“Fear” in The Crypto Market And Bitcoin’s Correlation With S&P 500 Climbs to Highest Level of 2021

Crypto assets are not really having a good time, with Bitcoin stuck around $56,500 and Ether below $4,300.

But crypto assets are not alone in that as speculative stocks aren’t any different as losses picked up in very-high-priced technology names as the bond market started to price in higher odds of rate hikes next year following President Joe Biden picking Jerome Powell for a second term as the Federal Reserve chairman.

“The big-cap tech names have become synonymous with the risk-on/risk-off trade. When the big-cap tech names move in a significant way, other risk assets move in tandem,” said Matt Maley, chief market strategist for Miller Tabak + Co.

This has the 100-day correlation coefficient of Bitcoin and the S&P 500 climbing to 0.33, which is among the highest readings of the year.

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A coefficient of 1 shows a strong correlation, while minus-1 would show they’re moving in opposite directions. The current figure means when stocks move up, Bitcoin is likely to do the same, and vice versa.

“The recent drawdown in Bitcoin and the rest of the cryptocurrency ecosystem has been tied to the selloff in the more risky growth names,” Art Hogan, chief market strategist at National Securities. “So you’re seeing cryptocurrencies come off, and you’re seeing the high-flying growth names come down.”

The lack of bullishness in the crypto market, except for particular crypto-assets, has the market sentiments turning to “fear,” as per Crypto Fear & Greed Index.

While some may feel this might be the end of the crypto market, others believe this could be a sign of an extended cycle.

“It’s very possible “extended cycle” could partially play out. Bitcoin could top early January or whatever. ETH a bit later on. Alts in April and maybe DeFi even separately from other alts. Not everything must converge on one top point in time,” said popular crypto investor @bitcoinpanda69.

Currently, there are a few potential factors that are playing a part in the market weakness, including a shifting macro outlook and crypto market conditions.

Within crypto, as price drops, open interest for BTC and ETH, which is a proxy for leverage, has “started to decrease as pressure is placed on existing long positions,” as per Coin Metrics.

As for Bitcoin miners, who are natural BTC sellers, their selling pressure has been minimal and is trending lower. Moreover, they use OTC desks to minimize their impact on the price. Recently, miners have started to HODL their BTC mining rewards.

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On a macro front, with the US bond yields, especially with shorter-duration maturities, on a sharp rise over the last few weeks, capital might be reshuffling from riskier crypto assets to a “risk-free” rate of return.

Amidst all this, JPMorgan Chase CEO Jamie Dimon couldn’t help but poke at cryptocurrencies. “It is not really a currency,” Dimon said at the Boston College series of CEO interviews.

These “crypto tokens” have no intrinsic value and have rallied on speculation fueled by government stimulus payments, he said, adding, “It is hysteria.”

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Author: AnTy

GBTC has Greater Market Penetration than the Most Popular S&P 500 ETF

Last week, Bitcoin hit a new high on several cryptocurrency exchanges, but it has been stuck in a range since then.

At the time of writing, BTC/USD has been trading around $19,000 with $1.86 billion in trading volume.

However, the digital asset is still up over 167% run-up YTD and made an all-time high weekly close over the weekend.

As we have been reporting, unlike the retail-driven bull run of 2017, 2020 is looking more institutional driven where the financial industry is playing a bigger role.

“The multitude of regulated crypto exchanges and custodians has eliminated the ‘career risk’ for institutional investors,” PwC’s Hong Kong-based Global Crypto Leader Henri Arslanian said in an interview with Bloomberg.

“In 2017, there was retail FOMO. The question is whether we will see institutional FOMO in 2021.”

GBTC’s the Way to Go

According to JPMorgan Chase strategist, Grayscale Bitcoin Trust (GBTC) points to the institutional demand, taking the crypto market beyond millennials’ retail demand.

GBTC’s “exponential” growth, which has swollen to over $10 million from $2 billion in Dec. last year, suggests that institutional investors like family offices and asset managers played a bigger role in the recent rally, a team of JPM strategies led by Nikolaos Panigirtzoglou wrote in a note.

GBTC is currently trading at a 27.52% premium to the price of Bitcoin.

The firm saw about $720 million of inflows in the third quarter, 81% of which came from hedge funds. According to Michael Sonnenshein, managing director of Grayscale Investments, the size of investment allocations is also growing.

