Category: Bitcoin

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Bitcoin Crypto News Trading

Bitcoin Supply Squeeze Results in 5-Month High, Back to a $1 Trillion Asset

After bitcoin languished behind the alts for what might have felt like an eternity, the winds appear to have shifted favourably towards the king of crypto as it soared past US$55,000, reaching a five-month high and reclaiming its status as a US$1 trillion asset.

Supply Squeeze At All-Time High

Based on Glassnode data, the current bitcoin balance on exchanges is at its lowest level since January 2018.

Bitcoin percent on exchanges. Source: Glassnode

In addition, the three-month HODL supply is at an all-time high. Over 85.25 percent of coins have not moved in three months. This is typically a bullish signal as strong hands continue to accumulate on the expectation of further gains.

Three-month supply. Source: Glassnode

Who is Driving the Supply Squeeze?

According to South Korea-based blockchain data firm CryptoQuant, whales purchased US$1.6 billion worth of bitcoin on the spot market:

Crypto analytics firm Santiment noted that October 6 was the single largest day of bitcoin accumulation by whales in over two years:

The firm highlighted the positive momentum in the market, commenting:

#Bitcoin dominance has been on a major rise the past couple days, and $54.6k has been breached for the first time since May 12. Our NVT Token Circulation model is indicating October is the first month we’re seeing a bullish divergence since February.

Santiment

As the “digital gold thesis” continues to gain momentum, signals are in that Q4 may be bitcoin’s best performing quarter in 2021.

There are a few indicators suggesting that a range of new participants are likely to enter the fray in this last quarter. As Raoul Pal noted on Anthony Pompliano’s The Best Business Show:

So who is the next big buyer of bitcoin? Well, it’s pretty clear to me. It is the ongoing institutions … and secondly it is the coming ETF … I have a very strong feeling it comes over the next October, November, December period. And finally, we’re starting to see some noise from the sovereign wealth funds…

Raoul Pal, The Best Business Show podcast

With the whales goggling up supply, what are the plebs left to do? Bitcoiners would tell you to simply stack sats.

Looking at the value of $US1 in sats, if you’re looking to preserve purchasing power, stacking sats would appear to be the rational thing to do.

$1 valued in sats. Source: Dr Jeff Ross
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Banking Bitcoin Crypto News Mining

BTC-Backed Loans a Reality as Miner Obtains $100 Million Credit to Buy More Equipment

Marathon Digital Holdings, one of the largest publicly traded American Bitcoin mining companies, has obtained a US$100 million credit line from Silvergate Bank, secured with bitcoin and USD.

According to its press release, the mining firm secured the loan on October 1. The credit line will be available for a year, and is expected to be renewed annually by agreement between both parties. The funds will be used to expand the company’s BTC mining operations and to acquire new equipment. 

[The] revolving line of credit is secured by our bitcoin holdings and USD [and] consistent with our strategy to focus on agility as it enhances our ability to act opportunistically and in a manner that is efficient for both our business and our shareholders. By having this line of credit in place, we believe Marathon is better positioned to continue growing over the coming quarters.

Fred Thiel, CEO, Marathon Digital

Over $360 Million in BTC Holdings

The firm also revealed its quarterly BTC production and miner installation updates. By the third quarter of 2021, the company produced 1,252.4 new minted bitcoins, 340.6 minted in September alone. This represents a 91 percent production increase quarter-on-quarter and increasing total bitcoin holdings to approximately 7,035.

At press time, Bitcoin was trading at US$51,260, which gives Marathon’s bitcoin holdings an approximate fair market value of US$361.2 million.

Not the First BTC-Backed Loan

This is the first BTC-backed loan issued by an American bank, but not the first BTC-backed loan as such. Crypto News Australia reported in July how Glen Oaks Escrow, a California-based escrow company, made its first BTC-backed refinance loan for a property in San Diego.

We have seen similar moves in Australia as some people use crypto to pay off their mortgages or even put their houses up for bitcoin.

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Bitcoin Market Analysis Markets Trading

Q4 Looks Bullish for Bitcoin, Up 34% in a Week

Over the past week alone, bitcoin is up over 34 percent, surging past the US$55,000 mark. After a lacklustre September (jokingly referred to as “Downtember”), October (or “Uptober”) has kicked off with a bang suggesting we may be in for an exciting Q4.

2021 – A Topsy Turvy Year

Everyone knows Bitcoin is volatile, but 2021 has been noticeably so, particularly in light of the endless attacks on the network. These ranged from China banning crypto (again) and shutting down miners to Elon Musk triggered sell-offs in the wake of his “environmental concerns“.

