A Glassnode study found that only 4 million BTC are in free float on the market. The third halving in the Bitcoin network, which happened in May 2020, halved the miners' reward for the mined block from 12.5 BTC to 6.25 BTC. This further exacerbates the shortage of coins in the market, while businesses have begun to actively invest in Bitcoin, and the largest payment applications, including PayPal and Square, have added the ability for their users to buy and sell digital assets. Market participants continue to monitor Bitcoin addresses that have been idle for a long time. Analysts concluded that every time the old coins move, it coincides with a market correction. Now 1,000 BTC have been moved, which have been motionless since 2010. Thus, in combination with what is happening in the traditional market, we may well see a new immersion in Bitcoin and the entire crypto market as a whole.
After an impressive rebound in Bitcoin and overcoming $ 50K, crypto market participants will look forward to further growth and struggle for new highs above $ 58K. In case of successful overcoming of this level, the road to the establishment of a new historical maximum is opened for the reference cryptocurrency. Probably, if the resistance level is successfully overcome, we can see the testing of $ 60K.
MicroStrategy has become one of the largest leveraged buyers of bitcoin. Not even on the attracted capital, but on unsecured bills of exchange with yield tending to zero. The company itself is nothing more than a gasket for financial engineering and stock transactions of more serious individuals and companies, suggests Sergey Kalinin, a representative of the Kuna crypto exchange. Digging deeper reveals even more interesting details. These details suggest that we are dealing with a financial scheme, not an investment. Who could pull off such a combination? To do this, take a look at MicroStrategy's list of holders of securities. Among the main ones are the largest investment funds and banks: Blackrock, Morgan Stanley, Vanguard, JPMorgan.
MicroStrategy quickly burst into the life of the bitcoin industry last year when it began buying up the first cryptocurrency. What could be behind MicroStrategy's big Bitcoin boost? Recently, the information space has exponentially increased the number of enthusiastic opinions regarding the "massive arrival of institutions" in bitcoin. MicroStrategy, Tesla, Square became financial news headliners. The software provider and public company MicroStrategy acquired first with its own and then with borrowed funds - 90 859 BTC. Many see this as a forward-looking bet on the scarce properties of bitcoin and praise the investment acumen of Michael Saylor.
Once upon a time, the correlation of traditional and cryptocurrency markets caused rejection and rejection among Bitcoin supporters. However, the situation has completely changed in just a few years. Now what is happening in the stock market is directly linked to the prospects for BTC and the entire crypto market.
The rollback may not be over yet. The biggest risk for Bitcoin in the short term is associated with the decline in the US and global stock markets. Once upon a time, the correlation of traditional and cryptocurrency markets caused rejection and rejection among Bitcoin supporters. However, the situation has completely changed in just a few years. Now what is happening in the stock market is directly linked to the prospects for BTC and the entire crypto market.
Greed and fear index for Bitcoin and the largest cryptocurrencies can also speak in favor of greater caution, which since last week fell by 56 points to a value of “38”, which corresponds to the “fear” regime. Once upon a time, the correlation of traditional and cryptocurrency markets caused rejection and rejection among Bitcoin supporters. However, the situation has completely turned around in just a few years. Now what is happening in the stock market is directly linked to the prospects for Bitcoin and the entire crypto market. The growth in the yield of ten-year American bonds provokes the closure of positions, which immediately affects the crypto market. For the party to continue, both markets desperately need good news. Bitcoin needs the next Elon Musk, and the stock market needs the promise of a long, non-stop printing press. There are no guarantees in either case.
It looks like the hard times will not end for Ripple. One of the world's largest money transfer services, MoneyGram, refused to use the product based on the XRP token due to the claims of the US Securities and Exchange Commission (SEC) against Ripple. Against the backdrop of SEC claims, in addition to MoneyGram, Coinbase and OKCoin, Galaxy Digital, Bitstamp, B2C2, eToro and Kraken have already refused to support the XRP token. Asset management company Grayscale Investments announced the liquidation of an XRP-based investment trust, and 21Shares has removed the Ripple token from its exchange-traded products. As a result, the Ripple lost up to 45% of its value last week, and the XRP/USD pair was trading at $0.42 on the evening of February 26.
The popularity and prominence of cryptocurrencies continues to grow. According to BDCenter Digital, 12 out of 100 Twitter posts are about cryptocurrency. In just the week of February 7-14, Twitter users mentioned bitcoin over 675,000 times. The last record was set on January 10, when the weekly number of posts mentioning bitcoin reached 576,000. In total, the number of cryptocurrency users has stepped over 200 million people from more than 150 countries.