GBTC actually stands out as a market leader in terms of market penetration, as per TradeBlock. GBTC’s AUM is just shy of 3% of the total BTC market cap, which is much larger than other investment trusts and ETFs in different markets. GBTC is followed by the most popular S&P 500 ETF, SPY, at 1.25% market penetration.

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Last month, Guggenheim Partners reserved the right for its $5.3 billion fund to invest in Bitcoin via GBTC.

“Institutional investors are keen on portfolio construction in the wake of Covid, and the ways they need to reposition themselves given how governments have injected stimulus into the system,” said Sonnenshein.

Compared to $52 trillion funds managed by institutional investors, the Bitcoin market at $355 billion and the crypto market at $570 billion are still very small.

But as legendary investor Paul Tudor Jones himself said, because of this gap between Bitcoin and the market of equity, gold, and other assets, the digital asset has immense potential for growth and upside.

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Author: AnTy

Get Ready for Some Action as Bitcoin Volatility Hits Historical Lows

Markets are boring right now, with not much going on.

Bitcoin is stuck around $10,700, while altcoins are oscillating between red and greens.

Basically, “all markets, including our beloved digital asset space, seem to be going nowhere fast,” said analyst Mati Greenspan.

After having a blast for about half of the year, even stocks are uncertain thanks to the upcoming elections next month.

September was actually marred with worst monthly performance since March as the broader digital assets market and equities all closed in losses. But according to Greenspan,

“Stocks remain overvalued because there’s too much money in the system that needs a home, and the lower-risk alternatives are no longer attractive.”

While the leading digital asset ended Sept. and opened October both on a negative note, at least for the S&P 500, there were some gains.

While the risk-asset rally may have legs still in this last quarter of 2020, for bitcoin, it might be time to make up for all the losses and move towards beating the 2019 high of $14,000.

“Q4 is where BTC typically makes most if its gains during bull markets. I don’t think this year will be an exception,” stated one crypto trader.

On a Downtrend

While the price isn’t doing anything, for some time now, trading volume has been the one that’s been really disappointing. Bitcoin volume, which is on a downwards trend actually hit the lowest since late February on Saturday.

“The volatility in the market is back at historical lows, and it is not unlikely that we get some more action in the market soon,” noted Arcane Research.

The 180-day volatility has fallen to a two-year low, but according to on-chain analyst Willy Woo it actually spells “bullish.”

“When volatility is at a minimum, it means trade volumes are at a low, which means exchange fees revenue are at lows, which means exchanges sell less BTC profits to fiat, which mean investor buy pressure dominates the next move,” he explained.

Volatility reaching low also means buyers have laid down a floor on spot markets as they continue to accumulate, which ultimately leads to accumulation bottoms as “this stops downward moves and lowers volatility,” added Woo.

However, what’s worth noting is that when BVOL (30-day realized volatility) hit its lowest in 2018, it was followed by the start of the 50% November crash.

Volatility will be coming if not in the near term, then the less than a month away US Presidential elections will surely get the ball rolling.

On an Uptrend

Several indicators, meanwhile, are painting a bullish picture.

To start with, “The Market Cap to Thermocap Ratio suggests that Bitcoin has massive room to grow from here. It has not even started to show the sharp increase that is typical in bull markets. Current levels are a whole order of magnitude away from previous BTC tops,” as per Glassnode.

Thermo cap is the aggregate amount of bitcoins paid to miners, which serve as a proxy metric to the true capital flow into the Bitcoin network.

Bitcoin addresses are also telling a bullish story, moving away from the usual norm of 5-10k new BTC addresses per day; last week, it grew to its highest level in over two years, peaking above 22k.

Not to mention, Tether’s market cap is ready to burst through $16 billion as well, just three and a half months after hitting $10 billion.

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Author: AnTy

Altcoins Crash as Bitcoin Plummets Under $10,600; Overall Crypto Market Looks Pretty Bad

Bitcoin has been stuck around $11,000 since the middle of last week, very slowly moving upwards. Until today that is. The digital asset went down 3.7% to as low as $10,538 in a sudden move.

Trading around $10,600, BTC is in the red on the back of $1.2 billion ‘real’ volume. Top altcoins are also moving in tandem with the leading digital currency and recording losses between 5% to 16%.

