JPMorgan Strategists Find Current Bitcoin Price “Unsustainable,” says Retail Demand Is Pushing It

JPMorgan Strategists Find Current Bitcoin Price “Unsustainable,” says Retail Demand Is Pushing It

The retail demand, which has been strong since January, is showing no signs of abating.

As Bitcoin surpasses $52,000, JPMorgan Chase & Co. strategists are back at calling the current price of the cryptocurrency “unsustainable,” saying the volatility needs to ease to prevent the rally from fizzling out.

The market cap of Bitcoin has reached above $977 billion, rising 1.8x in just over two months.

In the last five months, the market value of the leading cryptocurrency has risen by more than $700 billion while the aggregate institutional inflow was only around $11 billion, strategists led by Nikolaos Panigirtzoglou wrote in a note Tuesday.

It may be limited supply and the retail demand, which “remains strong with no signs of abating,” pushing up the price, they said.

While there is an increase in interest from real money investors, speculative investors seek to front-run it. And retail inflows have significantly magnified the institutional flow, notes the strategists.

Not only the US retail impulse, strong since January, has been a driving force for bitcoin but also for equities.

“Movements since January this year appear to have been more influenced by speculative flows,” the team said.

Grayscalebitcointrustflow

Source: JPMorgan Report

This “remarkable” jump means that Bitcoin has “already” surpassed gold in risk capital terms, and looking at the biggest bitcoin and gold funds — the 3m realized vol for the Grayscale Bitcoin Trust stands at 113% vs. 16% for GLD, the largest gold ETF by AUM.

Given that bitcoin, at current market prices, has more than doubled relative to gold in risk capital terms, JPMorgan finds Bitcoin prices “unsustainable.” The last time they felt the same was when BTC was at $48k.

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Author: AnTy

Not Having Bitcoin in your Portfolio has Now Become a ‘Career Risk’ Says CoinShares Chairman

Bitcoin has entered a new era, said Danny Masters, former J.P. Morgan Commodity trader and current chairman of CoinShares in a recent interview with CNBC’s ‘Power Lunch.’

According to Masters, this has been largely due to the global pandemic which increased the need for inflation-resistant investments. Bitcoin is further driven by digitization because it is a digital store of value and people are looking for that, he said.

Additionally, it is driven by the fact that people are now accepting its volatility which is not only declining but the volatility of other asset classes has proved to be a lot more than people expected, added Masters.

He also pointed to CoinShares’ research which talks about four percent allocation to bitcoin in a traditional balanced portfolio having performance and diversification benefits. Masters said,

“There is definitely a narrative at the moment that this so-called this sort of perceived career risk of having bitcoin in your institutional portfolio as a portfolio manager is fast migrating into a career risk for not having bitcoin in your portfolio and that’s a really stunning development.”

Demand-pull effect

Talking about the overall current environment, Masters said that the “sentiment is electric” in the market.

For this, he mentions the world’s largest asset manager BlackRock’s CEO, Larry Fink who recently pointed out the enormous interest that they have been sensing over its social channels and websites.

Fink in his conversation with former Bank of England Governor, Mark Carney shared that the hits on the BlackRock website were 3k on COVID, 3k on monetary policy, and 600k on Bitcoin.

Bitcoin has caught the attention and imagination of many people and they are “fascinated” and “excited” about it, said Fink. Although it is still untested and pretty small relative to other markets, it can possibly evolve into a global market, he added.

We look at it as something that is real but it is still untested and it has to go through many markets to see if it is real, said the CEO of the asset manager which has about $7 trillion in AUM.

He further went on to say that having a digital currency has a real impact on the digital dollar as they make the need for the US dollar less relevant. Digital currency also brings down costs quite considerably according to Fink but he added that it needs to be organized and governed and be a component of government policy worldwide.

“That’s the demand-pull effect,” said Masters referring to Fink’s change of tune, adding that companies like Square, MicroStrategy, and PayPal are outperforming the market because they are going public with their exposure to Bitcoin.

