Ahead of the holidays, bitcoin sets an new all-time high as even more institutional money and support pours in
What a week it’s been for the bitcoin market. After falling below $20,000, as we covered in last week’s Bitcoin Moves, the leading cryptocurrency peaked at $24,300 this past weekend. Even after a correction, bitcoin is up approximately 20% since our last report.
Bitcoin’s rally has sucked all the air out of the altcoin markets, with BTC being one of the top-performing crypto assets in the top 20 this past week.
Analysts attribute the latest leg of this rally to continued institutional interest. This past week, MicroStrategy confirmed that it has purchased $650 million worth of bitcoin, adding to its existing holdings. Prominent investment bank Jefferies also threw its weight behind the leading cryptocurrency.
This rally comes in the face of bearish news events such as the prospects of stringent regulation on self-hosted crypto-asset wallets.
It’s been a wild week for bitcoin — what do you think comes next for the asset? Tell us on Twitter.
- Bitcoin exploded higher this past week as the U.S. dollar continued to drop.
- BTC peaked at $24,300 this past week and currently trades for $23,400 (2:30pm PT).
- This rally comes as institutional players have continued to throw their weight behind bitcoin.
- Altcoins underperformed BTC this past week due to the strength of the leading cryptocurrency’s rally.
- Institutions Jefferies, MicroStrategy, Guggenheim, and SkyBridge show more support for bitcoin.
- The U.S. Treasury targeted the crypto industry this past week with regulations regarding self-hosted wallets.
Here’s your market snapshot:
All prices are in USD and time zones are PT. Prices are as of 2:30pm PT.
Technical outlook for bitcoin
Analysts have begun to fear that bitcoin is preparing for a correction after rallying nearly two dozen percent in the past seven days alone.
Bitcoin’s one-week stochastic relative strength index (Stoch RSI) recently began to peak, as one analyst noted.
While the analyst noted that the oscillator indicator can remain overbought for extended periods of time, it is looking extremely similar to how it did in the summer, prior to the correction from $12,500 to $10,000. The Stoch RSI also looks similar to how it did prior to the drop in late February and into March.
Another trader echoed the concern, noting that the recent rally has seen a number of “signs of exhaustion”:
“I have noticed some signs of exhaustion, have seen many rising wedge breakups during uptrends though in my day, of course on a lower time frame, that usually leads to blow offs. You can see a bit of tightening on the 4h BBs now, implying momentum slowing down.”
There are some on-chain reasons to be concerned as well. CryptoQuant CEO Ki Young Ju recently shared that the number of bitcoin being sent to exchanges has begun to spike, leading him to believe that a correction/consolidation is possible:
“I am aware of the dumping risk as whales are active on exchanges, but I’m not short on BTC since the buying power is so strong now. I punt long with low leverage. When this indicator hits 2 BTC, it is likely to be sideways or bearish. It always has been sideways since November.”
Bitcoin dominance run
A key theme this week was bitcoin’s outperformance of altcoins. While BTC is up 20% in the past seven days, ethereum has only gained around 7%.
This is par for the course: whenever BTC appreciates rapidly, it is common practice for altcoins to lose traction against the leading cryptocurrency. Due to the speed of the rally, investors swap their altcoins for bitcoin in hopes of capturing more upside.
Should bitcoin continue to move higher rapidly, altcoins are likely to continue to underperform.
It appears that the altcoin market is also being battered by the news that Ripple is being sued by the Securities and Exchange Commission over the sale of XRP.
Jefferies backs bitcoin in report
Christopher Wood, global head of equity strategy at investment firm Jefferies, sees value in investing in bitcoin. Per Business Standard, Wood revealed in a recent report/investor note that he has cut his gold position from 50% to 45% and is moving that 5% over to BTC.
“The 50 percent weight in physical gold bullion in the portfolio will be reduced for the first time in several years by five percentage points with the money invested in bitcoin. If there is a big drawdown in bitcoin from the current level, after the historic breakout above the $20,000 level, the intention will be to add to this position.”
Jefferies is a multinational independent investment bank and financial services company with total assets of over $40 billion.
Wood wrote earlier this year that investors should begin to accumulate bitcoin ahead of the halving
“In this respect, GREED & fear continues to believe that investors should own both gold and Bitcoin in the sense that they are not mutually exclusive, though clearly attitudes to both vary according to the demographic profile of the investor.”
MicroStrategy confirms massive bitcoin purchase
On December 21st, MicroStrategy confirmed that it has “purchased an additional approximately 29,646 bitcoins for approximately $650.0 million in cash in accordance with its Treasury Reserve Policy, at an average price of approximately $21,925 per bitcoin.”
This somewhat explains what has been driving the market higher so fast over the past week.