Following a strong Q1 providing a return of 102 percent, Q2 proved to be bitcoin’s worst in over eight years, delivering 40 percent. Q3 brought bitcoin back into positive territory, with the digital asset recording a 24 percent return over the period. After reaching an important technical milestone last month (the “Golden Cross“), there are signs that Q4 may prove to be bitcoin’s best in 2021.

BTC monthly returns. Source: CryptoMichNL (Twitter)

Three Reasons Q4 Is Looking Good

Reason One: HODLers Are Accumulating

One of the main signals of a bull market is accumulation by long-term holders (HODLers). According to Glassnode, HODLers have added 2.35 million BTC to their stacks since supply bottomed out in March. Since then only 180,000 BTC have been mined, meaning HODLers accumulated 13x more coins than were produced via fresh issuance over the past seven months.

HODLer accumlation. Source: Glassnode.

Reason Two: On-Chain Volume Dominated By Large Transactions

According to Glassnode:

The rising dominance of large transaction sizes hints to the increased maturation of Bitcoin as a macro-scale asset with increasing interest from high-net-worth individuals, trading desks, and institutions.

Glassnode
Volume dominance. Source: Glassnode

Reason Three: SOPR is Flashing End of a Bear/Start of a Bull Market

In Glassnode speak, the LTH-SOPR (long-term holder, spent output profit ratio) refers to the degree of profit realised on chain. Glassnode notes that as a longer-term cyclical metric, the “LTH-SOPR usually trades in this range during late stage bear markets, and early stage bull markets. This is a result of lengthy sideways price action which compresses profit multiples, even for longer-term investors.”

7-day moving average SOPR. Source: Glassnode

Outside of on-chain analysis, the futures and options markets are currently showing that traders are no longer in fear mode and have shifted bullish.

Despite having the validity of his model challenged this year, Plan B remains confident of his end-of-year US$135,000 bitcoin prediction made in late June:

Just last week, derivative markets gave bitcoin a 3.2 percent chance of reaching US$100,000 before year end.

Between technical, fundamental, on-chain and stock-to-flow analysis, time alone will tell which is more accurate in determining how bitcoin performs in Q4. Chances are bitcoin will do what bitcoin does – whatever it wants.

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Banking Bitcoin Crypto Hardware Wallets Crypto News

Is Remittance-Dependent Tonga the Next Nation to Adopt Bitcoin as Legal Tender?

The small Polynesian island nation of Tonga will follow the example set last month by El Salvador in making bitcoin legal tender, if at least one senior politician has his way.

Like the Central American republic, Tonga is one of the world’s most remittance-dependent economies. Tongan MP, barrister, hereditary landowner and bitcoin advocate Lord Fusitu’a believes the adoption of bitcoin as legal tender in Tonga can potentially offset the high remittance commissions charged by money transfer services such as Western Union.

Last month, Crypto News Australia reported that El Salvador’s bitcoin adoption could cost Western Union US$400 million per year.

Between 38 percent and 41.1 percent of our GDP, depending on which World Bank figures you use, is remittances. To get those remittances to Tonga, Western Union takes a 30 percent bite out of them, on average. In El Salvador, it’s closer to 50 percent.

Tongan MP Lord Fusitu’a

Fusitu’a believes bitcoin has a place in the Tongan financial ecosystem and believes it could work using digital wallets such as Strike. He also suggests that bitcoin payment apps could be adopted en masse as they would not require a parliamentary order to implement.

Bitcoin is the first truly global natively open monetary system. Blockchain is the most optimal storage medium for money if your goal is decentralisation and complete, egalitarian democratisation of money.

Tongan MP Lord Fusitu’a

Choice of Wallet Could Be a Problem

Fusitu’a cites Strike, the digital wallet of Chicago-based Zap Solutions, as a potential means of accepting bitcoin as payment in Tonga. He claims that using Strike to send money back to Tonga from countries such as New Zealand would not require an act of parliament or even an endorsement by the National Reserve Bank of Tonga.

However, earlier this year it was found that Zap Solutions lacked the licences to operate in most US states, potentially meaning most cash and crypto transfers to El Salvador using Strike are illegal. That would have obvious implications for Tonga.

Fusitu’a’s enthusiasm for bitcoin is not shared by everyone in Tonga. Sione Ngongo Kioa, governor of the Pacific island nation’s reserve bank, has already indicated the bank has no intention of accepting bitcoin as legal tender. 