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Author: AnTy

Ethereum Developers Set to Release ETH 1.x “Berlin” Hard Fork in January After Delays

The Berlin fork stands as a hard fork of the current ETH 1.x proof-of-work (PoW) blockchain. This system-wide upgrade includes low-level changes to improve the original mainchain while ETH 2.0 is still under development. At first, the planned launch was to be in July but pushed back to summer thanks to a perceived need for higher client diversity, alongside clients and employees experiencing burnout.

Geth Ruling The ETH Nodes

In particular, devs highlighted Geth, which stands as one of 11 client specifications. Even so, 79% of all Ethereum nodes operate on it, having gained 5% since December last year. As such, developers have a serious concern that some critical bugs could develop thanks to the rolling updates to ETH 1.x, which itself is gearing towards a complete transition to a Proof-of-Work (PoW) consensus algorithm.

Péter Szilágyi stands as the team leader for Geth and gave a statement last Friday about the matter. He highlighted that it’s critically important that this update is done right, seeing as Geth is the majority of the network. Szilágyi stated that the ETH team couldn’t afford to not be correct about this matter.

Rushing Could Lead To Disaster

As a result, the update needed to be delayed to ensure that the entire thing will operate smoothly. With the five languages listed by the Ethereum foundation, 11 clients in total, a small niche or nuance for the one client can quickly turn into a catastrophic bug if not appropriately investigated.

Ever since, the process of including various Ethereum Improvement Proposals (EIPs) and determining which one will end up in the hard fork, has seen a significant shift.

Changing Of EIP Lineups

At the original launch plan in June, Berlin was scheduled to add three EIPs. The first was EIP-2315, which held simple subroutines for the EVM. The second was EIP-2537, which would add BLS12-381 curve operations. Lastly, EIP-2929 would see gas cost increases when it comes to state access opcodes.

Now, however, things have changed. EIP-2537 will now not be included within the Berlin update. EIP-2537 will make it possible for the ETH 1.x and the ETH 2.0 blockchains to speak with each other, thanks to similar cryptographic setups.

The remaining EIPs will see a new life, as it will now be included within the YOLO v3 short-run testnet, which is set to release within the next few weeks.

It should be noted that EIP-1559 and other important EIPs that would restructure the transaction model of Ethereum will now no longer be included within the Berlin update.

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Author: Ali Raza

Fidelity Report: Trillions of Dollars Could Flow into Bitcoin as a ‘Unique’ Alternative Investment

The current macro environment is the best scenario for bitcoin; it is exactly what the digital currency needs.

As Fidelity notes in its latest report on “Bitcoin Investment Thesis,” bitcoin as a unique investable asset is gaining a lot of traction, which is to increase in response to the Federal Reserve cutting their benchmark interest rate to zero or negative.

“In a world where benchmark interest rates globally are near, at, or below zero, the opportunity cost of not allocating to bitcoin is higher,” reads the report by Ria Bhutoria, the Director of Research.

What makes bitcoin an attractive alternative investment is its low correlation to traditional assets.

BTC, being uncorrelated to other assets because of its dynamic narrative, being a young asset, and favored by retail investors. As such, it makes all the sense to invest in Bitcoin.

When it comes to retail, it has more to gain as the retail investors’ channel for financial information and advice shift to Twitter, Reddit, Telegram TikTok, and YouTube, a new wave of retail investors “will undoubtedly flow to bitcoin and other digital assets.”

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As a matter of fact, the report found that “The annualized returns of portfolios with an incrementing allocation to bitcoin outperformed a portfolio with no allocation to bitcoin over all time horizons displayed here, ending in September 2020.”

Given the growing interest in alternatives amidst low yields, overvalued equities, and the potential for funds to flow from fixed income into other asset buckets, it is beneficial to have BTC as a component of the alternative bucket.

With a market cap of just $210 billion, it is a drop “in the bucket compared with markets bitcoin could disrupt,” such as a store of value, alternative investments, and settlement networks.

