Bitcoin hits another new ATH and the world’s biggest asset manager seeks a bitcoin and blockchain lead, but is BTC due for a correction?
It’s been another crazy week for bitcoin and the rest of the cryptocurrency market despite it landing right in the holiday season. BTC underwent another strong leg higher, reaching highs above $28,000 two days after Christmas Day on December 25th. Even after a correction from the local highs, bitcoin is up approximately 15% since our last report.
On-chain analysts and professional investors in the space argue that this rally is a byproduct of a strong increase in demand for bitcoin as existing holders have become hesitant to sell their coins. These two factors working in tandem have pushed the equilibrium price of bitcoin higher, leading to the rally we are seeing now.
This past week, institutional players continued to show their support for bitcoin. While inflows into Grayscale’s Bitcoin Trust have paused temporarily, there has been capital siphoned into the cryptocurrency by a number of publicly-listed companies and by private asset managers.
There are some concerns that the market is becoming overbought. From a technical perspective, bitcoin is the most overbought it has been since the 2017 highs, per some momentum indicators.
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- Bitcoin continued higher over Christmas week, pushing to new all-time high above $28,300.
- The cryptocurrency market further concentrated in BTC this past week as altcoins underperformed.
- This rally comes as there has been continued evidence of retail and institutional demand for Bitcoin.
- There are some that fear the market has become overbought, including holders of the cryptocurrency.
Here’s your market snapshot:
All prices are in USD and time zones are PT. Prices are as of 12:00pm PT.
Even bitcoin buyers are getting worried about a correction
While bitcoin’s rally over the past few months has been welcome, there have been growing expectations of a market correction.
Anthony Scaramucci, an institutional investor that runs bitcoin-friendly asset manager Skybridge Capital, told CNN that he thinks the market could tumble:
“This thing has a tendency to crash up. It is due for a correction, and these corrections can be violent.”
He added to the outlet that the cryptocurrency could face a drop of 20% to 50%, based on market conditions. While this may sound scary for new market participants, BTC regularly corrected this severely during the last bull market, though continued to push to new heights as buyers stepped back in.
One analyst that is known as “Bitcoin Jack” is also cautious of a correction due to his analysis of the on-chain data. Referencing how the bitcoin market nears medium-term to long-term tops when each dollar added to the bitcoin market has an outsized effect on the price, he wrote recently:
“A factor of 3x on chain average paid price for current circulating bitcoin supply equals risk. When this normalizes (at higher or lower prices), that’s when taking on irresponsible long leveraged exposure is less risky == big profits. Now is not the time.”
While the macro factors driving bitcoin remain bullish, there are traders and investors wary of an imminent correction.
Blackrock looking for “Blockchain VP”
The world’s largest asset manager, Blackrock, is looking for a vice president for its blockchain division. Blackrock was rumored to be looking into the cryptocurrency space in 2017 and 2018, though nothing substantial ever became of those rumors.
According to a job posting, the Wall Street giant that manages $7.8 trillion is looking to hire a vice president to handle its blockchain operations for its New York headquarters. This role will see an individual create and implement “strategies designed to drive demand for the firm’s offerings” while also analyzing cryptocurrencies from a valuation standpoint.
The ideal candidate must have experience in blockchain and must have knowledge of “cryptographic hash functions, distributed network consensus mechanisms, and public-private key cryptography.”
While this is far from a comprehensive press release announcing its intentions, many see this as a sign that the company is getting serious about Bitcoin and cryptocurrencies as a whole.
Prior to this, Blackrock CIO Rick Rieder said that bitcoin will likely be a better investment than gold over the years ahead.
According to IntoTheBlock, bitcoin is currently “mostly bearish” as per their seven core metrics, which are based on on-chain trends and market data such as order books.
Three out of the platform’s seven core metrics are currently “bearish.” These three metrics are all in the on-chain signals category. They are net network growth, wallet concentration, and large transactions.
Out of the four remaining metrics, two are “bullish” and two are “neutral.” The two “bullish” metrics are part of the exchange category.
Some may construe this to be bullish: a decrease in on-chain activity is often indicative of two things: 1) an increase in “HODLing” activity, and 2) the entrance of retail investors. The large amount of buying pressure seen on exchanges, as evidenced by IntoTheBlock’s “bullish” exchange indicators, may imply there are retail investors looking to buy bitcoin to store on exchanges.
Company treasuries continue to buy bitcoin
Certain publicly-listed companies are buying bitcoin with their treasuries.
Greenpro Capital Corporation on Monday that it will be investing in bitcoin with its treasury money. The company is a Nevada-registered corporation based in Kuala Lumpur, Malaysia. It owns CryptoSX, a security token exchange.
Greenpro, similar to firms that have made similar moves such as MicroStrategy, claims that it thinks bitcoin will be a better holding than cash over the years ahead. Company chief executive CK Lee elaborated on the matter:
“We fully believe in $BTC as a store of value. I’ve instructed our investment bankers to raise debt in Q1, 2021 of up to US$100 million to invest in $BTC. The Company will also invest its own cash into $BTC.”
This was followed up earlier today with NexTech, a Canadian virtual and augmented reality company, announcing it will be using $2 million from its balance sheet to buy bitcoin. Company chief executive said about the planned investment:
“Our investment in Bitcoin is part of our new capital diversification and allocation strategy with the intent to maximize long-term value for our shareholders. This initial investment reflects our belief that Bitcoin is a long-term store of value and an attractive investment asset with more long-term appreciation potential than holding cash, which is currently yielding 0.06%.”
SkyBridge Capital confirms large bitcoin purchase in leaked slide deck
According to The Block, Skybridge Capital has invested “as much as $182 million into bitcoin on behalf of its funds.” Skybridge Capital is the alternative asset manager run by Scaramucci, as mentioned earlier in this blog. The firm manages over $7 billion worth of assets.
Skybridge is working with Fidelity Investments, the financial services provider and asset manager, for storing the bitcoin.
In that same slide deck, which was partially leaked online, the company also wrote that it expects a “tidal wave” of capital to hit the bitcoin market. The deck mentioned that eventually, investment advisors, retirement investment advisors, hedge funds, and pension funds will all have capital in bitcoin.
Scaramucci has been a public supporter of bitcoin for at least a year now. He thinks that the cryptocurrency has a leg up over gold and other traditional asset classes due to its appeal to millennial investors and its 21,000,000 coin scarcity.
Per The Block, Skybridge has a thesis that the capital currently locked in traditional 60/40 portfolios, meaning 60% stocks and 40% bonds, will soon shift to include bitcoin. This is because stocks have become extremely overvalued due to stimulus and bonds have lost interest rates due to this same stimulus along with inflationary monetary policy.
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