Bitcoin Is Weathering A Lot of FUD This Week; What’s the Market Saying?

This week, Bitcoin is fighting several ‘fear, uncertainty, and doubt’ all at the same time.

The week started on a red note, as the price of the digital asset declined by 28.5%, and the market got a buy the dip opportunity. On the downside, $30k is of importance, whose breach could trigger “could trigger a much sharper correction.”

However, it didn’t take long for BTC to recover, and we were back at $40,000 in the middle of the week.

Now, into the weekend, Bitcoin is holding around $37,000 BTC -0.43% Bitcoin / USD BTCUSD $ 36,130.40
-$155.36-0.43%
Volume 57.14 b Change -$155.36 Open $36,130.40 Circulating 18.6 m Market Cap 672.11 b
7 h Kraken Halts XRP Trading; DOT Replaces the Digital Asset as 4th Largest Crypto Asset 8 h Bitcoin Is Weathering A Lot of FUD This Week; What’s the Market Saying? 1 d Bitcoin Donations Made to Those Involved in Capitol Riot a Month Prior: Chainalysis Report
, taking a breather and giving altcoins the chance to rally.

Nothing Stopping it from Going to zero

While the broad crypto market is enjoying an uptrend, Bitcoin is weathering a lot of skepticism and the same old FUD.

First, the UK financial watchdog issued its stapled investment warning that customers investing in cryptocurrencies should be ready to lose everything.

”Cryptocurrencies are not sustainable,” chimed in Peter Branner, the CIO at APG Asset Management. “Bitcoin is not backed by a central bank. It only has a value if people gives it value.”

Even UBS Global Wealth Management is taking inspiration from the Financial Conduct Authority (FCA) issuing a warning of losing all your money.

“There is little in our view to stop a cryptocurrency’s price from going to zero when a better designed version is launched or if regulatory changes stifle sentiment,” authors including Michael Bolliger, the chief investment officer for global emerging markets, said in a report Thursday in response to rising client interest.

While in the short-term, institutional adoption, limited supply, and market momentum can prop up the prices, regulatory intervention is a risk in the long term, the strategists wrote, citing the UK banning crypto derivatives. UBS Wealth said,

“Investors in cryptocurrencies must therefore limit the size of their investments to an amount they can afford to lose.”

Renewed Interest

When this wasn’t enough, the market itself found some FUD to keep things interesting. Mt. Gox saga renewed with CoinLab making a deal so that creditors can claim 90% of BTC owed to the exchange.

But while there is only 0.23 BTC available to every Bitcoin the creditors lay claim to, the users have been waiting for 7 years with nothing so far. Though it “should be bearish news short term,” the rehabilitation plan deadline has been postponed several times.

Amidst this, whether Tether is 100% backed remains a constant presence in the market, which only got heavy with Deltec Bank announcing that they hold a large position in Bitcoin for their clients, which Tether says has nothing to do with them.

“The amount of USDT printed by Tether is dwarfed by the amount of USD printed by the state,” argues Balaji S. Srinivasan, and that even if USDT fails, bitcoin has seen several 80% to 90% drawdowns, and there are other stablecoins available with long term people here to “advance freedom, privacy, and decentralization (and) that doesn’t change.”

But while the FUD created some uncertainty, there has been just as any good news. Grayscale is back to buying Bitcoin with an increasing premium for starters — presenting $23k as “a strong floor.”

Goldman Sachs is now also looking to invest in digital assets. The report came after Anchorage became the first crypto firm to win a charter from the Office of the Comptroller of the Currency, whose big official called for regulators to be ready for DeFi — self-driving banks.

Not to mention the big stimulus coming, USD weakness, Fed Chairman informing that they have no plans to increase rates or stop asset-buying anytime soon, the macro environment is also in favor of BTC.

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Author: AnTy

Synthetix (SNX) Releases Aggressive Roadmap to ‘Take on CeFi’ in 2021

This week, while other cryptocurrencies are still struggling to reverse their correction, DeFi tokens swiftly made a recovery, with SNX token hitting a new ATH above $16.50. For now, the 23rd largest cryptocurrency is trading around $14.80 SNX 2.17% Synthetix / USD SNXUSD $ 14.84
$0.322.17%
Volume 409.21 m Change $0.32 Open $14.84 Circulating 110.52 m Market Cap 1.64 b
4 h Synthetix (SNX) Releases Aggressive Roadmap to ‘Take on CeFi’ in 2021 1 d A ‘Massive Transfer of Wealth Among Traders’ Sees DeFi Tokens Winning the Round 1 w Three Arrows Capital Holds 36,969 Bitcoin ($1.24B) via An Over 6% Stake in GBTC
.