The alternative investment market was sized alone at $13.4 trillion in 2018, as per the CAIA Association. If BTC were to capture even 5% of it, it would equate to an incremental $670 billion growth in its market size, and a 10% growth would take it to over a trillion dollars.

Also Read: Asset Manager, Stone Ridge, Buys 10,000 ($115M) Bitcoin as its Treasury Reserve Asset

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Author: AnTy

YFI’s Andre Cronje: Greed & ‘A Whole New Ponzi’ We Came Up With is Behind DeFi’s Insane Growth

  • “The current massive influx (in DeFi) is purely because of this new greed cycle that we’ve created seemingly out of thin air,” said Andre Cronje of yEarn.
  • Decentralized Finance (DeFi) is flying with more than $9 billion of total value locked (TVL) in this sector.

There is no doubt about the ongoing DeFi mania, which is glaringly obvious, especially in the way the unaudited protocols are locking in billions of dollars in less than a week of their launches.

Not to mention the skyrocketing prices of these DeFi tokens.

So, what is exactly driving this massive growth?

Greed is a pretty simple answer that has come right from the mouth of the horse. Cronje, the founder of DeFi darling YFI, the governance token of Yearn Finance in his interview with Chainlink said,

“I mean, the reason there’s such a massive influx of money right now is because people are making money in insane amounts and the reason they’re making money in insane amounts is because we came up with a whole new Ponzi.”

And the Ponzi, Cronje is talking about here is governance tokens, “which is this wonderful way where we give away free worthless tokens that for some reason people buy.”

The next wave then buys it so that the first wave can sell it, a cycle that then just keeps on repeating, while the token continues accruing more and more value.

YFI token gained popularity and a cult-like following for its most decentralized approach — zero supply, zero value, no VC funding, and no tokens allotted to the management.

The token hit an all-time high of $38,865 on August 31st, after its launch just over a month before that.

Also, “how economics work is that money comes to money,” shared Stani Kulechoiv, the founder of another popular DeFi protocol Aave.

It is “fake exposure” with those with capital deploying it in different protocols, minting tokens, and then selling them to those with only sufficient capital to buy them.

“It’s not fair,” for sure, but this is like the financial system, and “that’s how the market works,” Kulechoiv said.

The Real Thing

While all of this is making people wealthy by insane amounts, “it’s not the sustainable part of DeFi,” said Cronje.

But underneath it, all are also the protocols that are accruing value like the Synthetix ecosystem, Aave ecosystem, Compound, and the supporting tools like Chainlink. He said,

“These are the real things accruing value because they’re the ones that are going to be here in a year from now when this greed phase is over.”

According to Kulechoiv, in Synthetix or Yearn, one is optimization yields — using technology to get rid of efficiencies — and “that’s like the real growth that is happening.”

There’s substantial growth in things that we’re building, but then there’s the noise on top of them. It’s a dilemma in finance because the noise will always be there when people enter into financial markets with less knowledge, and they have to pay for that knowledge by actually buying things from other people, explained Kulechoiv.

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Author: AnTy

Bitcoin (BTC) Has A “Really Good Chance” Of Becoming A Global Reserve Currency, Analyst Says

Bitcoin (BTC) is increasingly gaining its fame as a favorable replacement to the current fiat backed monetary systems. One of the latest top personality to speak on the potential of BTC posing a threat to the current financial world is top selling author and financial analyst, Max Keiser.

An interview by Max Keiser on RT to CEO of e-commerce company BuildDirect, Jeff Booth, revealed the current challenges in the financial system and the importance of digital assets such as Bitcoin.

Bitcoin likely to become world reserve currency

The increasing global expansionary monetary policy led by the Federal Reserve’s $4.3 trillion monetary injections into the economy is raising tension on possible widespread inflation. Bitcoin is built to solve such challenges in the current legacy financial systems through its deflationary policy and Booth believes this may propel it into a world beating reserve currency.

