
  • 24hr BTC volume sits around USD $22 billion, down 12% from last week (USD $25 billion)
  • Bitcoin Dominance sits ~58.33%
  • 30 day high / low: USD $12,427 / $10,988
  • 90 day high / low: USD $12,427 / $8,727
  • Bitcoin Volatility Index (BVI), 30day: 1.00713%, down .065% from last week (1.00779)
  • Hashrate: 123.92 EH/s, down 1.62% from last week (125.80 EH/s)
  • Network value to transaction ratio (NVT): 76.56
  • US dollar index (DXY): 93.10 up .89% from last week (92.27)
  • SPX-BTC 90d correlation: 0.235, up .85% over last week (0.233)

BTC-USD 7day, via OKCoin 

BTC-USD, 1day, via OKCoin 

Buy BTC on OKCoin

Institutions are buying up BTC

Why are institutions and companies buying bitcoin? Cloud based services company MicroStrategy made mainstream media headlines after it purchased $250 million worth of bitcoin (BTC) with cash from its balance sheet. This U.S. publicly-traded company has now set a precedent by being the first to purchase BTC as an investment. 

Following MicroStrategy’s move, Canadian design startup Snappa put 40% of its company cash reserves into bitcoin. In an announcement published August 24th, 2020. “I believe we now have a far superior savings technology available to us,” Gimmer wrote. “That technology is Bitcoin.” Zach Voell from Coindesk reports “concerns of inflation and global economic uncertainty”, will we see other institutions taking sizable positions in bitcoin and other crypto assets?

Rachel Wolfson, reporter for Cointelegraph has this to share with Bitcoin Moves: “I am bullish on bitcoin, so I personally view the assert as a smart long-term investment. Yet given that Grayscale Investments’ Q1 2020 earning report shows capital inflows totalling $503.7 million in cryptocurrency investments – with $388.9 going into the Grayscale Bitcoin Trust – both retail and institutional investors also seem to agree that bitcoin is a smart investment. Bitcoin’s long-term value is especially relevant following the stock market collapse in March, where traditional investments plunged. In my opinion, Bitcoin represents the asset class of the future and it’s value is being highlighted by increased interest from savvy investors.”

Bitcoin over 10k, will it hold? 

The price of bitcoin upon the publishing of this article is ~ $11,300.  A whopping 97.6% of the total amount of bitcoin is now in profit trading above the $11,700 price point. This means if you bought bitcoin at any point Indeed, this recent bitcoin price action above $10,000 and holding is the third longest period of consecutive days over $10,000

On Monday, OKCoin liquidity manager Dan Koehler told Coindesk “Bitcoin has settled into a consolidation position at $11.7k. Traders are waiting for better fills at $11k and $12.5k respectively. Momentum is still bullish, but it is unclear if we should test the $10k breakout area before moving higher.”

Long Term Holder Sentiment 

On the chart below you can see the amount of active bitcoin addresses correlated to bitcoin’s price action. The number of active bitcoin addresses holding bitcoin is beginning to rival the bullrun of 2017, with over 100,000 active addresses. There is a correlation to active addresses exceeding 100,000 and price action reflecting this holding of bitcoin with a positive upward trend. 

Source: Glassnode 

The amount of Bitcoin addresses receiving bitcoin has increased along with the amount of new bitcoin addresses. Coindesk has announced that the number of active bitcoin addresses has now reached an all time high. 

Futures traders have a huge influence on market movements and price action for spot traders. Outstanding BTC open interest options contracts hold above $2.1 Billion, close to all time highs reports Coindesk. Leveraged funds are taking out record amounts of shorts on bitcoin price futures on the Chicago Mercantile Exchange (CME). The bulls and bears will clearly battle it out for price action in the near future. 

OKEx open interest for futures and swaps has been in decline since the 17th of August, ending at 96,000 BTC from a high of 111,000 BTC. Rolling futures premiums are also collapsing, falling to 8.6% annualized, which could indicate that traders are unwinding positions at these elevated levels and are positioning themselves neutral or negative bias.  

Portnoy sells his BTC, market moves up 7% from where he sold. 

Dave Portnoy, famous sports gambler turned post-lockdown  stock trader and Barstool sports chief sold his investment in Bitcoin and Chainlink,  merely days after investing $1.25 million into bitcoin and $50,000 into Link. The legendary trader claimed to lose $25,000 and that he “may or may not be done”.

Long time investors and traders were quick to jump on Portnoy, with some calling it the “Portnoy Top”. Coindesk’s Zack Voell points out that “The bellwether cryptocurrency actually gained more than 7% in the days following Portnoy’s broadcasted purchase. At last check, BTC is trading close to 1% from the daily open on the day of Portnoy’s meeting.” Meaning at the very least that sometimes good things come to those who wait…

In the news

Uber Bitcoin Hack 

Uber ex chief security officer (CSO), Joseph Sullivan, was charged with obstruction of justice for a 2016 hack targeting Uber that compromised 55+ million Uber users data. Uber chose to pay the ransom $100,000 USD in bitcoin and kept the hack a secret rather than report it to authorities. The Department of Justice announced Thursday that Sullivan lied and diverted the Federal Trade Commission investigation with charges filed in San Francisco Federal District Court.

Boston Fed teams up with MIT

The Boston Federal Reserve in conjunction with the Massachusetts Institute of Technology Digital Currency Initiative. While still years away, research is now being done to investigate the impacts of a digital currency on the U.S. dollar and its broader implications on society. With other major global players investigating their own Central Bank Digital Currency (CBDC), is the US next to follow suit? Read more about this at Coindesk

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