Bitcoin Moves #34 — A weekly review of what’s moving Bitcoin and crypto markets
Over the weekend, Bitcoin topped its recent bull run to hit a new all-time high over $58,000, per OKCoin market data, before experiencing a swift correction of almost 20% on Sunday-Monday.
Prior to the ongoing correction, traders had begun to take notice of the extremely high funding rates paid by crypto futures traders. The overheated market finally broke down towards the end of the weekend. It reached a point on Sunday evening, then into Monday, when long positions closed into little buy-side liquidity, triggering stop losses and perpetuating the downward price action.
It is worth noting that Bitcoin did outperform altcoins like Ethereum in this downtrend over the past few days. As of the time of writing, BTC is down approximately 19% from its all-time high while ETH has shed nearly 25%.
Regardless of the recent price action, investors remain bullish on the crypto market amid positive institutional acceptance for Bitcoin. Also, clarity around stablecoin Tether’s role in the cryptocurrency markets seems to have boosted overall crypto market sentiment, with most of the industry reacting positively to today’s ruling.
TL;DR
- Bitcoin has faced a strong correction over the past 48 hours, falling as low as $45,000 on leading exchanges.
- This market drop comes after BTC peaked at $58,000 just this Sunday.
- Bitcoin’s total market capitalization reached over $1 trillion for the first time
- Despite the negative price movement recently, Bitcoin is still enjoying positive fundamental developments, including continued momentum from institutional investors
Bitcoin price movements
- Current BTC price: $48,800, just shy of last week’s price of $49,040
- 24H high: $54,200
- 24H low: $44,900
- 24H change: -10%
- 24H BTC volume sits around $116 billion, up 81% from last week ($64 billion)
- Total circulating BTC: 18,636,718
- Total market cap: $907,320,991,555
- Bitcoin dominance: ~60.6%
- 30D high / low: $58,100 / $29,500
- 90D high / low: $58,100 / $16,800
- Bitcoin Volatility Index (BVI), 30D: 1.81%, up 12% over the past week (1.62%)
- Hash rate: 149.74 EH/s, down 0.6% over last week (150.51 EH/s)
- Network value to transaction ratio (NVT): 78.46
- U.S. dollar index (DXY): 90.12, down 0.5% from last week (90.58)
Bitcoin market cap breaches $1 trillion
On Friday, Feb 19, Bitcoin’s total market capitalization reached over $1 trillion for the first time, triggering a wave of bullish sentiment across the crypto market.
Michael Saylor, Bitcoin bull and CEO of business services company MicroStrategy, noted on Twitter this week that the leading cryptocurrency had reached $1 trillion faster than tech giants Apple, Amazon, Microsoft and Google.
The market cap milestone came just a few days after the BTC price crossed $50K for the first time.
MicroStrategy upsizes investment round to $900 million
As we covered in last week’s edition of Bitcoin Moves, MicroStrategy had announced plans to roll out a $600 million sale of convertible senior notes, a type of corporate bond, and use the funds to increase its already substantial BTC holdings.
Just a week later, the firm confirmed that there was a large amount of demand for the notes, and the firm had raised a total of $1 billion in the sale.
MicroStrategy announced that it will spend $900 million of the raised funds to purchase more BTC.
The Motley Fool announces BTC investment
The Motley Fool, the popular stock trading and information site, followed MicroStrategy’s lead this past week by purchasing Bitcoin using its private corporate treasury.
The company revealed its purchase of $5 million in BTC to add to its company balance sheet. The firm stated that it believes that BTC will perform well over the long run, noting that it normally tells investors to hold assets for five years or more:
“We generally recommend investors aim to own at least 30 stocks and hold them for a minimum of 5 years. And we think Bitcoin can play a role within a diversified portfolio built with a focus on the long term.”
Square buys more bitcoin
Financial technology company and payments app Square just revealed that it has purchased more BTC, following a similar decision in December of 2020.
The firm’s fourth-quarter financial report indicated that it had acquired “approximately 3,318 bitcoins at an aggregate purchase price of $170 million.”
In that same report, Square also indicated that its clients sold over $4 billion worth of bitcoin over the fourth fiscal quarter of 2020.