“The adoption of bitcoin as an official alternative currency is definitely unlikely,” Kioa said.

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Bitcoin Crypto News New Zealand

New Zealand Launches First Bitcoin-Only Fund to Attract First-Time Investors

It’s often been said that technical complexities remain one of the main obstacles hampering widespread Bitcoin adoption. In an attempt to provide retail investors exposure to bitcoin without the complexities, one Kiwi fund manager has just launched the country’s first bitcoin-only fund.

A First For New Zealand

The Vault International Bitcoin Fund (Fund) is the first of its type to be established in New Zealand and will be managed by Implemented Investment Solutions, an investment firm with over NZ$4 billion (A$3.8 billion) assets under management. The Fund has a market capitalisation of about NZ$1 million and would invest in international exchange-traded funds (ETFs) that hold positions in bitcoin.

One of the key motivations behind establishing the Fund was to take out the hassle and risk of direct ownership, including some of the tax complexities:

We see this as a great way for people to get that exposure without having to do all the more complicated and technical parts of it themselves.

Janine Grainger, co-founder, Vault Digital Funds

Vinnie Gardiner, Vault chief executive and co-founder, recognised that bitcoin was not necessarily suitable for all investors and recommended that they do their own research:

The reality has always been that if you own digital assets, you are the custodian of your own wallet, which introduces some real risk … Bitcoin isn’t appropriate for everyone. This is something people should not be taking lightly.

Vinnie Gardiner, co-founder and chief executive, Vault Digital Funds

‘Not Your Keys, Not Your Coins’

New Zealand institutions appear to be on the ball and this latest announcement is just another way for ordinary investors to gain exposure to bitcoin. In July, as reported by Crypto News Australia, the Kiwi Saver Pension Fund announced it had bought bitcoin in October 2020 to the tune of 5 percent of investable assets.

It’s no doubt bullish for bitcoin that more retail products are becoming available, making it easier and simpler to buy and hold bitcoin. The downside retail investors ought to be aware of is that ultimately, you are not in control over your bitcoin – “not your keys, not your coins”.

Bitcoin mantra.

Some would argue that having a third party retain custody of your bitcoin negates bitcoin’s raison d’etre – namely that you can be self-sovereign and, ultimately, your own bank.

Of course, holding your own bitcoin comes with risks and it’s not for everyone. Each investor needs to determine their own risk appetite for self-custody and act accordingly.

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Bitcoin CBDCs Crypto News Regulation Stablecoins

Crypto Market Fear Subsides Following Fed Announcement that ‘It Will Not Ban Crypto’

During the US House Financial Services Committee meeting on September 30, the chairman of the Federal Reserve, Jerome Powell, confirmed that he doesn’t have any intention to ban private cryptocurrency. 

For months now, many US crypto investors have been concerned that the government could ban bitcoin and other cryptocurrencies on the issuance of a central bank digital currency, as seen with China. This was based on Powell’s comment in July, where he precisely said: “You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital US currency.”

However, in the recent meeting, Powell claimed he had “misspoken”. In his words, there is “no intention to ban” cryptocurrencies in the US; however, stablecoins need to be regulated. 

Stablecoins are like money market funds, they’re like bank deposits, but they’re to some extent outside the regulatory perimeter, and it’s appropriate that they be regulated.

Jerome Powell, US Federal Reserve chairman

China Took a Different Approach to Crypto

Evidently, the Chinese government’s approach to crypto is similar to the previous statement made by the US FED chairman. While China is in the pilot phase of testing its long-planned central bank digital currency, it has prohibited the trading, investing, and use of private cryptos in the country. Several mining pools and exchanges have ceased supporting users from China following the latest announcement by the central bank.

Nevertheless, the crypto market was pleased with Powell’s clarification, as bitcoin and other crypto began to spike thereafter. Just a day after the FED chairman clarified his previous statement, the price of bitcoin spiked to nearly US$48,000, resulting in the liquidation of over US$47 million short positions within an hour.

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Bitcoin Crypto News Gold

Billionaire Investor Says ‘Bitcoin Has Effectively Replaced Gold’

In an interview with CNBC during its Delivering Alpha conference, outspoken billionaire investor Chamath Palihapitiya suggested he could “pretty confidently say that bitcoin has effectively replaced gold and it would continue to do so … and so that market cap is just going to grow”.

Chamath Palihapitiya. Source: Fortune magazine

Long History of Bitcoin

Palihapitiya, a well-known early investor in Bitcoin, has previously advocated to have at least 1 percent of your assets in something that is totally uncorrelated (ie, Bitcoin) to the current financial system.

