Bitcoin Moves #40 — A weekly review of what’s moving Bitcoin and crypto markets.
This week has been, by Bitcoin’s standards, relatively quiet. The leading digital asset has remained in the $57K to $59K range most days. A lot has been going on under the surface though, and most investors remain bullish on BTC’s prospects for the coming months.
While the total market capitalization of all cryptocurrencies has climbed above $2 trillion, Bitcoin’s has remained just above $1 trillion — about 10% of gold’s market capitalization. Analysts are now speculating how much of gold’s lunch Bitcoin could end up eating (seems like probably a lot).
In other news this week, a bunch of high profile finance and crypto companies have joined forces to push for Bitcoin-friendly regulations in the United States, which could let even more institutional money pour into the market.
TL; DR
- Retail and institutional investors alike eye even higher BTC prices.
- Bitcoin could be on its way to surpassing gold’s market capitalization.
- The push for favorable Bitcoin regulations begins in the U.S.
Key Bitcoin metrics
- Current BTC price: $56,600 (-3% on the week)
- 7D low / high: $56,169 / $60,150
- Total market cap: $1,062,629,874,270
Institutions and traders target even higher Bitcoin prices
Where is the market headed, after this somewhat quiet week? Well, the CME — a leading derivatives exchange used by institutional investors — has a 13% annualized premium rate on its Bitcoin futures contracts. The average rate on retail-focused derivatives exchanges is even higher, oscillating between 22% and 25%, Coindesk reports. This rate is a measure of how bullish traders are on the asset and the higher rate indicates that plenty expect BTC’s price to keep rising. A slew of analysts have indeed recently announced bullish targets:
- A Bloomberg report published this month sees Bitcoin going to $80K in the second quarter of 2021.
- JPMorgan reportedly set a target of $130K, if it were to reach parity with investments in gold from private investors.
- Back in November, when the BTC price was at $18K, Hong Fang, OKCoin’s CEO, had made the case for $100K Bitcoin.
Is Bitcoin going to eat gold’s lunch?
Bitcoin is often called a form of “digital gold” and both assets are often compared for their potential as hedges against the inflation of fiat currencies. With BTC’s recent price surge, it’s worthwhile to look at how it relates to that of gold. Here are three recent facts to keep in mind:
- In early April 2015, one Bitcoin was worth 0.2 ounces of gold. In April 2020, it was worth 4.2 ounces of gold. As of early April 2021, 1 BTC is 32.6 ounces of gold.
- Galaxy Digital CEO Mike Novogratz admitted his original target of Bitcoin reaching 10% of gold’s market capitalization (placing it at roughly current level price of $60K) was too conservative. He said last week that he expects the cryptocurrency to reach a higher market capitalization than gold — the new BTC price target thus becoming $600K.
- Crypto asset analyst Yassine Elmandjra from New York investment firm Ark Invest agrees with Novogratz’s target, stating that Bitcoin could “capture[] a lot of gold and market share, and more.”
The push for favorable Bitcoin regulations begins in the U.S.
The CEO of Goldman Sachs, David Solomon, told reporters yesterday that his firm is looking at Bitcoin “in a very proactive way.” The range of services the bank can offer is significantly constrained by regulations however, and Solomon added he expects a “big evolution” to occur on that front in the coming years.
Meanwhile, Fidelity, Square, Coinbase and investment firm Paradigm have joined forces to create the Crypto Council for Innovation (CCI) to tilt that regulatory evolution in a Bitcoin-friendly way. The goal of the CCI, according to a report from the WSJ, is indeed to help policymakers understand the importance of innovation in the crypto industry and craft regulations favorable to its growth.
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