“First of all, I see Bitcoin as a likely, a very likely candidate for a world reserve currency. So, I see it has a really good chance of winning over time as it works on a network effect.”

As the value of fiat currencies erodes due to governments expansionary policies, Booth said the need for a better system will emerge. He further said,

“Bitcoin seems to be that one that’s emerging as something that people trust more.”

Founder of BlockchainEDU, Jeremy Gardner, recently weighed in on the current value that Bitcoin holds against a failing financial system. Gardner tweeted,

So what are the predictions for Bitcoin?

Bitcoin (BTC) dropped below $9,000 for the first time in three weeks causing a bearish mood over the current market. The volatility of the top crypto coin has always been a factor to focus on and a number of analysts have made their predictions.

Chris Burniske, Partner at Place Holders, a decentralized applications VC firm, predicts a $1 trillion dollar market cap for Bitcoin, a sizable amount to be considered a global reserve. Reaching this level will require the price of Bitcoin to touch $50,000, or approximately a 450% increase from current market price.

While the long term prospects of Bitcoin look bullish, the price of BTC in the near term may drop to $6000 level after a fake breakout to $10,400 at the start of the month, BEG reported.

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Author: Lujan Odera

Gold Breaches $11 Trillion, Bitcoin’s Annual Issuance Rate at Parity with Gold

In the current macro backdrop, both bitcoin and gold have recorded an increase in their prices.

Earlier this month, macro investor Paul Tudor Jones said bitcoin reminds him of gold in the 1970s and that bitcoin is the best bet in the ‘The Great Monetary Inflation.’

Talking about the hedge against the inflation which he sees coming from central bank money-printing, he bets on gold and treasuries with a “growing role for Bitcoin.”

American billionaire hedge fund manager Paul Singer in his April investor also said the fair value of gold in the current macroeconomic environment is “literally multiples of its current price” and “one of the most undervalued investable assets existing today.”

Recently, gold’s market cap breached the $11 trillion mark.

In the coming years, the market size for non-sovereign stores of value is expected to expand dramatically which spells good for bitcoin as well.

Recently, Bitcoin underwent its third halving, which reduced its annual issuance rate at 1.8% to parity with gold. And this has been while the top four central banks alone printed a combined $4.1 trillion over the past three months to fight off the effects of Covid-19.

btc vs gold halving
Source: MessariCrypto

“There are few opportunities with as much asymmetric upside as Bitcoin if it were to become successful,” noted Messari in its latest report.

Bitcoin with its sovereignty, secular tailwinds, and upside is an attractive option however, it has a long way ahead as to reach gold’s current market cap, the digital currency needs to rise 63x from its current levels.

[Also Read: Professional Money Managers Loading Up on Bitcoin Post Halving]

New banks are what matters more?

In the first quarter of 2020, central banks have been printing money relentlessly and slashed the rates to zero.

The lower rates affected the banks which eat into their interest margins as such various financial stocks are sitting at near YTD lows.

If we look at the traditional old banks, the likes of Goldman Sachs ($59 bln), Citigroup ($87 bln), and Western Union ($7.5 bln) are at their 3 to 5 years low while Wells Fargo at $95 bln market cap is at its 10 year low.

Even Warren Buffet has been selling his banks’ stocks including that of Goldman Sachs, JPMorgan Chase, U.S. Bancorp, Bank of New York Mellon, Wells Fargo, and Bank of America.

Bitcoin meanwhile with a market cap of $170 bln is up 25% YTD but still down 54% from its ATH in 2017.

“Maybe banks make the old economy worse, and FinTech (including digital assets) makes it better?” said Jeff Dorman, CIO at Arca.

But not just bitcoin, new finance companies like Paypal, Stripe, Square, and even stablecoins are making new highs or are near their peaks. As analyst and investor Howard Lindzon said,

“People say markets can’t move higher without the financials (banks) but maybe the new ‘banks’ are what matter more.”

