Portfolios Reviews & Comments - April 2024

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.

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.

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.

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.

The SEC listens to investors and does not decide to make a decision, including against the owners of XRP in the United States, the lawyer suggests. Brian Brooks, the former head of the US Monetary Authority, also believes the litigation between Ripple and the SEC will lead to an agreement between the parties. The SEC has filed a lawsuit against Ripple and two of its top executives, CEO Brad Garlinghouse and founder Chris Larsen. In the filed case, the SEC argued that the company and its executives were selling unregistered securities and thus making a profit. Analysts believe that further XRP growth depends on the first meeting of the case, which will take place this month. However, the fact that the XRP price is moving with the cryptocurrency market once again gives hope to investors.

In addition to the investment changes, the Ethereum developers are confidently pushing the project towards the second version based on PoS. The Ethereum blockchain uses the stablecoin Tether (USDT), as well as all projects in the field of decentralized financial applications (DeFi). Each transaction within these projects consumes ether, which maintains a natural balance of supply and demand. If developers can sustainably solve the scalability problem, and more and more projects and promising areas will operate on the Ethereum blockchain, ETH will be able to compete even with the reference cryptocurrency, the technological potential of which rests on investment speculation.

Blockchain data indicates continued growth in the number of bitcoin whales. So, since the beginning of 2021, the number of cryptocurrency holders with at least 1,000 BTC in their wallets has grown by 164 to 2,440. Large inflows to whale wallets took place at a price of $ 29,314. They will protect BTC. This level should provide reliable support in the short and hopefully long term.

Biden approves a new $ 1.9 trillion stimulus package. can also be viewed by market participants as a catalyst for the growth of Bitcoin and the market as a whole. The global economy and the situation around the coronavirus are not conducive to a return to growth rails, so investors may pay more and more attention to cryptocurrencies as a means to diversify their investments. At the beginning of 2021, special attention will be paid to the resumption of investments from the side of big capital, as well as the turnover of PayPal and other large companies that have announced their interest in the crypto market. In addition, a violent price rally risks re-attracting the attention of regulators to the sector, primarily in the US. As we can see from the example of XRP, lawsuits from the SEC can put an end to any cryptocurrency, no matter how promising its technologies are.

It is worth noting that the inflow of new funds to crypto funds also dropped significantly during the first week of January. According to CoinShares, only $ 29 million was invested in institutional crypto funds during the first week of the new year. The week before Christmas, large capital invested more than $ 1 billion. Although this can be attributed to the fact that many investors were on winter holidays, if the influx funds in crypto funds will not increase towards the end of January, this may mean that big capital prefers to wait or even satisfy their demand for crypto.

Is $ 50,000 the limit in the current bullish cycle? Hardly. Globally, now all the prerequisites for the continued growth of cryptocurrencies in general, in addition, we received another proof of the operation of crypto factors, including halving. Bitcoin's next funeral ended with a bright return to the scene, which will surely weaken the critical thinking of opponents of cryptocurrencies for a while.

On December 22, the SEC filed a lawsuit against Ripple, accusing the company and its management of selling more than $ 1.3 billion in unregistered securities. A preliminary court hearing in the SEC v. Ripple case is scheduled for February 22. More than 24,000 crypto investors have asked the White House to declare XRP a virtual currency. On December 29, a petition was filed with the White House calling for an end to the SEC's claim. The petition requires the US government to start counting XRP as a virtual currency, and argues that the SEC's actions against Ripple are illegal as the Financial Crimes Enforcement Agency (FinCEN) previously characterized XRP as a virtual currency. Because of the actions of the SEC, the 40 billion dollar market of the currency is collapsing, and hundreds of thousands of ordinary Americans, whom the SEC is called upon to protect, are suffering irreparable harm and damage, the petition says. In order for the White House to respond to this petition of citizens, it is required to collect more than 75 thousand signatures.

Bloomberg experts believe that the current consolidation in the $ 19,000- $ 20,000 range may stretch over the next few months, but further growth will continue. Analyst optimism is based on fundamental shifts from 2017. Bitcoin will be set to new records by the unprecedented pace of quantitative easing and growth in the debt-to-GDP ratio, as well as the reduced rate of coin emission after the halving. The range of fluctuations in the price of the first cryptocurrency can be $ 10,000 - $ 50,000, and the capitalization can grow to $ 1 trillion.