Derivatives liquidity protocol, Synthetix is the blue-chip DeFi project with a market cap of $1.68 billion. Amidst this uptrend, Synthetix released its roadmap for 2021, painting a picture of a

“future where everyone in the world is connected to one another by handheld devices that allow them to hold, trade, and transfer every imaginable asset.”

The roadmap mentions Optimistic Ethereum, Synthetix V3, Synthetic Futures, Asset expansion, dApp Upgrades, and optionsDAO as its high-level priorities.

A complete re-architecture of the Synthetix contracts will be done for the first time since last 2018. Synthetix V3 will involve a new SNX staking mechanism so that SNX is always freely transferable, introducing eSNX, tokenized debt, continuous staking rewards, continuous vesting, and Keep3r implementation, among other features.

The transition to layer two scaling solution Optimistic Ethereum which will lower the gas costs and provide higher throughput, is one of the most exciting things to come. The combination of this with Synthetic Futures will allow projects to compete with centralized futures markets and provide a minimum of 10x leverage. Also, Synthtix will expand into equities.

In the options, sDAO will provide upfront funding based on certain conditions, and oDAO will enable several improvements over the existing binary options implementation.

⁩”As an investor in SNX, it’s great to see the aggressive roadmap here,” said one of the partners of crypto fund The Spartan Group. “This is how $SNX is getting to $10B.”

2021 will also involve a focus on acquisitions and expansion for Synthetix as the scale of the project grows.

“This year we finally take on CeFi, then we come for TradFi…” concluded Kain Warwick, the founder of Synthetix.

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Author: AnTy

Sushi’s Whirlwind Week Sees the Launch of Onsen; The ‘Future of Finance in 2021’

SUSHI reverses the 60% pullback while Onsen replaces the Menu of the Week. Anonymous dev 0xMaki shares future plans for the project.

DeFi project Sushi had a whirlwind journey and the same was reflected in its price action this week. On Wednesday, from the high of about $2.76, SUSHI prices crashed hard nearly 60% to the $1.16 level. But the next day Sushi was back above $2.6.

This crash was market-wide, although SUSHI reacted hard and fast both in terms of losses and then reversing them into gains. The news of SEC suing Ripple and its two executives, former and current CEO, over the alleged sale of an unregistered security offering was what pushed the cryptocurrency market down.

The red sea of Wednesday is already a field of green on Christmas. Just last week, SUSHI had hit $3.35, last seen in early September when the token was making its way down from the high of $12.47 on Sept. 1st.

As of writing, SUSHI/USD has been trading at $2.73.

With these greens came the official launch of Onsen, a new liquidity mining incentivization program, that is replacing the Menu of the Week.

200 allocation points have been set aside for the initial launch of Onsen which will require LPs to stake their SLP tokens in MasterChef to take advantage of the SUSHI rewards.

MKR, OMG, ESD, ANT, PNK, HEGIC, CREAM, PICKLE, DPI, CVP, YETI, ARCH, INJ, BOR, DUSD, DFD, BADGER, zLOT, INDEX, SWAG, JRT, DOUGH, SEEN, UWL, ICHI, ROPE, oBTC, mbBASED, DSD, nTRUMP, UST, FNX, BCP, YPIE, DEFI+L, BASE, DDX, MPH, FRONT, UOP, TRU, ALPHA, AKRO, and CRETH2 — is an exhaustive list of token that will be taking part in Onsen.

The Future Plans

DEX SushiSwap’s project lead, 0xMaki, recently shared his plans for the project that currently has more than $1 billion in TVL (total value locked).

The anonymous developer shared that SushiSwap users will soon get to borrow or lend and long or short an asset with the launch of BentoBox, which he said will be available in 2021. Developers will also be able to build on top of the protocol, he said.

“I think we are going to see the future of finance in 2021,” said 0xMaki in his recent interview with UniWhales.