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Author: AnTy

Steem Freezes $5 Million of 64 Hive Users Funds in Coordinated Hard Fork Today

  • Steem Blockchain’s hard fork on May 20th has been lauded by current Witness Group Triple A as essential to ensure network stability. However, some of the users are opined that these are punitive measures to those that did resist the Sun’s takeover bid.

The Steem project has been thrust into the spotlight yet again. This is as an oncoming hard fork on May 20th will see some users accounts frozen and lose up to 23.6 million STEEM valued to be well over $5 million.

The Tron CEO, Justin Sun acquired the SteemIt blogging site towards the end of the last year. Then was involved in a hostile takeover for the Steem Blockchain despite widespread criticism from the Steem Community.

Hostile Takeover

The Delegated Proof of Stake (DPoS) protocol allowed the takeover as the SteemIt Blog owned about a fifth of the total STEEM tokens. This combined with key support from Binance, Huobi and Poloniex was enough to rally their weight (about 45.6 Million STEEM) behind new witnesses in a bid to get rid of ‘rogue actors’. This was seen as an attempt to quell the soft fork within the Steem Blockchain and resulted to some staunch Steem users retreated to their new Blockchain namely the Hive.

The witness group, Triple A recently highlighted that the imminent update will only target those that are deemed a direct threat to the Blockchain. They cited that this would be crucial in ensuring the Network was stable and improve the Steem Ecosystem.

“Publicly attacking users, collecting personal information, threatening murder… spreading fake news, and damaging network stability.”

Punitive Measures to Hive Defectors

However, some share the sentiment that these are just some of the punitive measures Sun is rolling out for those who opposed his takeover bid. This and the fact that majority of Hive’s users weren’t allocated any free token according ‘TheMarkyMark’ who was a witness prior to Sun’s takeover. A screenshot from a Steem employee stirred speculation that some user accounts would be victimized by the new update. The code that was released on May 19th confirmed this as it was seen to contain names of the supposed ‘rogue actors’.

The targeted users have not taken the issue lightly and have threatened all those supporting the hard fork with civil suits. Targeted users such as ‘They Call Me Dan’ and ‘pharesim2’ are set to lose $600,000 and around 80,000€ respectively if the hard fork is to go through.

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Author: Lujan Odera

Republican House Candidate Praises Bitcoin’s SOV And The Speed of XRP, DGB & NANO

  • Amid the current crisis that has affected the stock market greatly, U.S congressional candidate David Gokhshtein recently revealed to his Twitter followers that he will be hodling his Bitcoin.

David Gokhshtein has taken to his twitter account to discuss cryptocurrencies including Bitcoin (BTC), Ripple (XRP), NANO, and Digibyte (DGB) with much emphasis on Bitcoin. Despite the recent improvement in the stock market situation, he was stern on his decision of not planning to sell his Bitcoin and gave his followers reasons why.

David Gokhshtein once compared Bitcoin to gold. He explained that we might not incorporate it into our daily lives for carrying out our ordinary day-to-day activities. However, he added that we will probably see it attaining the same status as gold today which is a store-of-value (SOV).

Means of quick payment

In the thread, he mentioned Ripple (XRP), NANO, and Digibyte (DGB). He went ahead to praise XRP which is currently the third-largest cryptocurrency all over the world. He said that in his view XRP was faster than NANO. This wasn’t received well on the NANO end and he said that the NANO community was well mad at him after that.

He, however, clarified himself on that point saying that he didn’t label NANO as not good but only meant that XRP is faster. His followers related to XRP praised his positive comments over the currency. He also suggested that LTC and DGB be used as a means of quick payment.

Nothing is for certain yet

Crypto enthusiast and CEO of Galaxy Digital Michael Novogratz during a recent interview by CNBC showed his discontent on Bitcoin. He stated that he might as well give up on Bitcoin unless it hits $20,000 this year. The future of Bitcoin seems to be uncertain despite all the praises coming from people after the recent increase in price. From the most recent statistics, it has been recorded that Bitcoin has hit a three months low volume.