Whether you support the fiscal and monetary policy or not, it doesn’t matter. This [bitcoin] is the schmuck insurance you have under your mattress.

Chamath Palihapitiya

In the interview, he suggested that Bitcoin is the most “profound iteration of the internet we’ve seen” and when asked about the risk of government shutting it down, he responded that it would be “very hard to kill”.

Despite standing out from this Silicon Valley peers in his endorsement of Bitcoin, Palihapitiya is in good company with other billionaires across the globe who have also entered the fray.

Dabbling Outside in Broader Crypto Ecosystem

Despite the bulk of his crypto investments being in Bitcoin, Palihapitiya indicated that he had put a small amount of capital into other projects that one day could be worth “tens of millions, hundreds of millions … “. Presumably his version of a “small amount of capital” is somewhat different to that of an ordinary investor.

Overall, he saw the impact of the sector as being enormous:

For the first time, I think we’re seeing the initial versions of the solution that we thought Bitcoin was supposed to be. Smart contracts, better savings accounts, better insurance, better credit scoring.

Chamath Palihapitiya


Looking at the bigger macroeconomic context, he mentioned he was very concerned about inflation and found crypto particularly attractive as a non-correlated asset:

Bitcoin, Solana, DeSo, a lot of the DeFi protocols because it’s a great counterintuitive hedge against all of this stuff.

Chamath Palihapitiya

Tracking Gold

How has Bitcoin performed relative to gold? Across almost all timescales, as at October 1, it’s not even close:

BTC v other assets. Source: Casebitcoin

Michael Saylor is perhaps less diplomatic about gold’s weak performance:

Notwithstanding the advantages of “digital gold”, some have however argued in favour of a small physical gold position to guard against black swan, apocalyptic events. Perhaps, then, it makes plenty sense to have a form of hard money with a 5,000-year track record.

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Bitcoin Crypto News Markets

Probability of Bitcoin Hitting $100k by the End of the Year is 3.2%

At the current price, bitcoin (BTC) is less likely to exceed the long-sought US$100,000 price mark this year than it was about seven months ago. 

According to options-based data from Skew, the probability of bitcoin reaching the mark in December has declined to 3.2 percent, while for October, the likelihood is around 0 to 1 percent. There is a slightly higher probability of bitcoin exceeding that price level by next year. 

This decline, as per the data, is a result of poor pricing in the bitcoin options market. Many options traders seem to be uncertain about the current market condition, probably because of the sudden correction in price to the lows of US$40,000 amid the crackdown in China. During the bull market earlier this year, traders were seen betting big on the rally, which raised the probability to over 20 percent. Back then, in March, bitcoin was priced around US$55,000.

Crypto Twitter Still Anticipates $100k Bitcoin Price in 2021 

Regardless of the odds, many still believe bitcoin could reach US$100,000 later this year. A fortnight ago, analyst Benjamin Cowen conducted a poll to that effect and about 52 percent of the 12,343 respondents agreed. 

In Australia, many investors have predicted that bitcoin will cross A$100,000 (US$72,310) by the end of the year. 

Former hedge fund manager and economist Raoul Pal recently stated that bitcoin could reach as high as US$300,000 given it “usually goes 5x to 10x within three months”. Pal added that the rally could be driven by the introduction of a Bitcoin exchange-traded fund (ETF) in the US or more dollar printing by the FEDs.

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Australia Bitcoin Crypto Exchange Crypto News Investing Tokens

Important Crypto ETF Decision Dates Coming Up in Late 2021

As worldwide interest grows in crypto, the need for exchange-traded funds (ETFs) is growing along with it. Some countries and institutions have got on board, filed, and have been approved, while the decision for others still looms.

What Is a Cryptocurrency ETF?

A crypto ETF is a fund consisting of cryptocurrencies. While most ETFs track an index or basket of assets, a crypto ETF tracks the price of one or more digital tokens. The price fluctuates daily based on investor sales and purchases, and provides many benefits to investors. These include significantly lower crypto ownership costs and outsourcing of the steep learning curve associated with trading cryptos. 

For the crypto enthusiast, ETFs are the holy grail that will boost liquidity and the adoption of cryptocurrencies for the purpose of investment.

Crypto ETFs are trading in a number of countries, but thus far US regulation has denied attempts to offer ETFs on exchanges. Many companies who have applied to the Securities and Exchange Commission are expecting to hear the outcome later this year.