BentoBox was recently revealed when YFI’s Andre Cronje announced the merge of SushiSwap and YearnFinance. In this partnership, 0xMaki said they both share the same goals and that both are “big proponents of decentralization.”

Cronje is “very good” who has a lot of good ideas, said 0xMaki adding, “pushing the idea to the finish line or maintenance is not his forte and that’s where we can come in and pick up the ball for him.”

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Author: AnTy

Is The SEC Lawsuit a Blessing in Disguise for Ripple & XRP Investors?

The Trump administration’s parting shot pushes XRP down 46% this week but small XRP addresses continue being created at a fast pace while trading is suspended on three exchanges.

A day after Ripple CEO Brad Garlingouse intimated the crypto community about the upcoming lawsuit against XRP over the sale of unregistered securities, the US Securities and Exchange Commission (SEC) did just that.

SEC has charged Ripple and its two executives, co-founder Chris Larsen and CEO Garlinghouse for raising more than $1.3 billion through “an unregistered, ongoing digital asset securities offering.”

Not just this, Ripple has allegedly distributed billions of XRP in exchange for non-cash consideration. Additionally, both Larsen and Garlinghouse “effected personal unregistered sales of XRP” totaling at $600 million.

“We allege that Ripple and its executives failed over a period of years to satisfy these core investor protection provisions, and as a result, investors lacked information to which they were entitled,” said Marc P. Berger, Deputy Director of the SEC’s Enforcement Division.

The SEC’s complaint is filed in the federal district court in Manhattan and charges the defendants with violating the Securities Act.

Immediate Effect

The legal case in itself will take years to come to a conclusion but in the immediate future, the price of the digital asset took a beating. This week, XRP has lost 46% of its value, currently trading at $0.354. XRP actually hit a new low against BTC which continues to surge higher and higher.

“Bag holders want to see .304 hold on a weekly close to establish topside HTF support,” said trader Mr. Anderson. Another trader, CryptoYoda noted,

“Tightening stops. worried about potential of XRP imploding if support doesn’t hold and the resulting repercussions in the overall markets. might be a non-event, just making sure I don’t stand on the beach when the tsunami hits.”

Since the news broke, while the number of large tier addresses is shrinking, small XRP addresses being created haven’t skipped a beat in its uptrend, as per crypto data provider Santiment.

And with this, the digital asset dropped one step and Tether retook the place of the third-largest digital asset by market cap.

In the meantime, 133,152,655 XRP (48,850,963 USD) has been transferred from the Ripple founder Jed McCaleb’s Settlement account to his wallet, noted Whale Alert.

Additionally, crypto exchange OSL has suspended all XRP trading services on its platform, effective immediately. The exchange is well known in Asia for its OTC services but isn’t much for retail exchange trading.

Two smaller crypto trading platforms, Beaxy and CrossTower have also halted trading for XRP already.

Is it Security?

After avoiding this level of intervention for years, SEC Commissioner Jay Clayton seems to be ticking off one last thing from his to-do list before his departure from the office.

“For XRP hodlers, this could be a blessing in disguise,” because the question of whether XRP is a security has been dangling over the early investors, wrote Mati Greenspan in his daily newsletter Quantum Economics.

But that is if it is not deemed security because if it is XRP will be basically “useless,” making it difficult for anyone to use it for settling transactions. Jake Chervinksy, General Counsel at Compound Finance said,

“Alleging violations through present-day is a kill shot. Charging individual executives is remarkable. This is the SEC playing hardball.”

However, Messari founder Ryan Selkis, a known XRP antagonist believes the argument of XRP being security is “silly.” However much “unethically marketed and distributed” XRP was, “that still doesn’t mean it’s a security,” he wrote.

According to Selkis, USG is going to lose because they are outclassed on legal as Ripple has a lot of money to put into action, and USD should lose because the Howey test is broken, SEC’s restrictions on non-accredited investors is outdated and un-American, and because “it’s incumbent upon industry to self-police.”

Not to mention, regulators get to fine and tax Ripple, so no gain in killing a “domestic golden goose,” he said.

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Author: AnTy

Tether’s Exchange Supply & $900B US Stimulus Deal Offers Fuel to Bitcoin Bulls

After the monster weekly candle last week while being on track to beat 2Q17 to become the second-best quarter after 4Q17, today the market is in red but the bulls might not back down yet.

