Blockstream Markets Weekly — Dec 31, 2021
Bitcoin ends 2021 at an average price of $47,400, Ray Dalio says BTC has proven itself, MicroStrategy backs up the truck, Southeast Asia sees mining boom, Marathon buys $900M of miners, and Morgan Stanley funds add to GBTC position
By Jesse Knutson
Hope springs eternal
Bitcoin is on pace to end the last week of 2021 modestly lower and almost spot on the full-year average price of $47,400 (up 4.3x from last year’s full-year average price of $11,126).
Equity markets look set to end the last week of the year higher and will likely close out the year at or near all-time highs. 2021 was a blowout year for equities with the S&P recording a new record high every month this year.
Today’s Bitcoin options expiry was followed by a ~ 3% price pop, recovering some ground lost earlier in the week.
The removal of both the China exchange ban and the normal dump into options expiry probably sets us up pretty nicely for the first week of 2022.
I wonder how much of the downward price trend of the last two months has been driven by the forced closure of Chinese exchange accounts.
Earlier this month, Bobby Lee noted that Chinese exchanges like Huobi and OKEx have until the end of December to close down Chinese user accounts.
I think this probably explains why we’ve seen Bitcoin typically trade weaker over Asia hours vs US and European hours.
It’s also a potential reason for optimism going forward as the Chinese exchange overhang will be cleared from the end of this month.
Southeast Asian boom
China’s September Bitcoin mining ban has reportedly driven a mining boom in South East Asia.
It’s interesting to see governments around the world from New York and Miami, to Texas, El Salvador, and now Thailand turning to Bitcoin as a growth driver.
Beijing’s crackdown forced the largest and best-resourced companies to pack up and move operations to North America, Malaysia, Russia, and Kazakhstan.
The smaller players reportedly cut losses and dumped hardware to retail and corporate miners in places like Thailand.
Meanwhile, in neighboring Laos, authorities have licensed six domestic companies as legal miners and in November, it was reported that the government of Laos expects Bitcoin mining to generate $190M in revenue next year, almost 7% of the country’s total projected domestic revenue in 2022.
“Laos is handicapped by geography and lack of human capital…It desperately needs cash in government coffers and has few options to generate revenue.”
Bitcoin fixes this.
A big year
2021 was a massive year for Bitcoin.
It was a year marked by significant institutional participation and the very beginning of sovereign adoption.
There’s a lot to look forward to in 2022, including US spot ETFs, further decentralization of Bitcoin hash rate, more Bitcoin company IPOs, broader sovereign adoption, increased institutional participation, Lightning Network growth, and more STOs on the Liquid Network.
Bitcoin ends 2021 stronger and more resilient than ever. I think 2022 will probably be another big year for Bitcoin.
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Bitcoin markets news
- In a podcast appearance with Lex Fridman Dalio said that
“It has proven itself. It has not been hacked, it has operated in an amazing way over that 11 years to be probably the most exciting topic among a lot of people. It has been used and is now obtained the status of having imputed value.”
- Also mentions that he thinks that massive money printing has started an era of competition between different forms of money and that Bitcoin will be part of that competition
- Marathon announced the purchase of an additional 78,000 Antminer S-19 XP Miners from Bitmain
- The company expects its operations to grow to nearly 200K bitcoin miners producing ~23.3 EH/s by early 2023. The article states that this should represent a 600% increase from the current production levels
- Miners are guiding for a massive capacity expansion in 2022, but it’s unclear to what degree this will continue to be bottlenecked at the foundry level. My channel checks indicate significant TSMC 5nm allocation to Bitmain in 1Q22
- Michael Saylor backed up the truck again…loading up another 1,914 BTC for a total of ~ $94.2M
- In 3Q21 alone, MicroStrategy bought more than 9,000 BTC
- MSTR’s total stash now totals 124,391 BTC acquired at an average price of $30,196
- Fundstrat managing director Tom Lee had a $100k price target for 2021
- Lee thinks that this year’s China ban may have derailed Bitcoin’s price appreciation somewhat this year and its ability to bounce back from negative catalysts may set it up for a strong move in 2022
“2022 should be a good year because the things that disrupted Bitcoin in 2021 — such as China essentially banning mining, trying to essentially ban Bitcoin — that would have been considered a crypto winter-like event and it didn’t kill Bitcoin.”
- At the end of last quarter, filings from Morgan Stanley Funds showed a total position of ~ $300M
- Robinhood Markets is launching a beta version of its crypto wallet in January
- The platform’s alpha program saw 1 million waitlist sign-ups in less than 30 days, and currently, around 1.6 million in total
- Jasmine Technology Solution announced an expansion into bitcoin mining in July
- The company has rallied nearly 7,000% year-to-date, the most among global tech firms with a market value of at least $2 billion
- The company began mining with only 325 miners and has produced just 8 BTC to date. The company plans to aggressively ramp mining operations in 2022
- The number of digital asset investors globally is now a significant number, this is starting to be recognized by policymakers and an important political constituency
- No word yet on Doge support
365-day average price
- Bitcoin finished 2021 with a full-year average price of $47,434
- Up 4.3x from last year’s average of $11,126
Don’t be scared
- The Bitcoin Fear & Greed sentiment index continues to signal extreme fear
- Ecoinometrics notes that this has historically signaled limited downside 30 days out
Chart credit: Ecoinometrics
Asia hours selling
- This chart is a week old but shows how Asia has been hammering Bitcoin price
- I think this is especially interesting given the context of China exchange account closures
- Interestingly, price has mostly been up in US and Euro hours
Chart credit: Glassnode