Blockstream Markets Weekly—December 04, 2020

USD slides as BTC hits ATHs, Bernstein Research warms to BTC, Paul Tudor Jones reiterates bullish outlook…Does a massive risk-on rotation mean $20K for Christmas?

What’s happening in the markets?

USD slides as BTC sets new highs

Money on the sidelines

When moon sir?

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Bitcoin markets news

Dollar plummets on US stimulus hopes, Bitcoin hits all-time peak

  • What a headline…
  • USD dropped to a new 2.5 year low as Bitcoin hit new highs on most exchanges Tuesday. Despite trading just shy of the $20,000 mark, Bitcoin’s 20-day moving average is now sitting at about 20% higher than the 2017 peak.

Bitcoin’s rally has Wall Street questioning gold

  • Highlights how BTC has rallied as institutional investors back out of gold
  • Says that if Bitcoin’s market cap increases to 5% of gold’s market cap, it would imply a target price of ~ $30,000

Bernstein Research Co-Head: I have changed my mind on Bitcoin

  • In 2018, Inigo Fraser-Jenkins told clients Bitcoin should play no role in investment portfolios.
  • Now, though, the policy environment, debt levels, and diversification options for investors have changed since the pandemic and made Bitcoin more attractive

Paul Tudor Jones on Bitcoin: The path forward from here is north

  • Implies that Bitcoin is undervalued:
  • Bitcoin’s market cap is actually only ~ $360B. So I guess this means it could go up another 40% and is still wouldn’t be priced correctly :P
  • Also compares it to gold and says that its neutrality and constancy will set it up for conflicts with the fiat banking system in the future

The total number of Bitcoin active users hits a new all-time high

  • On Tuesday there were a total of 432,451 active entities, +5% from the Dec 2017 peak of 410,972.

MicroStrategy BTC premium would make GBTC blush

  • MicroStrategy holds 38,250 BTC at a cost of $425M
  • Stock price has ripped recently as investors see it as a BTC proxy
  • Article highlights analysis that MSTR may now be trading at a > 300% premium for its BTC holdings

Visa launches Bitcoin rewards credit card

  • Visa announced it is teaming up with BlockFi to issue the card
  • Will give 1.5% of purchases back in BTC and a lump sum of $250 in BTC if you spend more than $3,000 in the first 3 months

$5B Guggenheim Macro Fund files to put 10% into GBTC

  • Translates to a potential $530M position, despite GBTC’s current 30% premium to NAV
  • The fund also said that they don’t have plans to build a position in BTC directly. I think this points to how big an impediment custodial and mandate restrictions still are too many mainstream institutional investors.

BitMEX appoints new CEO

  • Alexander Hoptner, the former CEO of German stock exchange Borse Stuttgart GmbH, is slated to take over on Jan 21 of next year
  • Several senior BitMEX executives stood down from their positions in October following charges of violating U.S. money laundering laws and offering illegal derivatives products to American customers

Congress wants Stable Coins to secure Federal approval

  • “The Stable Act” appears to be aimed primarily at Libra type coins issued by US tech companies, but has been broadly worded and companies like Tether would be required to have a banking charter and be approved by the Federal Reserve and FDIC
  • Democratic Party congresswoman Rashida Tlaib, one of the bill’s leads, stated that the Stable Act is designed to protect people of color and other minority groups who lack access to regulated financial services.
  • It looks unlikely that the bill will get passed with just a few weeks left in the congressional year, though
  • Increased regulatory pressure would have a wide-ranging impact on the industry, but could actually be positive for Bitcoin price as a potential haven for Tether’s massive $18B AUM.

S&P Dow Jones plans crypto index launch in 2021

  • Note that this refers only to price benchmarks, of which there are already many providers, including Bloomberg, Nasdaq and Blockstream
  • There is clearly a groundswell of mainstream institutional interest in Bitcoin at the moment, though. So I think this is part of a broader bridge-building between those investors and existing Bitcoin markets.

Charts

Bitcoin balances on exchanges are low

  • This indicates a low near term propensity to sell
  • Chart credit Danny Scott

A recovery in BTC hash rate tends to support price gains

  • Hashrate looks to have largely recovered after the annual migration of Chinese miners from Sichuan back to their local hubs
  • Historically, the 1 Month Hash rate MAVG crossing > the 2 Month Hash rate MAVG has signaled periods of strong BTC price appreciation (very big numbers!)
  • Chart credit Charles Edwards

Bitcoin’s YTD VWAP (volume-weighted average price) hits new high

  • Bitcoin’s year to date VWAP is now above $10,000 for the first time
  • 2017 saw fully year VWAP increase 16x from 2016

USD weakness vs BTC strength

  • The inverse relationship between BTC and DXY looks to have started in March with the passing of the $2.2B stimulus bill.
  • Stronger risk appetite is driving money from safe havens and into risk assets, BTC has been benefiting from that rotation

GBTC premium back above 30%

  • A new 10 month high. This is actually probably a little concerning as it points to a strong uptick in US retail demand. That said the 2017 GBTC premium didn’t top out until more than 130%.
  • Chart credit YCharts

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