Last week was a wild one for Bitcoin.

The digital asset capped one of the biggest weeks with a monster candle that pushed us from about $18,950 to above $24,000.

There have been only a handful of times when Bitcoin BTC -4.74% Bitcoin / USD BTCUSD $ 22 930,0532
-1,086.88 -4.74
Volume 47.02 b Change -1,086.88 Open $22 930,0532 Circulating 18.58 m Market Cap 425.98 b
1 h Crypto Exchange EXMO Hacked; BTC, ETH, XRP, ZEC, USDT, and ETC Stolen By Attacker
recorded more gains than what we posted last week.

This quarter, which is still 10 days from its end, has recorded the third-largest quarterly gains of 121% beaten by 125.32% in Q2 of 2017 and of course the 10.13% gains in Q4 of the same year, as per crypto data provider Skew.

The world’s largest cryptocurrency made yet another new high early Monday, as it jumped past $24,300 following Tesla CEO Elon Musk’s Bitcoin meme and inquiry about “larger transactions” required to convert $100 billion of USD in Tesla’s balance sheet to BTC.

According to Hxro Labs, “With a break of 24k, it looks like the next such cluster of objectives lay in wait up around the $26,750-$26,650 area.”

But the weakness in the price of the digital asset seen last night and today has some feeling a bit cautious.

And, today the price of the Bitcoin went down to about $21,885 level and is currently trading around $22,800 in red.

Interestingly, amidst the ongoing bullish price action, the number of Bitcoin holders with 1,000 or more BTC continues its upward momentum. Unlike these multi-millionaires, addresses with under 1,000 BTC have been selling off their stash since Wednesday, the day BTC price breached the all-time high of $20k only to continue to break past several levels.

Meanwhile, the bullish sign for the Bitcoin bulls is the percentage of Tether supply on cryptocurrency exchange hitting a 4-month low on the weekend, as per Santiment.

At the same time, Congress reached a deal on the $900 billion coronavirus relief package. Congressional leaders announced the agreement on the bill on Sunday which will fund the government through Sept. 30.

“At long last, we have the bipartisan breakthrough the country has needed,” Senate Majority Leader Mitch McConnell, R-Ky., said on the Senate floor Sunday.

However, House Speaker Nancy Pelosi called the plan inadequate and that they would soon push for more spending after President-elect Joe Biden takes office a month later, on Jan. 20.

This relief plan includes direct payments of $600 to adults and $600 per child. These payments could make their way to Bitcoin, like the last time. The $1,200 check from last time is currently worth about $4,000 in Bitcoin.

The Democrats said it would put $240 billion into Paycheck Protection Program small business loans, and direct another $20 billion to small business grants and $15 billion to live event venues.

With all the money printing going on at “unprecedented levels,” Bitcoin price could see more action. According to Mike Belshe, the CEO of California-based cryptocurrency firm BitGo, BTC is “immune” to this money printing which is because the digital asset “got a level of scarcity that we really don’t have in any other market,” not even in gold, he said.

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Author: AnTy

Crypto is the Only Way to Pay for Pornhub After Mastercard & Visa Drops Adult Platform

Last week, Mastercard and Visa announced that they would no longer allow their cards to be used on the popular adult website Pornhub.com. The decision came after the payment processors’ review of the website found unlawful content. Mastercard said in a statement,

“Our investigation over the past several days has confirmed violations of our standards prohibiting unlawful content on their site.”

“We instructed the financial institutions that connect the site to our network to terminate acceptance.”

Both the companies started the investigation after a New York Times column accused Pornhub of videos depicting child abuse and non-consensual violence, which the company said to be untrue.

In response, this week, Pornhub enacted safeguards including banning unverified uploaders from posting new content and eliminated downloads and partnered with non-profit organizations to combat illegal content. The company’s latest update reads,

“It is clear that Pornhub is being targeted not because of our policies and how we compare to our peers, but because we are an adult content platform.”

Regarding Mastercard and Visa severing its ties with the company, Pornhub said the move was “exceptionally disappointing,” adding that it affects hundreds of thousands of models who rely on the platform for their livelihoods.

Now, the website exclusively supports cryptocurrency as it has become the default payment method.

