Wall Street’s Ray Dalio Might Be Changing His Tune on Bitcoin – Bitcoin Moves #20

Bitcoin Moves - Weekly Bitcoin Market Report

Wall Street’s Ray Dalio Might Be Changing His Tune on Bitcoin – Bitcoin Moves #20

Wall St funds continue to get into bitcoin and so do the celebrities as adoption increases, while Taproot receives miner support

Bitcoin can’t stop and won’t stop. 

The leading cryptocurrency continued its rapid ascent on Monday and Tuesday to new year-to-date highs at $17,870, just shy of the $18,000 resistance. Bitcoin moved higher as the U.S. dollar once again began to fall against foreign currencies, seemingly on more COVID-19 uncertainty.

Technical analysts are optimistic the cryptocurrency will continue to rally in the days ahead. Josh Rager, wrote amid the move to the upside:

“Bitcoin is shredding each resistance on the daily and high time frames With a close over $17,150, the next major daily/weekly resistance would be at $18,953 to $19,187.”

Bitcoin has begun to diverge from the S&P 500 once again. Analysts attribute this to the vast amount of buying pressure flooding the cryptocurrency markets, coupled with a decrease in selling activity.

Pseudonymous analyst “Light” shared that since $10,000 was broken months ago, 3,000 BTC has been withdrawn daily (net) from centralized exchanges such as OKCoin. Simultaneously, miners “refuse to sell their recently halved rewards in face of demand,” resulting in price action that spirals upward. 

Analysts expect bitcoin’s rally to continue as new buyers continue to allocate capital to cryptocurrencies. 

What a crazy week it has been for bitcoin, but what do you think comes next? Tell us on Twitter.

TL;DR

  • Bitcoin just hit $17,870, establishing a new year-to-date high and multi-year high.
  • $17,870 is the highest the cryptocurrency has traded since early 2018.
  • Analysts attribute this rally to a number of new institutional and “rich” (celebrities) entrants into the cryptocurrency market. 
  • Square also recorded a massive quarter, suggesting an influx of retail participants.
  • On a technological basis, Bitcoin’s Taproot technology is receiving support from miners. 

Here’s your market snapshot:

All prices are in USD and time zones are PT. Prices are as of 12:10pm PT.

Bitcoin Price - Bitcoin Moves OKCoin

Skybridge Capital signals support for Bitcoin

Following other institutions, Skybridge Capital signaled its intent to invest in bitcoin this past week. The fund holds approximately $7 billion in assets and was founded by Anthony “The Mooch” Scaramucci, a former Goldman Sachs VP that infamously spent ten days as the Trump Administration’s communications director. 

In a filing to the U.S. SEC first spotted by tech analyst Kevin Rooke, the firm revealed that it will be updating its mandate to include potential exposure to digital assets and related investments. Skybridge Capital is an alternative assets fund, making an allocation to cryptocurrency an easy decision.

Skybridge Capital specifically mentioned investments in bitcoin, though caveated that by saying it may invest in altcoins, initial coin offerings, and equity of cryptocurrency companies. 

Scaramucci has been a public bitcoin bull for over a year now, shouting out the cryptocurrency in podcasts, on Twitter, and in interviews. He specifically cites characteristics like bitcoin’s scarce supply and its digital nature as reasons why he is bullish.

Skybridge’s move to invest in bitcoin comes shortly after prominent Wall Street investors announced their support for the coin.

As we reported in last week’s edition of Bitcoin Moves, Stanley Druckenmiller, a Wall Street billionaire, last week announced a position in bitcoin publicly. He is widely regarded as one of the world’s best macro analysts, having been a lead portfolio manager for George Soros and making his investors an average of 30 percent a year.

Like Scaramucci, Druckenmiller is a fan of bitcoin’s scarcity and likes how the cryptocurrency naturally appeals to younger demographics, unlike equities and gold. 

“Rallies / movements are happening on weekdays which is indicative of institutional flow (vs retail),” said Jason Lau, OKCoin’s COO. “Companies like PayPal, JPMorgan, and Citibank are participating and creating new awareness of bitcoin as an asset class.”

Ray Dalio may change his tune on bitcoin

In a similar vein, billionaire investor Ray Dalio signaled on Tuesday morning that he may be wrong about bitcoin.

Dalio runs the world’s biggest hedge fund, Bridgewater Associates, and has become one of the world’s most respected investors as a result. For context, he’s viewed by many on a similar level to Warren Buffett.

Like Buffett, he’s been a critic of bitcoin over the past few years. In a CNBC interview at the World Economic Forum in Davos earlier this year, he said the cryptocurrency is “not effective” as a medium of exchange or as a store hold of wealth.” For something to be deemed a currency or money, it must fulfill those requirements, he argued. 

In a Twitter conversation with financial analyst and podcaster Preston Pysh, Dalio signaled that he is willing to change his mind if someone presents him with the proper information about the coin:

“I might be missing something about bitcoin so I’d love to be corrected. My problems with bitcoin being an effective currency are simple.” 

