Editor’s note: Happy Chinese lunar new year! First Mover does not publish on Monday, February 15, which is Presidential Day in the US markets for cryptocurrency, as always.
Price point
Bitcoin (BTC) was lower, after rising to a high price of $ 48,925 early Friday, based on CoinDesk prices.
The market activity was quiet due to the lunar new year celebrations in Asia and the upcoming Presidential Day holiday Monday in the US, according to Craig Erlam, senior market analyst at currency brokerage Oanda. (By the way, this is the year of the ox, which is considered bullish by some traders, if you missed the story last week by CoinDesk’s Muyao Shen.)
In traditional markets, the US futures contract was lower, with one investor telling Bloomberg News that “investor exuberance has declined slightly.” Gold weakened 0.5% to $ 1,817 per ounce.
The news
JPMORGAN FEELS BITCOIN BRAND: JPMorgan employees chased senior trading division management during an internal city hall meeting on when the largest U.S. bank would end up in bitcoin, CNBC reported.
RESERVE CURRENCY STATUS? ECB President Christine Lagarde said it was highly unlikely that central banks would own bitcoin in the near future. “I would say it’s out of the question,” Lagarde said during a conference call hosted by The Economist.
GIVE THE PEOPLE WHO THEY WANT: U.S. Securities and Exchange Commissioner Hester Peirce, sometimes known as “Crypto Mom” because of her good views on the digital asset industry, said the country’s capital markets were ready for a bitcoin exchange-traded product. Despite several applications, the SEC refused to approve an exchange-traded fund. People are already eager to trade a bitcoin ETP, and “so if we do not give them the natural way, which I think would be an ETP, they will look for other (less optimal) ways to do it,” Peirce said on CoinDesk TV on Thursday.
CANADA DOES NOT WAIT: The first North American bitcoin ETF was approved by the Ontario Securities Commission on Thursday. “Maybe they’s normal and SEC too conservative,” tweeted Eric Balchunas, senior ETF analyst at Bloomberg. “Either way, US usually follows shortly thereafter.”
FINANCES WORK ON DEMUR BITCOIN: Major financial executives at Verizon, Cisco Systems and Mozilla see risks and accounting challenges in putting corporate money into bitcoin, the Wall Street Journal reported. Such anecdotes challenge the investment narrative that the cryptocurrency benefits from a wave of new demand from companies.
BAIR’S A BEER: Bitcoin prices are at ‘nose blood level’, said Sheila Bair, former chairwoman of the US Federal Deposit Insurance Corp. and now chairwoman of government-owned Fannie Mae. “Stay away from it,” she said in a Bloomberg Radio interview late Wednesday. “It simply came to our notice then. It is now at nose blood level. We do not know how sustainable it is. ”
INDIA GRACE PERIOD: Policymakers in India will offer a transition period if a proposed ban on the use of cryptocurrency is passed as expected, Bloomberg reports. Thereafter, the use of cryptocurrency in all aspects will be banned via a new law that will be introduced in the current parliamentary session via the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
Market movements
How bitcoin amounts to $ 1 million in 11 years, according to one analyst scenario
First Mover offered some math earlier this week to illustrate how scarce the supply of bitcoin can be for the plethora of new institutional investors and corporate treasurers now apparently considering a grant to the cryptocurrency, following Tesla’s announcement earlier this week of a $ 1 purchase , 5 billion.
Now come Charlie Morris, chief investment officer of ByteTree Asset Management, who has done his own calculations in similar ways, making First Mover’s amateur efforts look like the killing of a toddler.
About 363,500 bitcoins will be allocated to cryptocurrency miners this year for the security of the blockchain network, estimates Morris. He assumes that the miners “will probably sell the most, because that’s their business.”
Further extrapolation leads to a figure of $ 18.17 billion: According to Morris, this is the amount of new bitcoin demand that would be needed this year to maintain a $ 50,000 BTC price.
For context, Morris writes that gold-traded funds attracted $ 41 billion last year. “Given the compensation flowing in bitcoin at the time, the evidence suggests that gold investors are turning to bitcoin,” Morris writes. “If bitcoin can pull $ 20 billion in 2021, like gold last year, you expect an average bitcoin price of $ 100,000.”