Ether also dropped by more than 6% to nearly $355. According to trader Benjamin Blunts, the digital asset could further plunge to $320 level. “Eth is still very close to rolling over imo, the whole market looks pretty fucked tbh,” he said.

While CREAM (-35%), RUNE (-30%), and bzrx (-27%) are among the top losers, SASHIMI (+42%), Hakka (18%), and Orchid (+17%), are the biggest gainers.

Volatile Coming

Altcoins continue to react violently whenever bitcoin makes a downward move. And bitcoin itself remains vulnerable to equity market movements. When it comes to S&P 500, it can be a source of great price volatility with not only the most contested election in US history coming, but the passing of the Supreme Court Justice Ruth Bader Ginsburg over the weekend has only thickened the plot.

Besides the macro-environment this week, we will see more than 80k BTC option contracts expire, which could further open the doors to more volatility.

Over the weekend, Bitcoin dropped just under $10,800 only to move back up at the beginning of another week, much like other times, only to get dumped.

“We’re trading in the middle of nowhere ($11.5k resistance, $10.6k support),” said analyst DonAlt.

Meanwhile, Fundamentals Shoot Up

Analyst DonAlt also noted how the publicly traded MicroStrategy bought $425 million worth of BTC with no effect on the price of the digital asset.

“I’d honestly expect price to do anything but randomly drop/chop sideways after an event like that,” he said.

Before the weekend, MicroStrategy CEO Michael Saylor noted that the BTC purchase by the company was made in several off-chain transactions, which were then secured in a cold-storage with multiple off-chain transactions.

Source: @Woonomic

“If Bitcoin is treated as a treasury reserve asset, based on our model, 99.98% of all transactions will be off-chain, and assets-at-risk will be in cold storage 99.92% of the time,” said Saylor.

Over the weekend, Saylor further exhibited his BTC maximalism, stating, “When considering network dominance in the crypto industry, I find it clarifying to separate crypto-asset networks like Bitcoin from crypto-application networks like Ethereum & stablecoins.”

For now, the price of bitcoin might be taking its time to shoot off, but the fundamentals, the hash rate of the network, and difficulty continue to surge higher.

Miners are already contributing a record amount of hashes to generate the digital asset. With an 11.3% mining difficulty on the weekend, the third-largest positive adjustment in the past two years also made a new peak.

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Author: AnTy

Kraken and Binance Form New Partnerships to Offer More Fiat Funding Options

Amidst the flying altcoins and stuck Bitcoin, cryptocurrency exchanges continue to add new options to allow users to buy and sell digital assets.

Kraken has added seven new USD funding options for US residents through its partnership with MVB Bank to offer the fastest and smoothest experience for its clients. Formed in 1997, MVB Bank is an FDIC insured bank.

“We are excited to offer this new USD funding method, and think it will prove to be one the best funding methods for our US clients. MVB Bank is an ideal banking partner for us in many ways, including their deep commitment to supporting innovative financial companies in the Fintech sector,” said Kraken Chief Operating Officer David Ripley.

The new domestic wire charges a deposit and withdrawal fee of $4 with a minimum deposit/withdrawal of $20.

The new option is available in every US state that Kraken operates in, except for Texas.

Reaching 170 Countries

Another exchange that is extending its options is leading spot exchange Binance, which has acquired crypto wallet app Swipe.io. This acquisition could help boost crypto adoption, said Binance.

Swipe users can now purchase cryptos from within the app and use debit cards that utilize the Visa payment network to automatically convert stored digital assets into fiat currency.

Available in 31 countries, Swipe support transactions in US dollar, pound sterling, and euros. The app has also listed Binance’s native coin BNB to its platform for an undisclosed amount.

The exchange also announced a partnership with settlement provider Etana Custody to further increase options for users to buy digital assets with fiat currencies.

With this partnership, Binance users can now fund their accounts with 15 national currencies in Europe, Asia, North America, and Oceania markets.

Besides, United Arab Emirates dirham (AED), Czech koruna (CZK), Danish krone (DKK), Hungarian forint (HUF), Mexican peso (MXN), Norwegian krone (NOK), Polish złoty (PLN), and Swedish krona (SEK), euro (EUR), Canadian dollar (CAD), Australian dollar (AUD), and Swiss franc (CHF) are also included.