Currently, the supported digital currencies include Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), Dash, Monero (XMR), Ripple (XRP), NEM (XEM), Tron (TRX), Tether (USDT), Verge (XVG), Waves, and Zcash (ZEC).

This development is expected to help digital currencies gain further adoption as Nic Carter of Coin Metrics states, “financial infrastructure is already thoroughly politicized, from top to bottom.”

Pornhub attracts 3.5 billion visits a month, which is more than Amazon, Netflix, or Yahoo. Venture capitalist Paul Graham, co-founder of startup accelerator Y Combinator tweeted,

“Possible future scenario: Credit card companies become increasingly picky about who they’ll process transactions for, and this becomes the thing that tips the general public into using cryptocurrency in transactions, ultimately killing credit cards.”

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Author: AnTy

$50,000 Per BTC ‘Is A Reasonable Price Target Even For Q1 To Q2 Of Next Year’

The appetite for Bitcoin among institutional investors continues to grow at a fast pace.

Every week, a new company or public figure announces its investment in Bitcoin or the digital assets’ potential as a store of value, much like gold.

This appetite can be seen with the Bitwise’s Crypto Index Fund — with 75% BTC, 13% Ethereum, and 12% other crypto assets weightage — which surged more than 70% in a couple of days of its launch, that too while the digital assets slipped by a few percentages.

But over the weekend, the crypto market took over as BTC went from $17,600 earlier in the week to $19,500 on Sunday.

Today, BTC/USD is trading around $19,150, down 0.09% with $2.24 billion in volume.

Ultimately Bullish

Still, the largest cryptocurrency is up 166% YTD, and this Bitcoin rally is “fundamentally sound,” according to Antoni Trenchev, co-founder of Nexo.

According to him, any dips are just Christmas coming early — “a great entry point for you to purchase some Bitcoin just before liftoff,” said Trenchev in a recent interview with Bloomberg.

These price drops, according to him, are profit-taking and the rumor about last-minute legislation from the Trump administration, which according to him are just going to be more anti-money laundering and know-your-customer policies “just like in the banking sector.”

However, the new legislation will ultimately be a “very valid bridge bullish sign for Bitcoin, and that will set the stage for the next leg up,” he said.

The regulatory threat has been taking the edge off the market, and Trenchev is extremely bullish on BTC price.

Nowhere Near the Top

According to Trenchev, his predicted a $50,000 BTC target price by the end of the year “is a reasonable price target even for Q1 to Q2 of next year.”

The reason for his bullishness is simple, since the summer, the market has seen retail, institutional investors, high net worth individuals, and family offices positioning themselves and purchasing Bitcoin and other cryptos. And this is

“very different from what we had 2017 and 2018 where this was a really retail-driven frenzy where everybody was maxing out on leverage and credits to buy bitcoin.

This has not yet happened.”

Although retail has come, it is nowhere near what we saw in 2017, which makes this rally “fundamentally much more sound,” he added.

In the macro scheme of things, all the stimulus unleashed by the central banks and government in 2020 will continue moving into next year. As we reported last week, the ECB has already announced its big numbers, and the US might reach a compromise on the relief package soon.

Morgan Stanley chief rates strategist also noted that G10 central banks would inject another US$2.8 trillion of liquidity next year – just in their government bond purchases.

This is to be seen if and when all this liquidity will find its way into the financial and Bitcoin market. We are already seeing some rotation out of gold and into Bitcoin this year, thanks to the latter’s digital gold narrative.

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Author: AnTy

Ethereum Market Points to the “Start of a New Bull Cycle;” New Addresses Hits a 25-Month High

Last week, ETH touched $535 a couple of times, only to follow the Bitcoin bulls and make it back to $595.

Over the weekend, the surge in price also saw the number of new ETH addresses hitting a single-day, 25-month high, reaching 177.5k addresses.

“Notably, more addresses interacting on an asset’s network is a very promising indicator for bulls,” stated crypto data provider Santiment.

Today, however, the second-largest cryptocurrency went back to $582.

According to one trader, Ethereum is simply at the “start of a new bull cycle,” with points of interest for longs around $425-$460 with any dips to be bought. “The next higher high in the impulse wave is most likely going to be $850 or $1,150,” he added.

Despite more than double of Bitcoin’s gains in 2020, ETH is still 63% away from its all-time high.