The process of entry of institutions into Bitcoin is just beginning, which means that $ 16K is just the beginning. Bitcoin demonstrates significantly higher returns compared to gold, while BTC's market cap is just over 2% of gold. This fact cannot be ignored by big capital, so the end of 2020 may turn out to be bad for most, but not for Bitcoin.

The index of greed and fear for Bitcoin and the largest cryptocurrencies shows a decrease in a day by 4 points to “86”. While it still remains in “extreme greed” mode, the beginning of the decline while keeping Bitcoin at occupied price levels will suggest that the consolidation process can calm technical indicators, turning price highs into new starting points for further growth.

Ripple has begun buying back XRP tokens to “support a healthy market,” and has already completed $ 46 million in transactions. In addition, the famous billionaire and investor Stan Druckenmiller changed his attitude towards cryptocurrencies and invested part of his fortune in bitcoins.

The physical gold market, including secured ETFs, is worth $ 2.6 trillion. In order for bitcoin to equal it, it must grow 10 times from the current levels. “Even modestly crowding out gold as an 'alternative' currency over the longer term suggests a double or triple rise in Bitcoin.

It is very likely that in the near future this huge sector in terms of turnover will become the target of regulatory investigations, since the 5 largest sites have huge volumes of cryptocurrencies. The peculiarity of the work of this sector is that until the moment of withdrawal from the crypto-exchange, digital currencies do not belong to their owners. The fact that Bitcoin is finding the strength to recover against this background indicates the existence of a very strong demand from buyers, which increases even with small price pullbacks.

A price rise above $ 12K would be the best way to support the positive sentiment in the market and direct new investments towards Bitcoin. In the meantime, we can observe the process of BTC consolidation near the occupied levels.

Several events have the potential for significant pressure on Bitcoin and cryptocurrencies in general. First, the CFTC claims against BitMEX. After the arrests and lawsuit, crypto market participants feared that massive amounts of bitcoins would get stuck on the site. However, according to Crystal Blockchain, more than 45,000 BTC worth of assets were withdrawn from the site in less than two days. And this was great news, since the very fact of the withdrawal possibility reassured market participants. In addition, the asset did not change hands, but simply moved to other major crypto exchanges. BitMEX Bitcoins have been distributed to Gemini, Binance, OKEx and Huobi. The second important factor of influence on the stock market and with it on Bitcoin is the health of the president of the world's largest economy. Initially, the news caused a shock wave, but now the market is recovering, and in the absence of negative news, we will see a rebound of all affected assets. Bitcoin is also under the influence of investors, being a risky position, however, in this case, the news around BitMEX had a greater impact.

The rise in popularity of the Ethereum blockchain leads to an increase in fees. On September 1, miners earned $17 million due to the high demand for the platform's capabilities. Now Ethereum attracts both DeFi and stablecoins, there are serious questions about scalability, while for ordinary users the fees are already extremely high.

The weakening trend in the US currency is dominating. In this situation, for investors, the best option for preserving capital will be buying bitcoin, gold and silver. Bitcoin is doomed to long-term growth, and no short-term pullbacks can change the overall positive trend.

Despite what is happening in the market, the index of greed and fear still remains in the “extreme greed” mode, which is rather strange, since usually this indicator accurately reflects what is happening in the market. The RSI for BTC / USD has been declining over the past few days, further out of the overbought area. In the short term, bitcoin will have to demonstrate its intentions: either it will again gain a foothold above the support level, or the coin will have to test the key horizontal level of $11K, after which the path will open to a fall down to $10200 and below.

I doubt that this year Bitcoin will repeat the rally three years ago and reach $20000. The massive transition of investors to the crypto sphere is held back by the acute volatility of this market. In the near future, we should expect a decline in bitcoin. The number of active bitcoin addresses is declining. These are those wallets that send or receive BTC on a daily basis. The dynamics of the activity of users of the bitcoin network has a strong influence on the value of the coin. If in the near future the number of active addresses in the BTC network does not start to grow, then by the end of August we should expect a tangible decrease in the value of the cryptocurrency.

Levels above $11000 are highs in more than a year, and appear high enough to neatly take profit. Bitcoin's price high in 2020 has reached $11400, and at the moment the dynamics are similar to the situation with precious metals: in the range from a slight decline to zero. The index of greed and fear is in the "extreme greed" mode, which, according to the idea of ​​the index, indicates an imminent trend reversal, nevertheless, bitcoin may well show growth and being in overbought technical conditions. Formally, a sell signal will be the return of the RSI to the area below 70 against the current 75.