This brings the total number of countries and regions that Binance serves with fiat to 170.

Users can fund their purchases of cryptos right from Binance’s website once they have set up a funded Etana account. Etana also follows KYC and AML standards and is compliant with the Bank Secrecy Act.

Etana also provides services to Kraken as a third-party custodian and settlement provider of both fiat and digital assets for brokers, traders, and exchanges.

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Author: AnTy

Bitcoin Price Dullness Reflects in Difficulty that Records its Lowest Drop Since 2010

For the past two months, the price of bitcoin has been stuck in a range of $8,500 and $10,000. The leading cryptocurrency has been boring for some weeks now, with ‘real’ volume at extremely low levels, going below $1 billion.

However, it’s not just bitcoin, most of the major asset prices have been dull as well.

“Most major asset prices (my emphasis is on EM) are currently within a fairly narrow range relative to their pre-COVID 12-month averages,” said Natalia Gurushina, an economist at VanEck. “There are two big exceptions: EMFX and Gold.”

Move BTC Move

Since yesterday, however, the digital asset has been recording slight gains, going to nearly $9,300 before dropping back down to almost $9k flat. Today’s earlier gains came along with US stocks which are extending their greens as jobs in the country increased by 4.8 million in June, higher than the estimated 2.9 million. This helped bring the unemployment rate down to 11.1%.

“Payrolls even managed to move this tired dog,” commented trader and economist Alex Kruger about bitcoin’s movement.

Still, Bitcoin had a “strong” quarter 2 with 42% returns and closed at $9,150, making it the third-best quarterly close in the digital asset’s short history.

This has been despite June being an extremely slow month for Bitcoin, ending the month about 8.5% lower. The last month, however, proved to be a good one for small-cap cryptocurrencies while large and mid-cap indices followed Bitcoin.

“The year started out incredibly strong, but the party came to a sudden halt as corona shook the markets. Despite the sharp corona sell-off, all indices sits comfortably in the green, with BTC being the worst performer at +27% YTD,” noted Arcane Research.

Ya Boring

It’s not only the price that is boring, but so is the mining difficulty. Amidst the low volatility, bitcoin difficulty posted its smallest percentage change in a decade, it was last seen in March 2010.

A mere 0.0033% drop saw the bitcoin mining difficulty going from 15.7847 trillion to 15.7842.

Bitcoin difficulty that measures how hard it is to mine bitcoin, adjusts every 2,016 blocks, roughly every two weeks based on the total computing power participating in the network.

Network hashrate meanwhile hovers around 100 Th/s since the beginning of last month. This slowdown in hashrate growth may continue, says bitcoin mining pool, F2Pool, because “many of the large hardware orders reported recently won’t deliver until late in the summer.”

“With a relatively stable BTC price, daily mining revenue per TH/s also sees little change. Each day you can earn around $0.075 per terahash for your contribution to secure the Bitcoin network,” stated F2Pool.

“With such little change in the past two weeks, it means every new-gen machine is profitable at both $0.03 and $0.05/kWh.”

It’s Moving!

Not the price but the network.

From price to network fundamentals all have been dull and boring for quite some time but the on-chain activity on bitcoin today brought some enthusiasm with it.

Hourly new bitcoin addresses hit a 2-year high and hourly active addresses 1-year high. Hourly transaction count also hit a 10-month high while hourly spent outputs with a lifespan 24 hours reached an all-time high, noted Rafael Schultze-Kraft CTO at Glassnode.

Bitcoin price, volume, and social activity might not be doing much but some network activities are showing promising growth, not to forget all the accumulation by the retail and increasing interest from institutions.

Also, trader Bob Loukas says, “The July bitcoin Cycle low is slowly coming into focus. Continued consolidation is very bullish action.”

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Author: AnTy

Biggest Shift in Bitcoin Hashrate May Come in 2020

Bitcoin price is stuck around $9,100, but the hash rate of the network is continuing its ascent since crashing after the block reward halving.

The hashrate is yet again near the all-time high at around 130 Th/s after the jump in difficulty – the biggest since January 2018. Despite this, the bitcoin block mining time is back below 10 minutes since mid-June. Currently, a new BTC is being produced at an interval of 8 minutes 37 seconds, as per Bitinfocharts.