The fall in bitcoin could also have been facilitated by the fall in global indexes of technology companies and the beginning of large-scale vaccinations against coronavirus, but the main thing is the position of the US Government. According to Bloomberg, against the background of the decline in the bitcoin rate, the head of Tesla and SpaceX, Elon Musk, lost the first place in the ranking of the richest people on the planet. Tesla shares fell by 8.6%, as a result of which Musk lost $15.2 billion. At the same time, the fall in bitcoin, according to Bloomberg, may be partly due to the statement of Musk himself, who called the prices of cryptocurrencies too high. It is not for nothing that they say that a word is silver, and silence is gold.
If Bitcoin, Ether and a dozen other leading altcoins can be bought in the long term, then you need to be extra careful with the rest of the coins. So, Ethereum, due to the advantages of the platform, was able to overcome the historical maximum, while many stars of 2017, including ZCash (ZEC), were unable to overcome the attraction, remaining very far from their historical maximums. Now they are sold out along with the entire market, and have significantly less chance of recovery.
Glassnode analysts concluded that bitcoin whales have begun to sell their assets. In February, 140K BTC worth $ 6.7 billion were sold. The blockchain shows that coins are set in motion on wallets that have been dormant for more than 10 years. MicroStrategy's recent purchase of another billion dollars of bitcoins is unlikely to stop the sell-off if whale coins are now entering the market, buying BTC at $ 3- $ 5K and below.
The rapid decline in "Greed". During the last months of a bull rally, this indicator has rarely shown decline, being almost permanently in “extreme greed” mode. Over the past day, the indicator has shown a drop of 24 points, having abruptly switched to the “greed” mode, being on the border with the “neutral” zone. The volatility of the market is such that the market may well plunge into “fear” within just a few days.
Tesla's theoretical “paper” profitability could have been about $ 1 billion, which exceeds the profit from sales of electric cars in 2020 at $ 721 million. However, this is unlikely to encourage other companies to invest in Bitcoin, since everyone can see how quickly the situation is changing and how risky such investments are. At the moment, the market is full of optimism about a "healthy correction", but in fact there are already references to the end of 2017 - early 2018, when several waves of decline and growth were nevertheless replaced by a wide trend reversal.
Ripple officials said in a preliminary hearing on Monday that the SEC refused to notify exchanges and other market participants about XRP's status as a security during numerous discussions in 2019 and earlier. Lawyers for Ripple CEO Brad Garlinghouse have already filed a motion to leave the claim without consideration, pointing out that he could not have known about the possibility of XRP being recognized as a security. The standoff between the SEC and XRP will set an important precedent for the market. Moreover, the US financial authorities may similarly engage in other projects that, for some reason, will be perceived in terms of systemic risks to the economy.
Some members of the crypto community associate the current market dynamics with the "Musk effect". Recall that recently the head of Tesla has disappointed many participants in the crypto market with his unexpected skeptical statements about bitcoin. So, on February 20, he announced that he considered BTC and ETH overvalued. Microsoft co-founder Bill Gates urged potential investors not to follow the example of Tesla, which has invested $ 1.5 billion in bitcoin. I am not overly optimistic about Bitcoin, and my general thought is this: if you have less money than Elon Musk, you should probably be careful, ”said Gates. Painful market correction or end of the rally? In the near future, the prospects of the crypto market will be seriously influenced by the comments of the US monetary authorities. If the economy continues to receive incentives not only in words, but also in deeds, the situation with high-risk assets may stabilize for a while.
Yesterday's decline occurred against the background of an increase in the flow of bitcoins to exchanges. According to CryptoQuant, over the past 24 hours, trading platform balances have grown by 37 thousand BTC, which was the largest inflow this year and is comparable to the levels of March 2020, when the market experienced a major collapse. The enthusiasm for bitcoin is becoming "more and more sectarian" and is grounded in "magical thinking," said Will Hobbs, investment director at Barclays Wealth & Investments. The first cryptocurrency could turn out to be a wingless bird if interest rates rise. One of the main barometers of greed in the market, the S&P 500, has begun to decline, which raises the degree of fears about the possible start of a wide correction, which, no doubt, will spread to the crypto market.
Bitcoin is ineffective for transactions due to its highly speculative nature and the large amounts of energy used by its network, said US Treasury Secretary Janet Yellen. People need to be aware of the extreme volatility of Bitcoin. I am really worried about potential losses for investors. I'm afraid it is used in illegal financial flows, ”she said. Yellen mentioned the need to consider launching a central bank digital currency (CBDC). According to analyst Sven Henrich, Yellen has actually declared war on bitcoin. FTX CEO Sam Bankman-Freed said last week that the crypto futures market is currently overheated. If this level of activity in the market continues, then days with liquidation of positions worth several billion dollars will become the norm for the cryptocurrency space, said Paolo Ardoino, CTO of the Bitfiex crypto exchange.
Overall, the supply / demand ratio remains in favor of bitcoin: 150,000 BTC coins were mined and almost 360,000 were bought back over the last five months of 2020, and investors hope that this balance will continue in the future.
