Bitcoin Moves #35 — A weekly review of what’s moving Bitcoin and crypto markets.
Bitcoin continued to face volatility this past week as the rally that started the year has continued to lose steam. On Sunday, the top cryptocurrency fell as low as $43,000, after reaching over $51,000 just last Thursday, as per OKCoin market data. The correction over the weekend was also marked by a strong drawdown in altcoins, especially in ETH.
The Bitcoin price has since recovered off the weekend lows, currently trading just over $48,000 against USD.
This recovery coincides with a slew of positive fundamental events for the cryptocurrency market in spite of the recent volatility over the past week and a half since BTC hit its all-time high of $58,000. These events include Goldman Sachs reopening its cryptocurrency trading desk, MicroStrategy continuing to increase financial BTC investments and Citi publishing a report on the crypto asset.
TL;DR
- Bitcoin continued to face volatility this past week, reaching $51K on Thursday before falling as low as $43K on Sunday
- The leading cryptocurrency has since recovered to trade near $48,000.
- The recovery in the Bitcoin price coincides with a slew of positive news this week already, with Wall Street firms supporting the asset in different ways.
Bitcoin price movements
- Current BTC price: $48,250, just shy of last week’s price of $48,800
- 24H high: $49,800
- 24H low: $47,076
- 24H change: +0.26%
- 24H BTC volume sits around $53 billion, down 55% from last week ($116 billion)
- Total circulating BTC: 18,643,043
- Total market cap: $886,961,376,482
- Bitcoin dominance: ~59.6%
- 30D high / low: $58,100 / $33,000
- 90D high / low: $58,100 / $18,400
- Bitcoin Volatility Index (BVI), 30D: 1.69%, up 7% over the past week (1.81%)
- Hash rate: 157.72 EH/s, up 5.3% over last week (149.74 EH/s)
- Network value to transaction ratio (NVT): 72.22
- U.S. dollar index (DXY): 90.78, up 0.7% from last week (90.12)
Goldman looks to restart Bitcoin and crypto trading desk
Reuters reported on Monday that Goldman Sachs is looking to restart its crypto trading desk and will open trading for BTC derivatives, according to someone familiar with the matter. The report states that the firm will launch Bitcoin futures and non-deliverable forward contracts, in the near future.
This new team within Goldman Sachs will work within the firm’s “Global Markets” division, the source added. Goldman Sachs intends on expanding the mandate of this desk/division to blockchain technologies as a whole and central bank digital currencies. Along with this, Reuters reported that the investment banking giant also has plans to launch a Bitcoin exchange-traded fund, or ETF, which is a product that has yet to be approved in the United States, despite repeated applications to regulators. The firm will also reportedly be exploring digital asset custody, which will likely work in tandem with that proposed fund.
Reports that Goldman was exploring the idea of opening a cryptocurrency trading desk first surfaces in the fall of 2017. A year later, media reported that the firm had dropped the idea, citing regulatory uncertainty.
Goldman Sachs’ decision to delve back into Bitcoin comes amid a concerted push by Wall Street firms to involve themselves in the crypto asset space as it moves steadily toward mainstream acceptance.
Fidelity exec calls BTC “digital gold”
Speaking of Wall Street support, an executive at Fidelity Investments, one of the world’s largest asset managers, recently came out in support of Bitcoin.
In a 12-page report titled “Understanding Bitcoin White Paper,” Jurrien Timmer, Fidelity’s Director of Global Macro, explained that he thinks that Bitcoin should be treated as a form of digital gold that can act as a hedge against monetary inflation:
“With interest rates close to zero—or negative—and central banks printing money like there’s no tomorrow, is it any wonder that bitcoin seems to be having its day? The global monetary debasement story has a new protagonist, as well as fresh catalyst, in the form of COVID stimulus.”
Timmer elaborated in his report — published on Feb 19 — that BTC’s limited supply naturally makes it a potential inflation hedge. He tweeted a link to the report on Monday, stating “bitcoin has evolved to the point that it could be treated as a form of digital gold.” The executive specifically cited the stock-to-flow model, arguing that Bitcoin’s valuation is somewhat correlated with the amount of new supply that enters the market each year.
In 2018, Fidelity Investments rolled out an institutional service provider for the crypto market, Fidelity Digital Assets, that allows institutional players to obtain exposure to Bitcoin. The firm’s CEO Abigail Johnson has also long been a public supporter of the leading digital asset.
Citi thinks Bitcoin is on the verge of mass adoption or a “speculative implosion”
Prominent American bank Citi thinks Bitcoin is on the verge of adoption, or, if things don’t go according to plan, a “speculative implosion.” The bank’s research division released a new report early this week that indicated that Bitcoin could one day “become the currency of choice for international trade” as a result of firms like Tesla and PayPal embracing the digital asset as a medium of payment and investment.
The firm elaborated that the entrance of institutional investors into BTC has validated the asset, namely as a store of value.
While Citi appears to be largely positive on Bitcoin, the firm thinks that there are signs that there are roadblocks to the mass adoption of cryptocurrencies.
“For institutional investors, these include concerns over capital efficiency, insurance and custody, security, and ESG considerations from Bitcoin mining,” the report reads.
MicroStrategy continues to bet on Bitcoin
MicroStrategy continues to bid Bitcoin. The business services firm based in the U.S., which already holds billions of dollars worth of the cryptocurrency, has added more to its treasury’s balance sheet.
The firm published an SEC filing yesterday, March 1, indicating that it has used an additional $15 million in cash to purchase bitcoin at an average price of $45,710 per coin. Bitcoin is currently trading above the price it purchased the latest tranche of the cryptocurrency at.
MicroStrategy has been the largest corporate supporter of Bitcoin over the past six months after making the cryptocurrency its primary treasury reserve asset in August 2020 and acquiring a total of 90,531 BTC (~4.3 billion) since the summer.
As we reported in a previous edition of Bitcoin Moves, the firm raised $1 billion worth of capital from investors in MicroStrategy bonds. On Feb 24, the firm announced its successful purchase of 19,452 BTC for approximately $1.026 billion.
On-chain trends
Despite the exceedingly bullish news from the world of institutional investment, crypto data site IntoTheBlock indicates that Bitcoin is currently “mostly bearish,” with four 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, and concentration. The “bearish” concentration indicator may suggest that there are whales or larger holders currently selling their tokens. There are “bullish” signals though, including the smart price and bid-ask volume imbalance indicator, indicating there is increased buying activity in the bitcoin markets.
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