A Multi Billion-Dollar Fund Now Owns $300M in Bitcoin – Bitcoin Moves #27

Bitcoin Moves OKCoin Bitcoin weekly market report. - BTC price

A Multi Billion-Dollar Fund Now Owns $300M in Bitcoin – Bitcoin Moves #27

Bitcoin hit yet another all time high this week as the US dollar continues to fall and the asset receives more Wall Street support

We’ve said it before, and we’ll say it again, it’s been another wild week for the bitcoin market. The leading cryptocurrency set a new all-time high this past week at $34,830, some 20% higher than last week’s high. 

The cryptocurrency has consolidated for the first time in weeks, allowing altcoins to break higher. Ethereum is finally outperforming bitcoin. Per OKCoin market data, ETH is up 48% in the past seven days.

It appears that investors taking profits on the recent bitcoin rally are cycling some of their capital into altcoins, expecting this cryptocurrency subset to catch up to the market leader.

This past week was marked by continued institutional support for bitcoin. A Wall Street investment firm disclosed a $300 million bitcoin position while other prominent investors continued to vouch for the leading cryptocurrency.

Some investors have warned that the crypto market is primed to cool down after the parabolic rally it has seen. Yet the long-term trends that are driving this market are still potent.

Stepping aside from the market, bitcoin turned 12 this past week. On the day bitcoin turned 12, the cryptocurrency also graced the front page of the Financial Times

TL;DR

  • Bitcoin continued to explode higher this past week, moving as high as $34,500.
  • The cryptocurrency currently trades for $33,600, consolidating between $30,000 and $34,000.
  • Altcoins broke higher this week as bitcoin has entered a range of consolidation.
  • Institutions on Wall Street continued to throw their support behind bitcoin this past week.
  • Volatility and corrections are expected in the near future.

Here’s your market snapshot:

All prices are in USD and time zones are PT. Prices are as of 1:30pm PT.

Bitcoin continues higher as U.S. dollar falls

Bitcoin’s rally this past week came as the U.S. dollar moved lower.

The Dollar Index (DXY) fell from 90.00 to 89.50, which brings the measure to multi-year lows. The DXY is an index of foreign currencies against the U.S. dollar. The indicator falling indicates that the U.S. dollar is losing relative value against foreign currencies. The U.S. dollar appears to be dropping as a result of the latest $900 billion stimulus bill, which will put $600 into the hands of a majority of adult Americans.  

It has become a mainstream narrative that further losses in the U.S. dollar will drive bitcoin higher. 

When Stanley Druckenmiller, a Wall Street billionaire, announced his support for bitcoin, he cited a dropping dollar as one of the reasons why he is so optimistic. 

Analysts have said that investors should expect volatility with so much volume and news events playing out in the crypto asset market. Further, uncertainty around the transition of power and the ongoing Senate race in Georgia is expected to exacerbate volatility. 

Watch out for a correction: Mike Novogratz

Michael Novogratz, CEO of Galaxy Digital and a former partner of Goldman Sachs, says that bitcoin investors should be wary of a short-term investment.

He told CNBC on Monday morning that the cryptocurrency market is vulnerable to pulling back after surging over recent weeks. He did not give an exact price target. It’s worth noting that in previous bull markets, bitcoin regularly pulled back by 20-30% before pushing even higher. It’s unclear if this same dynamic exists now. 

While Novogratz has yet to update his comment, bitcoin dropped as low as $28,000 on Monday morning. It is unclear if this was the correction he was referring to or waiting for. As he explained in the CNBC interview, there are institutional players that are looking to buy dips in this rallying market. 

This is a similar sentiment to what our COO, Jason Lau, said in an interview with Cointelegraph. Regarding the recent corrections he said to the outlet:

“Profit taking occurred around these levels, resulting in some sideways trading, and causing many to be over leveraged long on futures. We saw $1.4B in BTC and $500M in ETH futures liquidated in the last 24hrs, resulting in a sharp dip to the $29,500 level for Bitcoin. However, these dips are being bought up pretty quickly, reinforcing the narrative that there are underlying bids by institutions keen to access bitcoin.”

Novogratz elaborated in an interview with the BBC that bitcoin is also seeing strong retail interest.

SkyBridge Capital confirms it holds over $300 million worth of bitcoin

SkyBridge Capital hinted a number of weeks ago that it would begin to accumulate a bitcoin position.

The alternative investment fund based in New York filed a document to the Securities and Exchange Commission (SEC) that indicated it was seeking exposure to the “digital asset market.” The filing indicated that Skybridge would take positions in spot cryptocurrencies, digital asset companies, or even early-stage initial coin offerings.

SkyBridge Capital confirmed on Monday that it has a sizable bitcoin position worth over $300 million as of the day of the letter’s publishing: 

“SkyBridge Capital, a leading global alternative investment firm, today announced the launch of the SkyBridge Bitcoin Fund LP, which provides mass-affluent investors with an institutional-grade vehicle to gain exposure to Bitcoin. Additionally, on behalf of its flagship funds, SkyBridge initiated a position, valued at approximately $310 million at the time of this release, in funds investing in Bitcoin during November and December 2020.”

Reports suggest that the firm invested a total of $185 million, meaning it is up nearly 70% on its position in bitcoin.

A slidedeck from the company leaked online also suggests that SkyBridge Capital has a lofty price target for bitcoin.

Like other Wall Street investors that have invested in bitcoin in recent months, SkyBridge pitted bitcoin against gold, writing that BTC’s market capitalization could reach that of gold in the years ahead. They wrote that bitcoin’s characteristics are much better than that of gold due to its truly scarce nature, it being digital, and its divisibility.

“We believe Bitcoin is in its early innings as an exciting new asset class. With the institutional quality custody solutions available today, we believe the time is right to allocate capital and provide our clients access to the digital assets space,” said fund founder Anthony Scaramucci on the news. 

Stablecoins get support from U.S. Treasury

The crypto industry has recently been under pressure from the U.S. Treasury. The Treasury indicated in December that if the rule was implemented, virtual asset service providers would need to verify the name and address of non-custodial wallet users for any transaction exceeding $3,000. We issued a response to the proposed ruling at this link. 

Not all of the Treasury is looking to curb cryptocurrency innovation, though.

The Office of the Comptroller of the Currency, which regulates banks that operate in the U.S., announced on Monday that it will allow banks to use public blockchains and stablecoins. 

While it is unclear if any banks will move forward with the use of bitcoin or other blockchains, many see this as a validation of cryptocurrencies and related technologies. 

On-chain trends

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. 

Four out of the platform’s seven core metrics are currently “bearish.” These four metrics are net network growth, large transactions, smart price, and bid-ask volume imbalance. These four metrics span on-chain trends and exchange/order book trends. 

This may explain why bitcoin is currently in consolidation. 

Out of the four remaining metrics, one is “bullish” and two are “neutral.” The only bullish metric is related to the futures market. Analysts have noted extremely high funding rates in these markets recently, which can be construed as a sign that a market is overbought. 


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