At the same time, buyers look at the head of Tesla Elon Musk, whose tweets alone push the quotes sharply upward. However, the US Securities and Exchange Commission (SEC) is now interested in his "creativity" on Twitter, considering that the billionaire's calls to buy digital assets fall under the law on the offer and advertising of securities and can be regarded as unregistered brokerage activities and attempts to manipulate the market. If proven, Elon Musk could face huge fines. In the meantime, the entrepreneur said that he was taking a break and would no longer post tweets, at least in the near future.
Institutional investors continue to buy both cryptocurrencies and shares of miners and crypto funds. So, the Grayscale Investments fund added 20,000 ETH to its Ethereum portfolio last week, bringing its volume to $6 billion. Another impetus for the growth of the BTC/USD pair was MicroStrategy's decision to raise another $900 million to buy bitcoins.
The statements of a number of US politicians and officials also have a positive impact on the price of digital assets. For example, Miami Mayor Francis Suarez announced that he had already taken a number of steps to legalize cryptocurrency. “We have made bitcoin an available currency for potential investors. In addition, employees can receive salaries in cryptocurrency, which is a huge step forward,” he wrote on Twitter. Candidate for mayor of New York and former candidate for US President Andrew Young supported his colleague, saying that he will try to make the financial center of the world become a center for cryptocurrencies as well. And St. Louis Fed chief James Bullard called bitcoin a rival for gold.
The supply / demand balance also remains in favor of Bitcoin, since 150K BTC were mined in the last 5 months of 2020, and almost 360K were bought back. In addition, the infrastructure for institutional investment continues to develop. Bitcoin ETFs have been approved by regulators in Australia and Canada. In addition, the statement by St. Louis Fed Chairman James Bullard that Bitcoin is a rival for gold, not the dollar, can be considered positive for BTC. Now we have come to the point where even the pessimists have paused their selling decisions. Perhaps the market has moved to a stage where most are aiming in one direction: up. However, this situation is so dangerous because massive FOMO and greed bring to the market a shadow layer of large investors who, using the investment infrastructure created over the past years, can start playing against the market. Thus, it is absolutely not necessary that the growth will stop in the near future, but right now, at the moment of general enthusiasm for the prospects of the crypto market, it is worth taking special care.
All participants in the crypto market, from retail lay investors to institutional and whales, are waiting for growth up to $ 60K, where Bitcoin will face one of the most serious tests in the current bull rally.
Another impetus for the growth of the benchmark cryptocurrency was the announcement of MicroStrategy about its intention to raise $ 600 million through the placement of bonds for the purchase of another portion of bitcoins. The company goes all-in, since the current price levels are considered by many to be an already overheated market, but everyone understands that market participants are following such news in the most careful way and, no doubt, this will strengthen the willingness of the majority to remain in the asset for some time. The Glassnode report does indicate that Bitcoin is now completing only the initial stage of accumulation and is entering a phase of active growth, similar to what we saw in the last six months of 2017.
After Musk's statement, Twitter's interest in bitcoin, promotion of launches of various bitcoin exchange-traded funds, we can talk about the formation of legal loyalty to the first cryptocurrency. Of course, regulators may well change their minds, but at this stage everything is moving towards opening ways for corporate investors to invest in bitcoin.
In December, MicroStrategy announced it had raised $ 400 million, subsequently raised its target to $ 550 million and eventually received $ 650 million from investors. The new round is held on similar conditions with the possibility of additional raising up to $ 90 million. To date, MicroStrategy has invested $ 1.145 billion in bitcoin, using for own and borrowed funds. The volume of its positions of 72 thousand BTC at the current exchange rate is estimated at $ 3.6 billion. Earlier, Citibank analysts lowered their forecast for MicroStrategy shares to $ 250 due to the company's decision to buy bitcoin using debt instruments. Since then, MSTR's share value has surpassed $ 1,000 and is up another 5% on Tuesday. For all of 2020, MicroStrategy shares have risen in price by 580%.
According to experts of the analytical service Glassnode, the bitcoin market has left the initial phase of the accumulation of the bull market. A similar situation, but in a less dynamic manner, was observed in 2017 - six months before the formation of the peak of the bull market. The rally of altcoins, the decline in the bitcoin dominance index, the growth in the number of cryptocurrency analyst followers on Twitter and the traffic to resources such as CoinMarketCap, speak of increased interest from retail investors. In early December, Glassnode CTO Rafael Schulze-Kraft suggested that the price of Bitcoin could exceed $ 200,000.
If everyone expects Bitcoin to test $ 50k and continue to grow up to $ 60k, then the attitude towards altcoins is warming very gradually and has turned into a state of obvious interest only now, while the attitude towards most coins until very recently was at least cautious. Over the past weekend, investors decided to celebrate Valentine's Day by buying all alternative cryptocurrencies in a row, as a result of which, most of the coins showed tens of percent growth. Altcoins are now also undergoing a local correction, but chances are high that this will not be the last impulse of price growth from retail buyers.
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