Amidst this, BEG reported that bitcoin mining giant Bitmain had received an order for 17,500 S19 mining machines from the US blockchain service provider, Core Scientific. The first batch of the agreement, which has a duration of four months, has already been delivered.

The latest flagship bitcoin mining machine of Bitmain currently costs 14,260 yuan, just over US$2,000.

A similar trend is seen by F2Pool, which reported receiving orders of large quantities of new-gen hardware from some of the biggest North American bitcoin mining operators.

On top of this, China’s rainy season is in full swing. The country is facing its worst flood in 70 years, with many plateaus in southwestern Sichuan Province experiencing heavy rain since mid-June. This was expected to continue in some parts of Sichuan.

Sichuan is of strategic importance for the Chinese mining ecosystem as such could play a part in the potential loss of mining hash power out of China, said Denis Vinokourov of Bequant.

All these bitcoin miner orders and “the hydro season in China coming to a close in October 2020 could see the biggest shift in hashrate,” said F2Pool.

Already capital controls in China have miners exporting their operations outside of China, and de-dollarisation of various financial systems, specifically in emerging economies are pushing them toward bitcoin mining.

These factors, combined with the institutionalization and financing of mining operations with the US, is why China has already started experiencing a sharp decline in Bitcoin mining dominance, which states the Amun Report.

Moreover, the US is seeing an increase in hashrate, now accounting for 7.2% of market share, making it the second-largest hash rate contributor after China.

Bitcoin Miners Expanding

Amidst this, Bitcoin miners are expanding their business, some even out of the mining sector.

Hut 8 has raised a total of $8.3 million from selling a 6% equity stake to investors, about $88k more than the original $7.5 million funding target. The Toronto-listed mining company is planning to invest this in new equipment that will enable them to increase their mining capacity to over a fifth.

“This financing is expected to strengthen Hut 8’s cash flows and balance sheet,” said company spokesperson Ryleigh Ebron.

Ebang International Holdings Inc. meanwhile is planning to launch an offshore cryptocurrency exchange this year, in an attempt to diversify beyond the mining sector. The company is considering applying for licenses in Singapore or the US or acquiring an existing exchange operator.

The Chinese crypto mining giant could see its total revenue grow about 40% in 2020, after expanding into the newer business of clients that manage data centers, said the company CFO, Chen Lei.

Revenue could double to $200 million this with the launch of digital asset exchange, otherwise, the mark should be hit in 2022, he said.

The Hangzhou-based maker of Bitcoin mining rigs that went live on Nasdaq under the ticker EBON last week has its shares currently trading at $4.50, down from the IPO price of $5.23 where it raised $100 million.

Ebang is planning to use the proceeds from the US share sale to develop new models of machines and expand overseas. Setting up regulatory-compliant crypto exchange outside China is part of the plan. Chen expects to initially attract 10% of the total transaction fees of digital asset trading.

Ebang is not the only one looking into expansion; its rivals Bitmain and Canaan are also betting on making chips in the field of artificial intelligence to reduce their reliance on BTC prices.

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Author: AnTy

Decentralized Finance (DeFi) Tokens are on Fire, Market Cap Surpasses $3.2 Billion

Bitcoin is stuck in a range but not altcoins.

This is the perfect time for altcoins to rally. The likes of Verge (XVG) (17.76%), Vechain (VET) (10.79%), Zilliqa (ZIL) (9.49%), and Cardano (ADA) (9.06%) are enjoying good gains today.

But among altcoins, it’s time for DeFi tokens to shine.

They have been surging throughout 2020, especially since March sell-off.

“As people are starting to realize, DeFi tokens are outperforming this year,” noted analyst Ceteris Paribus. “The sweet spot has been tokens with $10-30m market caps at the beginning of the year. This universe of tokens has increased their collective market caps by ~$700m in 2020.”

The market capitalization of DeFi has surpassed $3 billion, currently at $3,228,685,123, as per DeFi Market Cap.

DeFi tokens meanwhile continue to lead the market gains. Even last week, amidst the broker market rout, they recorded gains. Many tokens in this sector are posting upwards of 100% to 500% returns YTD.