ETF Timeline – Important Dates Source: Arcane Research
ETF Timeline Source: Arcane Research

Interest in ETFs is Growing

Entering the crypto market can be challenging, with concerns including price volatility, market manipulation, and lack of fundamentals to properly gauge value. ETFs offer an easier way to access the cryptosphere. Instead of trading cryptos on an exchange, ETFs trade on market exchanges such as the NASDAQ or NYSE, thereby circumventing the often daunting process of purchasing cryptos.

Crypto News Australia recently reported on a survey conducted regarding institutional interest in digital assets and crypto-based products such as ETFs across the US, Europe and Asia. It was found that over half were already invested in cryptos, while nine in 10 found crypto appealing and saw the potential upside.

Bitcoin-ETFs Rising Globally

Canada, the first country in the world to offer ETFs, launched a third Bitcoin-ETF earlier this year with the world’s lowest management fee, at only 0.4 percent per annum. Dubai has become the first city-state in the Middle East to offer ETFs and has launched a Bitcoin-ETF which is listed on the Nasdaq Dubai Exchange.

It is expected that Australia will see its first crypto ETF soon, as there is growing sentiment among millennials to retire at the age of 50 via investment in ETFs.

Earlier this year it was reported that the Australian crypto ETF could launch on the ASX in 2021. The Aussie ETF is currently delayed due to uncertainty in deciding how the arrangement with custodians will work. The Australian Securities and Investments Commission is, however, in the final stages of consultation to decide if a crypto ETF will be allowed to trade locally.

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Bitcoin Coinbase Crypto Exchange Crypto News Ethereum Payments

US Workers Can Now Get Paid in Crypto Through Coinbase

Coinbase will soon offer the option of employees’ paycheques being paid directly into their accounts on the crypto exchange. Customers will be able to deposit “as much or as little” of their salary as they like when the feature rolls out in the next few weeks.

Until recently, this option had been available only to a handful of people, such as celebrity athletes and employees at crypto companies. But this is changing. On September 27, Prakash Hariramani, senior director of product at Coinbase, announced a new “get paid in crypto” service that will allow almost everyone in the US who is paid by direct deposit to receive all or part of their wages in dollars, bitcoin, ethereum or other cryptos.

Both options will be free with no service fee, but Coinbase will earn a small profit in the form of a spread for those who opt to be directly paid in crypto.

The “Future of Payroll”

Coinbase calls this new feature the “future of payroll”, and explains exactly how the service will work:

You can set up a direct deposit in just a few steps without leaving the Coinbase app. Find your current payroll company or employer and we’ll automatically update your paycheque allocation. If you’d prefer to set up a direct deposit manually, we’ll provide instructions on what to share with your HR department or employer payroll website.

Coinbase

Earn Cryptos Faster and More Efficiently

Citing “time-consuming and inconvenient” frequent transfers as part of the reason for offering this new service, Coinbase says that direct deposits will allow users a faster and more efficient way of earning crypto rewards.

Having already partnered with US-based firms such as Fortress Investment Group, Nansen, SuperRare Labs and M31 Capital to roll out direct deposits for “employees throughout the creator economy and financial services”, the exchange hopes more will come.

As you begin to do more with your crypto from staking to spending to sending, we’re also making it easier for businesses to pay their employees in crypto.

Prakash Hariramani, senior director of product, Coinbase

Last year the exchange announced that the Coinbase Card had been connected to the Visa network, allowing users to shop just as they would normally with the difference that their purchase would be funded through cryptos. The use-value of this card is still a contested subject as crypto purchases trigger tax headaches and are associated with transaction fees, in this case running at 2.75 percent.

To address these issues, Coinbase offers a reward system that pays 1 percent in BTC on each purchase and up to 4 percent back in some other cryptos.

Coinbase Abandons the Lending Ship Following SEC Threats

The move from Coinbase comes only a week after the exchange announced it would no longer be pursuing its crypto lending program, Lend. Initially intended to offer partial returns on deposits of the stablecoin USDC, the exchange has had to abandon the plan after the US Securities and Exchange Commission (SEC) threatened the company with a lawsuit. The SEC issued an immediate warning saying the product is seen as a “security”.

Users of the exchange welcome the news in light of recent issues experienced on the platform. For example, Coinbase failed during the market dip on September 7, delaying or even cancelling transactions issued during that time.

The company is also facing a class-action lawsuit relating to claims it apparently failed to disclose relevant information before being listed on the NASDAQ in April this year.