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Author: Lujan Odera

Another Horrific Day: Bitcoin Crashes to $8,630, What’s the Next Stop?

  • Support at current levels and price could go even lower to $8,200 but it is still a “normal bull market retracement level”
  • After the S&P 500 lost nearly $1.737 trillion in the past two days, it rebounds while gold seeing flight into the safe haven
  • Bitcoin and gold correlation over the past 30 days is negative indicating BTC has characteristics of both risk-off and safe-haven assets

The bears are holding strongly to the market as the prices took a hit yet again. Today, in yet another crash, Bitcoin price fell to $8,630 level briefly on Bitstamp and is currently teetering on the edge of $8,800, having broken through $9k.

The market is in deep red. Yesterday’s daily candle was closed below the monthly opening and now we have gone back to late-January levels.

“Heavier bids at 8.8k. I can stay solvent longer than the market can remain bearish. If it 8.8k caves, even heavier bids at 8.4-8.5k,” said trader CryptoGainz.

Altcoins to crash harder but expect to be completely wrong about Bitcoin

As bitcoin takes a fall, altcoins tanked. According to trader Cantering Clark, the “hard cold truth” is the altcoins that have been enjoying the rally until recently will “go on to make new lows, and repeat this pattern again.”

“As for BTC, always be prepared to be completely wrong. A lot of trading in general is about preparation. When Bitcoin drops there is much more reflexivity in price because no one really agrees on a fair value. Price is what determines value, overthrow is then tremendous,” said Clark.

Meanwhile, trader Nik Patel sees BTC dipping into the 200MA at $8,900 and reverse or further drop to the 360MA and take out the stops at about $8,200.

Support is looking weak at current level and though price could go even lower, is still a “normal bull market retracement level,” says analyst Bob Loukas.

Amidst this bearish scenario, analyst Mati Greenspan gave a dash of hope to bitcoiners as he states, “the retracement off the February peak actually looks like a bullish flag from this angle.”

Risky assets struggling during a flight into safe havens

In the stock market, the S&P 500 has lost about $1.737 trillion in value in the past two days, according to S&P Dow Jones Indices’ Senior Index Analyst Howard Silverblatt.

After a four-day losing streak, stocks opened higher across the board Wednesday with 10-year Treasury yield also retreating from its record lows.

Risk assets are struggling as coronavirus cases continue to climb steadily outside the epicenter in China.

“The ultimate impact remains entirely unknown at this stage,” said Eleanor Creagh, a Sydney-based strategist at Saxo Capital Markets. “And uncertainty is the enemy of conviction.”

Gold also rebounded on Wednesday after it hosted its biggest one-day decline in about four months. However, it has been expected that the safe-haven hasn’t reached its peak yet, with the possibility for another Fed rate cut by 25 basis points becoming certain.

“It is a typical flight into safe havens after the coronavirus has spread not only to the Asian countries but also to Italy and Middle East,” said Peter Fertig, an analyst at Quantitative Commodity Research.

Bitcoin both risk-off and safe-haven asset

Bitcoin is doing badly in the current environment, meanwhile, it has the arguments that the digital currency is a safe haven during turmoil has been shattered.

Coin Metrics also found that the correlation between Bitcoin and gold over the past 30 days has been negative, “adding evidence to the thesis that BTC only reacts to certain types of events and not others.”

One explanation to this could be that it COVID-19 is more of a macroeconomic shock than an uncertain geopolitical situation, meaning, “perhaps BTC has characteristics of both risk-off and safe haven assets with a truly unique reaction function.”

“Bitcoin just picks the status as an alternative asset when other things look crowded,” said Mark McCormick, global head of currency strategy at TD Securities.

Meanwhile, crypto data provider Glassnode says, as per MVR Z-score, there’s still much room for bitcoin to rise to. The MVRV Z-Score is used to assess when Bitcoin is over or undervalued relative to its fair value and at current value, it says there’s much room to grow for BTC.

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Author: Bitcoin Exchange Guide News Team