Defi-on-fire

While some DeFi tokens are generating income in the form of a staking yield, others in the fee.

“Real investors in this space are flocking to these value assets while running from the non-productive “if you build it, they will come” legacy cryptocurrencies and protocols. And we believe that’s a good sign for long-term health and growth of this asset class,” said Jeff Dorman CIO at Arca.

Growing Sector

The sector basically represents those companies and projects that cut out rent-seeking middlemen in the new “open finance” ecosystem.

Today, the total value locked in decentralized finance (DeFi) has yet again surpassed $1 billion.

Although, this figure is nowhere near the traditional banking and brokerage sector, “it is nonetheless an impressive feat for DeFi to gain significant traction while the U.S. economy becomes more and more untrustworthy to the average citizen,” Dorman said.

In the past few weeks, some of the projects released significant upgrades. While Bancor announced a new upgrade to its protocol, Kyber Network has released its mainnet. Aave, which is quickly catching up on Compound, is seeing a surge in demand for popular stablecoin Tether (USDT).

Nexus Mutual, an insurance provider for Ethereum-based DeFi protocols has been seeing its risk pool doubling over the past two months.

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Author: AnTy

Best Case Scenario for Bitcoin is Govt’s Overspending & Losing Control: Economist

The price of the leading cryptocurrency is stuck at just about $5,100, keeping stable for now. Meanwhile, stock futures fell today and the markets remained highly volatile as the government’s response to the coronavirus fallout unfolds.

Stock Market Rose on Fed Stimulus

Futures on the Dow Jones Industrial Average fell 821 points, indicating yet another over 1000-points loss at Wednesday’s open. Nasdaq 100 and S&P 500 futures are also down. Futures contracts for the indices yet again went in “limit down” territory, triggering a circuit break after they hit a 5% loss.

On Tuesday, the markets rebounded from their deepest route since 1987 after the Trump administration’s massive fiscal stimulus plans had the investors hopeful. The White House is designing a fiscal package of over $1 trillion that includes a direct payment to Americans, financial relief to small businesses and the airline industry, allowing individuals and corporations to defer tax payments of up to $1 million and $10 million respectively.

Treasury Secretary Steven Mnuchin told Republican senators that unemployment could reach 20% if the stimulus package isn’t enacted.

Gold prices rose on Wednesday following the US Federal Reserve’s attempt to boost liquidity in the market. Spot gold rose by 0.7% to $1,538 per ounce while US gold futures were up 0.8%. Fed’s measures also supported the benchmark US 10-year Treasury yield which went up to a two-week high on Tuesday.

Bullish for Bitcoin in both the short and long term

Bitcoin that went up to $5,600 yesterday, is currently around $5,150, keeping above $5k.

“I hear people saying BTC is holding up well, yet no other asset (ex- some individual stocks and other cryptos) has dropped more than BTC,” said economist and trader Alex Kruger. According to him,

“Bitcoin did not behave like a store of value nor a safe haven” as it collapsed over 60% and there’s “nothing wrong in BTC moving up and down with risk assets in such a black swan event.”

However, he points out that those that are “ardently criticize governments’ economic aid packages” are doing so without realizing the fiscal stimulus is not only the reason for the stock market to jump but also for bitcoin. Kruger said,

“Those packages are bullish for the price of bitcoin in both the short and long term. In theory, the best case scenario for BTC is a world where governments overspend and lose control.”

Short-term holders got spooked

It is worth noting that gold also got sold-off aggressively during the past week’s carnage. It wasn’t anything new either as investors look to get their hands on cash just like they did in 2008. During that financial crisis, gold exploded after and Kruger like many others also believes “the same will happen with both assets (bitcoin and gold) this time.”

Also, with bitcoin, it is extremely important to note that long-term holders are confident in the crypto asset. The recent sell-off was because of the short-term sellers.

“The volatility certainly didn’t come from the >5y HODLers,” noted Unchained Capital. The vast majority of it came from “UTXOs 6 months old or younger.” The 3-5 year band was flat, totally apathetic, only .02%, or ~3,650 BTC from the >5y band moved. Another crypto analysis company Glassnode also noticed,

“Bitcoin HODLer Net Position Change has been positive during the recent price dump. This means long term investors have been accumulating discounted BTC and increasing their positions.”

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Author: AnTy