After dropping from the August high of $12,000 down to a low of $9,900 this week, it seemed like the bears had taken control of the market. But with a recent upturn in the price of BTC, can the bulls maintain the momentum from the past few days? In this edition of Bitcoin Moves we’ll take a dive into bitcoin price action and see what the future may hold.
Where is BTC going next? We want to know what you think— tell us on Twitter.
TL;DR:
- Bitcoin price has traded within a tight range for over a week, staying within the ~$10,000 and ~$11,000 range.
- MicroStrategy today announced the purchase of another ~17,000 bitcoin to add to their bitcoin holdings and MSTR increased 6.8% on the news.
- Jason Lau, OKCoin COO, told Coindesk that it seemed traders were in a “holding pattern” on bitcoin futures.
- Bitcoin hashrate is at an all time high, a potentially bullish signal
- More than $1 billion bitcoin have been tokenized in DeFi
- Conference of State Bank Supervisors (CSBS) announces consolidated regulations for cryptocurrency compliance in the US
Here’s your market snapshot:
All prices are in USD and time zones are PT.
Bitcoin price movements
MicroStrategy announces purchase of ~17K more bitcoin
Major institutional and corporate trading plays in the cryptosphere have been a recurring topic of discussion in recent Bitcoin Moves. Over the summer we documented a trend of accumulation of bitcoin by major companies including Grayscale and MicroStrategy, and even Canadian restaurant chain Tahini’s, converting their cash reserves into bitcoin.
Today MicroStrategy doubled down on their investment with the purchase of another 16,796 bitcoin, the equivalent of $175 million. CEO Michael J. Saylor announced on twitter that “on September 14, 2020, MicroStrategy completed its acquisition of 16,796 additional bitcoins at an aggregate purchase price of $175 million. To date, we have purchased a total of 38,250 bitcoins at an aggregate purchase price of $425 million, inclusive of fees and expenses.”
Microstrategy Stock (MSTR) Apr ’20 — Sep ‘20
Grayscale founder Barry Silbert responded to the news with his own tweet, commenting on the competing interest between the two companies to acquire Bitcoin: “Apparently there is some kind of bitcoin buying race between MicroStrategy and Grayscale… Game on.”
What does this mean for bitcoin’s price? In our August 21st blog post, Bitcoin, Microstrategy and Macro Price Trend, we discussed the many ways that these major purchases can affect price action of bitcoin in both the short and long term. In addition to its impact on crypto markets, it appears that the equities market is also experiencing the effects of this bitcoin acquisition. Microstrategy’s stock price jumped from ~$134 on August 11th, the day of the first purchase of bitcoin, to ~$155 at the time of writing, an increase of 15.6%. The stock again moved on the latest news of MicroStrategy’s bitcoin purchase, from ~$145 to ~$155, an increase of 6.89%. Microstrategy’s bitcoin cost average? $11,111!
Are we about to witness a competitive phase of bitcoin accumulation by American publicly traded companies?
CME Bitcoin Futures Gaps
Jason Lau, OKCoin Chief Operating Officer, recently told CoinDesk that he believes that “Bitcoin futures aggregate open interest has dropped $1 billion, or 20%, since the start of September. It seems traders are in a holding pattern. US markets have had a strong opening to start the week of September 9th, which pushed BTC price up 5%. It will be interesting to see what impact that has on open interest in the coming days.”
Open interest in bitcoin futures the past month.Source: Skew
However, Lau said a higher bitcoin price could mean an increase in futures interest. “It seems traders are in a holding pattern. U.S. markets have had a strong opening this morning, which pushed BTC up 5%, so it will be interesting to see what impact that has on open interest in the coming days.”
In a recent Coindesk market article regarding the stasis in bitcoin open interest futures, Daniel Koehler, Liquidity Manager at OKCoin, said that the $3.7 billion number “…represents a lot of indecision in the BTC market. I think many larger players hedged at these high price levels and are waiting for momentum to clearly go in one direction.” With bitcoin trading between ~$9,900 — ~$11,000 for over a week now, where is BTC headed next?
Bitcoin still could drop in price to fill the lower of two gaps in CME Group’s bitcoin futures market at $9,600. If bitcoin price does test that price, it is expected to encounter significant buying volume.
Where does bitcoin price go from here?
For the past 10 days, bitcoin has been stuck in a narrow trading range of $10,000 to $10,500, until today when it broke out at $10,900. While it tests this new price range, we are seeing a comparison in the stability of the largest crypto versus altcoins, which have experienced a significant contraction in the past month.
Cryptocurrency trader Josh Olszewicz tweeted on September 7th that if the price of bitcoin goes below $10k, we may see the price dip to the ~$8,100 range.
There are also bullish signs in the market that are showing a much longer upward trend. Bitcoin hashrate is at an all time high according to data from glassnode. When the bitcoin hashrate increases, mining blocks can become more expensive because there are more nodes, or miners, competing for block confirmations. A high hashrate can incentivize miners to hold, rather than sell, newly mined coins, which can reduce downwards pressure and raise the price floor. If price action is to follow on from the summer’s bullish trend, bitcoin will have to first retest the $11,200 price range before a continuation towards ~$12,000.
Bitcoin Hashrate January 2018 — September 2020
IntoTheBlock’s buy / sell data, seen below, is showing mostly neutral signals in the short term with the market trading in a tight ~$9,800 — $11,200 price range.
Still on the rise, volatility continues to provide trading opportunities as the Bitcoin Volatility Index increases 54.73%, from 0.95 on August 14th to 1.47 a month later, seen in the chart below. Volatility is good for traders because it provides wide ranges to take profits, either by shorting or longing positions, or through spot trades.
30 day Bitcoin Volatility Index
In the news
More than $1 Billion in Bitcoin has been tokenized for DeFi
With the growth of DeFi comes the growth of tokenized Bitcoin as an asset class. DeFi pulse reports that ~ 98,000 Bitcoin have been tokenized on DeFi protocols since 2019, roughly equalling $1 billion USD. WBTC, YFI and REN VM lead the tokenized Bitcoin assets with $1.6 billion total value when combining locked USD, ETH and BTC.
48 U.S. states will soon be releasing a consolidated regulatory framework for cryptocurrency company compliance that is intended to streamline access for companies like OKCoin to operate. With regulatory guidance of the SEC provided by Hester Peirce and now this move by the CSBS, expansion of legal, centralized trading platforms will soon become a reality for almost all of the United States.
‘Gold is dangerous’: Why Jim Cramer will invest 1% of net worth in Bitcoin
CNBC Mad Money host Jim Cramer plans to invest 1% of his net worth in Bitcoin because “gold is dangerous.”
Recommended reading
OKCoin is exploring listing DeFi assets: OKCoin is actively reviewing 18 DeFi assets for listing on the exchange within the coming days.