The business services company, based in the U.S., now holds ” an aggregate of approximately 70,470 bitcoins, which were acquired at an aggregate purchase price of approximately $1.125 billion and an average purchase price of approximately $15,964 per bitcoin, inclusive of fees and expenses.”
MicroStrategy is confident that the price of bitcoin will move higher over time due to it being a “dependable store of value” and due to BTC being the most widely-adoptive cryptocurrency.”
MicroStrategy has been one of the largest public buyers of bitcoin over the past few months though it is suspected that there are large Wall Street firms and high net-worth individuals buying BTC behind the scenes.
Guggenheim global CIO promotes bitcoin
In an interview with Bloomberg TV, Guggenheim Investments global CIO Scott Minerd said that he thinks bitcoin is an extremely valuable investment in the current macroeconomic environment.
He said that based on the scarcity of BTC and how it is performing in this macroeconomic environment, he would not be surprised to see it rally to $400,000 over time. This segment was especially notable because Bloomberg opted to speak with Minerd about Bitcoin as opposed to covering the then-ongoing speech from Federal Reserve chair Jerome Powell.
This public promotion of bitcoin comes just weeks after Guggenheim Funds Trust filed an amendment to the investment mandate for its Macro Opportunities Fund to the Securities and Exchange Commission.
The amendment indicated that the fund can invest up to 10 percent of its assets ($500 million) into Grayscale’s Bitcoin Trust (GBTC).
As we covered at the time, earlier this year, Minerd released a report covering the macroeconomic situation. In that report, he highlighted that as a result of the pandemic, it was highly likely that the debasement of fiat money would be inevitable.
As we see this play out in real time, Minerd and Guggenheim more broadly have begun to adjust its portfolios accordingly.
SkyBridge confirms bitcoin fund
Anthony Scaramucci, the founder of SkyBridge Capital, just confirmed that his firm will be launching a Bitcoin fund to allow registered investment advisors (RIAs) and others to invest in BTC more easily.
SkyBridge Capital filed a Form D with the Securities and Exchange Commission for this fund, called SkyBridge Bitcoin Fund L.P. SkyBridge Capital as a whole has about $9.2 billion in assets under management.
Scaramucci will be kicking off the fund by putting in $25 million of his own capital into bitcoin. He added in an interview with Yahoo Finance:
“So, we think there’s a very large move for Bitcoin over the next five to ten years. We think it’s a product that people will have in their portfolios, and we wanted to get out there with something that could be available to RIAs, the mass affluent, and people who have an interest in owning some digital assets.”
This move has arguably been a long time coming.
Scaramucci revealed in multiple podcasts over the past two years that he likes bitcoin as an investment due to its ability to allow its investors to hedge against inflation and due to BTC’s appeal to millennial investors.
FinCEN targets crypto industry in proposed ruling, set to be implemented in January
Late last week, the Financial Crimes Enforcement Network (FinCEN) branch of the U.S. Treasury confirmed that it is working on cracking down on the crypto industry.
A document that outlined this proposed rule indicates that exchanges and other virtual asset service providers will need to verify the name and address of non-custodial wallet users for any transaction exceeding $3,000.
Many in the space believe that this proposed ruling is absurd, especially because the Treasury is taking comments about the rule only until January 4th. Kathryn Haun, a general partner at a16z focused on crypto assets, wrote on the timing of this ruling:
“Late yesterday, instead of following that process, @stevenmnuchin1 slashed the ordinary comment period to just 15 days, on a Friday before the holidays no less, for crypto regulations that to us @a16z and others in the crypto space don’t make much sense.”
Even U.S. congressional men and women are supporting bitcoin and cryptocurrencies here.
Incoming Wyoming Senator Cynthia Lummis is “concerned” that this rule goes too far and may actually disallow the U.S. from being competitive in financial technology:
“I am deeply concerned that the Treasury Department is considering a hasty rule governing self-hosted digital asset wallets and the Bank Secrecy Act. Rather than prematurely adopting a rule on this complex topic, Treasury should immediately begin a transparent process to engage with Congress and industry, building a consensus to drive America forward.”
Four members of congress also sent a letter to the Treasury saying that this will stifle innovation in the U.S.
According to IntoTheBlock, bitcoin is currently “mostly bullish” as per their seven core metrics, which are based on on-chain trends and market data such as order books.
Two out of seven of the core metrics are currently in “bearish” territory, where there are three that are “bullish” and two that are “neutral.” The two bearish metrics are net network growth, which tracks the number of new addresses on the Bitcoin network, and large transactions, which tracks the number of transactions valued at over $100,000.
The bullish metrics are “Smart Price,” bid-ask volume imbalance, and futures market momentum.
While on-chain trends are bearish, the bullish metrics indicate that there is strong buying pressure for bitcoin on exchanges.
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