BlackRock exec reveals the firm’s involvement in Bitcoin
On Feb 17, the chief investment officer of BlackRock, the world’s largest asset manager, confirmed that the firm is involved in the Bitcoin market, though his statement was vague. He told reporters:
“Today the volatility of it is extraordinary, but listen, people are looking for storehouses of value. People are looking for places that could appreciate under the assumption that inflation moves higher and that debts are building, so we’ve started to dabble a bit into it.”
Previously we discussed how regulatory filings from the financial giant reveal that funds it manages may allow Bitcoin futures trading in the future.
Not everyone is bullish on Bitcoin
While there are an increasing number of prominent proponents of and investors in the foremost cryptocurrency, not everyone is convinced just yet.
Nicholas Taleb, an early Bitcoin proponent and a prominent author, recently reversed his stance on the leading digital asset. The author and analyst tweeted recently that he is getting rid of his BTC holdings:
“I’ve been getting rid of my BTC. Why? A currency is never supposed to be more volatile than what you buy & sell with it. You can’t price goods in BTC. In that respect, it’s a failure (at least for now). It was taken over by Covid denying sociopaths w/the sophistication of amoebas.”
Taleb added that the cryptocurrency is actually not anonymous as some expect, which may take away from its attraction as an investment to some investors.
Bill Gates, the billionaire founder of Microsoft, also seems to be neutral to bearish on the cryptocurrency.
The entrepreneur recently told the Wall Street Journal that he thinks the Bitcoin could be used to facilitate tax avoidance and illegal activity, repeating widely disputed and criticized views on the cryptocurrency that he has stated over the past several years:
“I don’t own Bitcoin. I’m not short Bitcoin. So I’ve taken a neutral view. I do think moving money into a more digital form and getting transaction costs down, that something the Gates Foundation does in developing countries. But there we do it so you can reverse the transaction, you have total visibility of who’s doing what, so it’s not about tax avoidance or illegal activity.”
Crypto market reaches clarity on Tether stablecoin
By far, one of the most controversial subjects in the Bitcoin and wider crypto markets over the past few years is the one around the legitimacy and viability of Tether (USDT), the stablecoin issued by iFinex.
USDT is a U.S. dollar value-pegged stablecoin, meaning USDT always trades at or near $1. IFinex claims on Tether’s official website that that all USDT tokens are 100% backed by the firm’s reserves, a combination of fiat currency and other assets. It is also by far the most popular stablecoin in the market, used as the primary trading pair asset across many crypto exchanges. USDT is also a top cryptocurrency by market cap — currently holding third place, with a market cap over $35 billion.
Historically, crypto market analysts have criticized Tether for failing to provide proof of its reserves in a third-party audit. The questions around Tether and the legitimacy of UDST’s reserves culminated in 2019 when New York Attorney General Letitia James involved the stablecoin and its issued in a legal dispute. The NYAG claimed that iFinex Inc. had violated that law by using funds that were supposed to be backing USDT for other purposes. The claim also involved Tether’s sister company, crypto exchange, Bitfinex.
This morning, Feb 23, the NYAG came out with a ruling on the dispute, stating that:
“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines…Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.”
As a result, Tether will have to pay $18.5 million in fines to the New York government, and Bitfinex and Tether have been banned from operating in the state.
Despite the ruling, many in the cryptocurrency space saw this as a positive outcome, likely because the possibility of settlement provides the industry with closure on the tense regulatory situation. Bitfinex, for its part, tweeted today that it continued to see the firm as not having broken the law, despite the NYAG ruling:
“After 2.5 years and 2.5M pages of info shared, we admit to no wrongdoing and will pay US$18.5M to resolve this matter.”
On-chain trends
Crypto data site IntoTheBlock indicates that Bitcoin is currently “mostly bearish,” with three out of seven of its core on-chain and exchange metrics currently printing “bearish” readings.
The bearish metrics are net network growth, large transactions, and futures market momentum. Two metrics are “bullish,” though, are “smart price” and “bid-ask volume imbalance,” indicating there is increased demand for bitcoin on spot exchanges such as OKCoin.
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