Blockstream Markets Weekly — June 25, 2021

Paraguay eyes BTC as legal tender, El Salvador to distribute $30 of BTC to citizens, Citibank launches BTC unit, Cathie Wood buys the dip, new ETFs launch in Brazil and the Middle East, Sichuan turns up the heat on miners, and Elon agrees to Bitcoin talk with Jack

What’s happening in the markets?

Buy the dip

ETFs and Legal Tender

Growth driver

Tinfoil hat

Great reset

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Bitcoin markets news

Blockstream, Cipher join Macquarie’s 2021 Technology Summit

  • Panel discussion with Blockstream CEO Adam Back and Cipher Mining CEO Tyler Page
  • Some great insights from two of North America‘s leading Bitcoin miners

Paraguay proposes bill to make Bitcoin legal tender

  • The bill, if passed will position Paraguay as the second country to embrace Bitcoin as legal tender after El Salvador
  • Paraguay is one of the most dollarized economies in the region
  • With 8,810 MW of hydro capacity installed, the 2nd largest hydropower plant in the world, and the lowest commercial price of electricity in the region, Paraguay could be a big deal for mining

El Salvador to distribute $30 of BTC to every adult citizen

  • A country with a population of just over 5 million people and a GDP 1% the size of the US just lapped the G7 on stimulus distribution technology

“The wallet app will even work anywhere with a cell connection, and you won’t have to have a cell plan for the app”

Citibank launches Bitcoin unit

  • Citigroup has launched a digital asset unit under its wealth management division
  • In March, Citibank said

“ Bitcoin could become the currency of choice for international trade”

Andreessen Horowitz launches $2.2B crypto fund

  • The funds will be used for everything from early-seed rounds to later-stage startups
  • The fund looks a bit crypto heavy and Bitcoin light

Bitmain suspends sales of mining hardware after China ban

“overseas mining sites are not built overnight, and selling pressure is huge in the secondary market”

  • I wonder also, though, if this is a convenient way to allow chip capacity allocation to catch up to a backlog of orders. I‘ve heard that TSMC gave no 7nm allocation to miners in 4Q20 and 1Q21

NYC mayoral front runner wants New York to be “center of Bitcoins”

  • NY has a checkered history with Bitcoin from the New York Bit License to a very active NYAG
  • I don’t think Bitcoin companies are going to be in a hurry to move to NYC

Cathie Wood’s ARK buys the (GBTC) dip

  • Ark Invest’s Next Generation Internet ETF bought 697,996 shares of the Grayscale Bitcoin Trust mid this week. Later in the week, Ark topped it up to a total of 1,000,000 GBTC shares and 215,000 Coinbase shares.
  • Wood has reiterated her long-term $500,000 price target for bitcoin and believes the recent environmental concerns surrounding Bitcoin mining are “misguided”

JPM thinks GBTC share sales will weigh on BTC

  • I don’t see how this can negatively impact Bitcoin, maybe in terms of sentiment
  • I think, outside of Cathie Wood, the bulk of institutional interest in the GBTC was small to mid-sized hedge funds trying to arb the premium
  • That’s gone south in a big way with the historic 10% to 20% premium flipping to a -10% to -20% discount since the end of February. Surprised we haven’t had any fund blowups around this

Brazil stock exchange lists first Bitcoin ETF in Latin America

  • Bitcoin ETF’s are now listed in Canada, South America, and the Middle East

South African brothers disappear along with ~ $4B in Bitcoin

  • Unclear whether it’s the largest crypto hack in history or the biggest exit scam of all time, either way, it’s not good for investors
  • South Africa was also home to what Chainalysis called the biggest crypto scam of 2020, which resulted in the loss of $1.2B of digital assets
  • Highlights the importance of digital asset self custody

3iQ launches first Bitcoin ETF in the Middle East

  • Canadian digital-asset manager 3iQ’s Bitcoin ETF gained +10% on the first day of trading on Nasdaq Dubai on Wednesday

South Korean tax crackdown sees $47M worth of seizures

  • Korea’s financial regulator has set a deadline for Korean exchanges to partner with local banks to open clients’ real-name accounts
  • Banks, though, are resisting partnerships with several smaller exchanges for fear of being exposed to money laundering and other financial crimes.
  • The South Korean government is also planning to impose a new income tax on cryptocurrency transactions

Sichuan turns up the heat on Bitcoin miners

  • 26 firms that had been inspected and reported as a potential cryptocurrency mining enterprise
  • Power providers were notified to immediately stop supplying power to crypto mining projects they have detected
  • The article suggests that 90% of China’s hashrate has already been shut down at least temporarily

Compass Point issues BUY call on listed miners Riot and Marathon

  • Compass Point’s Michael Del Grosso thinks Riot and Marathon are mining Bitcoin at a cost of production from $12,000 to $16,000
  • Compass Point sees North America as a major beneficiary of China’s recent crackdown on Bitcoin mining
  • I would highlight that Blockstream Mining Note allows individual investors exposure to similar North American mining economics

“We believe North American miners are well-positioned to benefit both from the lower global hashrate and the potential for increased availability of mining equipment”

Elon Musk and Jack Dorsey agree to have Bitcoin talk

  • Due to Elon fatigue, this gets put at the bottom of the list
  • Jack and Elon will have their sit down at an upcoming Bitcoin event
  • Jack Dorsey, Cathie Wood, and Blockstream’s Adam Back are all featured speakers at the event which is focused on driving institutional adoption of Bitcoin

Charts

Bitcoin sentiment improving

  • Bitcoin sentiment looks to be slowly improving from dismal to slightly less dismal
  • Currently at a two week high after being buried in ‘extreme fear’

Net new entities hits multi-year high

  • An interesting metric that points to a surge in new market participants following Bitcoin’s dip below the $30,000 mark
  • Net new entities is defined as the difference between new entities and “disappearing” entities (addresses with a balance that has fallen to 0)

Bitcoin liquid supply turns bullish

  • Liquid supply is the amount of Bitcoin held by entities that have consistent inflows and outflows (a cold wallet would be an illiquid entity)
  • I think this points to a decrease in overall supply, which should be price positive if demand remains the same

Futures/options expiry tend to be price positive

  • Over the last nine months, the last Friday of every month looks to be a pretty good entry point

Death of the death cross

  • Lots of talk this week about the 50-day moving average falling below the 200-day moving average (a death cross)
  • It’s a lagging indicator, though, and I think normally closer to signaling bottoms than additional downside. Since 2016, there have only been three death crosses. Two of the three were followed by gains in the weeks and months following the signal

The most concise roundup of Bitcoin market action in the industry.

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