Bitcoin price movements … a reflection on the last 12 months and what’s ahead
Bitcoin has had some material news items in the last few months, and material price volatility to go with it.
Over the last 12mths BTC is up +92.5%, from a low of USD$3179 in December 2018, to a high of USD$12,647 in July 2019, with the price currently sitting at USD$7128. The all-time high was set in December 2017, at USD$20,089.
The current market capitalization of all cryptocurrencies is currently USD$200bn with Bitcoin the most dominant by a wide margin, sitting at time of writing at USD$130bn.
This period of time saw:
- Bakkt launch in September 2019 (the first physically settled BTC futures contract) by ICE, operator of 23 leading exchanges, including the NYSE. Volumes have begun to increase substantially.
- President Xi Xinping announced China would embrace blockchain technology, with officials urging the countries commercial banks “to step up their application of blockchain and embrace digital finance”.
- Peter Thiel, along with other well regarded early stage venture capital firms invested further in the crypto mining space, participating in a USD$50m funding round, at a USD$200m valuation.
- Boston based Fidelity Investments became one of the early backers of blockchain and cryptocurrency, launching a subsidiary company called Fidelity Digital Assets, and in November was granted a license by New York’s financial regulator which allows them to offer its cryptocurrency trading and custody services to companies based in the state.
Despite being around for 10yrs+, Bitcoin is still in the early stages of adoption, so price volatility is to be expected, however the long term prospects are extremely positive, evidenced by recent major developments in the industry. Bitcoin is not only a hyper efficient monetary transfer mechanism, but it is rapidly being viewed as a store of value in a world where fiat currencies are continuing to be de-based.
A few interesting articles appeared online in the last week, including an update on the stock-to-flow model surrounding Bitcoin. For those who aren’t familiar with this model, see below.
Now I’m not saying that this is the future of Bitcoin, and a lot of models can be made to fit with a historical perspective, but as far as a financial model goes for BTC its worth paying some attention to.
If you want to have a better understanding of the model visit PlanB, who also have a Medium post on the subject. There post is from back in March 19.
https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25
Twitter commentator @Rhythmtrader posted this graphic, which was picked up by cointelegraph, which was how it hit my desk.
He highlighted that 11,580,000 BTC haven’t moved in over a year. On my basic math of 18mil in circulation = 64.3% of the BTC in circulation haven’t moved for 12 months. It really means that 6,420,000 BTC are doing all the price movement in the market.
Some context on all of this @ $USD8,000 the value of the active BTC is 51,360,000,000. That’s $51.36 Billion dollars of active BTC being moved around in the market.
Which brings me to my current most favorite Twitter account, @BakkBot, which helpfully summaries the Bakkt movements.
Bakkt continues to grow, with volume increasing steadily. I would like to think that the parties transacting on Bakkt are Institutional Investors, High Net Work (HNW) or Sophisticated Investors. Whatever the combination of the above, volume continues to increase and we have to think that’s positive over the longer term. But its still small change in the context of the overall BTC marketplace.
The next major catalyst for the industry is the halving event which should occur in May of 2020 — at this point in time the block reward will halve from 12.5 BTC to 6.25.
What typically happens in a market that is in supply/demand balance, when half the supply is cut out of the market overnight? 2020/2021 should be very interesting years for blockchain and Bitcoin — at Cosmos Energy we are positioning ourselves for this and for the years that follow.
About Cosmos Energy: Cosmos Energy Group (Cosmos) is an Australian based digital asset infrastructure business. We are focused on the identification, acquisition and use of stranded or distressed energy assets, through co-location of flexible data centres. Cosmos currently deploys ASIC hardward primarily focused on Bitcoin mining in these data centres throughout the USA.
About James Manning: James Manning is the Founder of Cosmos Energy Group. Based in Sydney, Australia he is has a background in accounting and finance. When he isn’t busy mining for Bitcoin, James is searching for value adding opportunities in emerging technology.