He added that he is fearful the cryptocurrency will be regulated extremely heavily by governments if it grows enough. Not to mention that Dailo explained he doesn’t see central banks, institutional investors, and corporations using bitcoin as a reserve asset. 

Again, though, Dalio said he’s willing to be corrected and change his mind if presented with proper information. 

His points can be rebutted as is: bitcoin is the best-performing asset of the past decade and of 2020 in and of itself. Not to mention, firms like MicroStrategy and Square are buying bitcoin as institutional investors like Druckenmiller, Paul Tudor Jones, and Bill Miller make similar moves. 

Celebrities go big on bitcoin

This past week was also a time for celebrities to once again divulge that they are into bitcoin and crypto.

Maisie Williams, the actress that portrays Arya Stark in Game of Thrones, asked her 2.7 million followers on Twitter if she should “go long on bitcoin.” The majority (53.5%) of the over 800,000 respondents said “no” while the rest said “yes.” She bought bitcoin anyway, though didn’t disclose how many coins she purchased or at what price. 

Elon Musk, CEO of Tesla and SpaceX, also got in on the action. He responded to Williams by posting an article from The Onion about bitcoin ‘crashing’. This is far from the first time Musk has done so: on many occasions when he’s asked about bitcoin, he has posted these parody articles as a way to respond.

Musk has publicly shared his thoughts on bitcoin multiple times. Responding to J.K. Rowling, the author of Harry Potter, Musk explained that he thinks bitcoin has value in a world where governments and central banks are debasing their currency. He added in a podcast that he thinks bitcoin is structurally “brilliant,” though criticized its consumption of energy. 

Williams and Musk join now-retired rapper “Logic,” Kanye, and Kevin Hart as celebrities that have mentioned bitcoin or cryptocurrency over the past month. 

Incoming U.S. senator shills bitcoin on national TV… Twice

Bitcoin is infiltrating Washington D.C. as well.

An incoming U.S. senator for Wyoming, Cynthia Lummis, shilled bitcoin on national television twice over the past few days.

On the weekend, she made an appearance on ABC News to discuss her new role as a Congresswoman for Wyoming. She was asked about her thoughts on bitcoin, to which she responded that she thinks the cryptocurrency is a viable store of value in a world where the U.S. dollar is being inflated. She likened the cryptocurrency to gold.

Lummis continued to share this opinion in a more recent interview with Fox News. The incoming Senator highlighted that she thinks one of her priorities on the Hill is to “explain” bitcoin to her colleagues so that they understand it is a viable investment compared to other assets. 

Of note, Wyoming is arguably the most important state to the bitcoin and crypto market in the U.S. Wyoming’s banking regulator has given charters to cryptocurrency-focused institutions, and it is an arguably safe place for firms in the space to register their businesses. 

Square records massive quarter for bitcoin investment

Financial technology giant Square announced a big coin for its involvement in Bitcoin and cryptocurrency. 

According to its Q3 2020 earnings report, the firm sold $1.63 billion worth of bitcoin to its customers over the past quarter, up “approximately 11x and 15x year over year, respectively.” Many see this as a sign that the cryptocurrency is seeing vast retail capital inflows.

This report came shortly after Square invested $50 million into bitcoin for its balance sheet. That investment is now worth closer to $80 million, just over a month after it made this move. 

Similarly, this past week Grayscale Investments announced it now owns 500,000 BTC.

These two statistics accentuate the vast amount of capital now entering the space. 

Taproot receives support from miners

Important cryptographic technologies Taproot and Schnorr Signatures received support from a number of large mining players this past week. These technologies will increase Bitcoin’s privacy and smart contract capabilities.

Bitcoin journalist and analyst Kyle Torpey was told by the operators of Poolin, Slush Pool, and BTC.com that they support the technologies. These three pools represent approximately 30% of Bitcoin’s total hash rate.

Citibank thinks BTC hitting $300,000 isn’t too absurd

Citibank senior analyst Tom Fitzpatrick this week released a research note announcing his support for bitcoin. Though it was meant for institutional clients, the note was leaked online. 

According to the note, bitcoin could hit $318,315 in December 2021 or by early 2022 if it follows a similar path to the one it took in the previous bull run and the one before that. 

He added that the cryptocurrency is fundamentally bullish with the vast amount of monetary stimulus and fiscal stimulus pumping through the market today, along with the ongoing push toward central bank digital currencies. 

Short-term Bitcoin on-chain trends mixed

IntoTheBlock, a blockchain analytics firm, reports that Bitcoin remains “mostly bearish” despite the upward price action. Four out of seven of its core metrics are currently in “bearish territory.” These are net network growth, large transactions, concentration, and the bid-ask volume imbalance. 

Concentration seems to be the most important metric to watch at the moment. IntoTheBlock indicates the metric is down 1.05%, suggesting a distribution of bitcoin from large holders (or “whales”) to smaller holders. While this may be short-term bearish, similar activity took place early in 2017’s bull run. 

Two of IntoTheBlock’s core metrics are “bullish,” and the last is “neutral.”


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