This is pretty bullish, in other words, but not crazy far-fetched. As First Mover reported earlier this week, $ 2.02 billion has already flowed into bitcoin-focused investment products this year, based on a report Tuesday from digital asset manager CoinShares. And the CoinShares report does not even cover the question of investors or corporate treasurers who might be buying bitcoin directly through their own accounts, or purchases from retailers looking for a share of the action.
Factor in the Bitcoin blockchain’s four-year halves, where mining rewards are halved, and the investment barrier is lowered every four years. “It continues to decline thereafter, which means it will be easier in the future to maintain high prices than it is today,” Morris writes.
So what does this mean for bitcoin prices? According to Morris, a $ 1 million price for bitcoin by 2044 is reasonable at a rate of $ 41 billion new inflows per year. Bitcoin will reach the price of $ 1 million by 2036 if consumer price inflation averages 2.5%, or by 2032 if inflation averages 5%. It’s only 11 years from now, which is a profit 20 times higher than current price levels.
Mastercard / BNY Mellon Reax
Gavin Smith, CEO of Panxora Group: “BNY Mellon and Mastercard’s entry into the cryptocurrency space moves bitcoin two big steps closer to accepting the mainstream.”
David Mercer, CEO, LMAX Group: “Financial institutions are now preparing to follow their clients.”
Don Guo, CEO of Broctagon Fintech Group: “We hope that the increasing adoption will encourage the industry to prioritize liquidity supply by improving crypto-infrastructure. This will ensure that both existing and new entrants have continuous access to the best prices and that the industry reaches the next level of maturity. ”
Edward Moya, senior market analyst, Oanda: “Improved general acceptance of cryptocurrencies currently alleviates most regulatory issues.”
Anthony Pompliano, Morgan Creek Digital, in a tweet: “Eventually, every company will join the revolution.”
Bitcoin Watch
The number of major bitcoin addresses swells, writes CoinDesk’s Omkar Godbole
Bitcoin’s blockchain data supports the popular narrative that bitcoin’s protest is fueled by rising institutional demand.
- According to the data source CoinMetrics, the number of bitcoins in the addresses containing between 1,000 and 10,000 BTC has increased significantly since the end of 2020. The group now owns more than $ 5 million coins, or 30% of the total supply of bitcoins. This is a sign of increased participation by individuals and institutions with a high net worth.
- Retailers also participated in the rally, with addresses holding between 0 and 10 BTC since mid-2020.
Token Watch
Ether (ETH): Joel Kruger, cryptocurrency strategist at the LMAX Digital exchange, offered Muyao Shen of CoinDesk a few price points to see: A Break Above [$1,840] “will open the door for a test of massive resistance at $ 2,000, which represents a critical psychological barrier and a measured movement upside down,” Kruger said. “We are seeing the first level of support at $ 1,680, with a break to take immediate pressure off the top and open the door for a correction to the $ 1,500 area.”
Avalanche (AVAX): Network comes to a halt after a “fault in the cross-chain functionality” failed under high loads, according to the Avalanche developer team on Reddit. The price of the AVAX token has risen 15 times this year.
Tether (USDT): The market capitalization with a dollar-linked stable rate exceeds $ 30 billion.
Economy in transition
DISTANCE WORKS: Another year of remote work awaits as companies delay the reopening of office plans until September or beyond, and in many cases refuse to commit themselves on specific dates, the Wall Street Journal reports. As First Mover wrote in November: ‘There could be a secular transition to commuting via the internet, perhaps one of the biggest transformations of the workforce since the industrial revolution, which has attracted people to cities … Governments and central banks are likely to must provide a lot of help and stimulus to ensure that the transition runs smoothly, that society stays together, that people can cope. ”
US debt> 100% of GDP: The government’s debt burden will exceed the size of the entire US economy this year, mainly due to the $ 4 billion in emergency spending that has been approved since March to fight the pandemic and stimulate production. The debt is expected to reach 107% of gross domestic product over a decade.
Opinions and observations
PAY NOW OR PAY LATER: Mohamed El-Erian, chief economic adviser for the German financial rand Allianz, writes in a column for Bloomberg Opinion: ‘What is favorable for policies and markets is now increasing future risks, starting with financial instability. The more Wall Street pushes forward in the short term, the harder it is to finally improve the economic conditions to order the ever-increasing asset prices in an orderly fashion. ”