The Bullish Signs

ETH’s outperformance also led miners to slowly offload their ETH, with their aggregate holdings declining from 1.13 million ETH to 1.016 million ETH since mid-October.

At the same time, there has been a 15.2% decline in the amount of ETH held by exchanges. This kind of decline was last seen during the 2017 bull run. This is likely to result from an increased focus on self-custody, long-term storage, and yield opportunities in DeFi. ~57% of ETH’s total supply hasn’t actually moved in a year.

Currently, there are over 7 million ETH locked in the DeFi space. Ethereum is the dominant smart contract platform, which, according to Coinbase, has proven to be “comparatively secure so far.”

However, it has its own drawbacks in the form of scaling and control, and flexibility. And projects like Polkadot and Cosmos are the front-runners as its competitors.

The Risk of Centralization

Amidst all the price action, the number of ETH locked in the ETH 2.0 deposit contract for staking continues to grow.

A total of 1,466,401 ETH worth more than $860 million have been sent to ETH2.0 deposit. This represents nearly 1.3% of ETH’s circulating supply, signaling strong demand for Proof of Stake participation.

However, this comes at the risk of centralization. Justin Drake, ETH 2.0 researcher at Ethereum Foundation, noted that 10.7% of validator deposits are from crypto exchange Kraken while other exchanges Coinbase and Bitfinex have 5.8x more ETH than Kraken. Drake said,

“Two exchanges could control 1/3 of the validators. Five exchanges could control 1/2 of the validators. Stake from home to avoid exchange fees and decentralise.”

According to Dune Analytics, these deposits came from 3,736 unique depositors.

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Author: AnTy

Bitcoin Retesting Resistance as Institutional Investors Take Profits & Reduce Holdings

Over the weekend, Bitcoin managed to recover the losses it suffered over the last week completely. From the low of $17,600 on Friday, on Sunday, the price of the digital asset went back to $19,500.

This strong rally is also reflected in the premium on futures, showing the market’s confidence in the price trend.

However, as per CME’s latest data, as of Dec. 12, institutional investors reduced their positions for risk control. While asset managers’ long positions fell from 626 to 544 and their short positions increased from 0 to 11, leveraged funds’ long positions declined from 4,509 to 4,365 along with their short positions from 9,375 to 9,354.

This reflects that institutional investors have taken off profits and reduced their holdings, as per Quandl.

At the time of writing, BTC/USD has been trading around $19,100 with a trading volume of $2.24 billion.

While people continue to hope for a deeper correction to sweep off even more of the BTC, the largest cryptocurrency is not giving the market a chance to do it.

As trader Credible Crypto noted, “Once a key area of resistance is broken, it typically acts as support.”

Last month, around Thanksgiving, Bitcoin went down to about $16,400, a drop of 16% from about $19,500. After going above $19,900, we had a dip last week of under 12% with no daily close below $17,100.

The trader expects bitcoin to do a repeat of it, retesting the $19,900 high from earlier this month to take a drop around $18,600 before we move on to rally off above $20,000.

“I think it’s the less likely scenario, but a sweep of the $20k ask liquidity before a dip back under to find the bid demand again would be a very Bitcoin thing to do. Would put us on pace for sustained ATHs in the 2nd half of Jan,” is another trader’s expected scenario.

For now, the bitcoin market is giving “encouraging signs” that says we can go higher.

As trader Jonny Moe notes, the Adam and Eve pattern we got on the low timeframe has broken to the upside; now the digital currency needs to fill out the ascending triangle to make a run for $20k by this upcoming weekend.

The market has turned bullish with the latest uptrend, and bulls are expected to be in charge as “the bears will want to wait for volume and momentum to fail prior to rushing in front of this freight train,” stated Hxro Labs, which called for the weekend’s rally.

But next year will be the most exciting when Bitcoin finally goes off above $20k and starts this bull rally in full effect.

And with institutions getting deep into Bitcoin, the moon targets have been getting higher and higher.

“Glad I bought Bitcoin. Next stop $50k. Wall of institutional money coming 2021. Buy below $20k,” said Robert Kiyosaki, the author of Rich Dad, Poor Dad.

According to Moe, “3500% > 1500% > 650% is roughly 40% of the prior move, and puts us right at $150,000.”

“Buckle up for a wild ~9 months folks,” he added.

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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.

image1

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