Category: Bitcoin

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Bitcoin Crypto News Market Analysis Markets

Institutional Investors Have Sold $5.3 Billion in BTC Since LUNA Bust

Institutional investors have sold at least 236,000 bitcoin since the UST/LUNA collapse in early May, which roughly translates to over US$5.3 billion.

It All Started With Terra

According to Vetle Lunde, an analyst from Arcane Research, institutions have offloaded 236,237 BTC since May 10, most of it forced selling triggered by the Terraform Labs collapse, which caused contagion all over the crypto industry:

However, Lunde says it’s likely things are worse than what he’s reporting and the dollar value could be way higher than US$5.3 billion:

Most of the selling of the 236,237 BTC mentioned in this thread has been forced selling, and it’s likely been worse than what this thread covers with underwater retail and institutions capitulating.

Forced Selling Infects Bitcoin Miners

At the same time, Lunde reports, Tesla sold 75 percent of its bitcoin holdings – around 29,060 BTC at an average price of US$23,209. Moreover, the forced selling spread to Bitcoin miners who reportedly had to dump all of their BTC holdings generated in May, an effective doubling of the usual 20 percent to 40 percent:

BTC public miner sales. Source: Arcade Research

Shortly after the CPI (Consumer Price Index) sparked June’s broader market downturn, 3AC’s massive liquidation threw more fire into a market that was already burning. The infamous hedge fund now owes crypto lenders over US$3.5 billion.

Lunde ended his Twitter thread stating that the past two months’ capitulations, chapter 11 bankruptcies and July’s relief rally indicate contagion is getting resolved. “Less uncertain times ahead,” he concluded.

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Bitcoin Crypto News

Man Who Lost 8000 BTC Unveils Robot Dog Masterplan to Recover Fortune

It’s been nine long years for James Howells, an IT engineer from the Welsh city of Newport, since he accidentally threw away a hard drive containing close to 8000 BTC.

Now, the 36-year-old has a new technology-centric plan to recover his fortune:

A Costly Mistake

According to the latest update of this saga from Business Insider, Howells had two identical hard drives stored in a drawer in 2013. One was blank and the other contained some 8000 BTC, worth US$552 million at one stage.

He intended to throw the blank one away, but mistakenly disposed of the one containing bitcoin, which ended up at the local municipal dump. Despite his best efforts, he has repeatedly been denied access, with local authorities arguing it would be too expensive and detrimental to the environment.

A man stands looking at the camera in front of a road and a metal fence.
James Howells. Source: Business Insider 

A ‘Needle in a Haystack’

After various failed attempts, Howells has now devised a new approach, backed by US$11 million in venture capital, which he hopes to present to the council in the coming weeks.

In short, he intends to sift through 110,000 tons of garbage through a combination of human sorters, robot dogs, and an artificial intelligence-powered machine trained to look for hard drives on a conveyor belt.

There are apparently two versions of his plan, depending on what council approves. The more costly version would take three years and cost US$11 million, whereas a scaled-down version would cost US$6 million over 18 months.

Howells has assembled a team of specialists across a number of key fields, including AI-powered sorting, landfill excavation, waste management, and data extraction.

A yellow quadrapedal robot with a mechanical arm attached to its back stands on a stage in front of a purple backdriop that says "collision."
Example of a robot dog to be used by Boston Dynamics. Source: Business Insider  

The unfortunate Bitcoiner has committed to ensuring the environment is protected, saying he did not want to damage it in any way, adding: “If anything, we want to leave everything in a better condition.”

Council Stonewalls Proposals

In rather typical bureaucratic fashion, a representative of the council told Business Insider: “There is nothing that Mr Howells could present to us that would make the council agree”, adding: “His proposals pose significant ecological risk, which we cannot accept and indeed are prevented from considering by the terms of our permit.”

If successful, the recovery team will enjoy 30 percent of the proceeds, with Howell and the investors retaining 30 percent apiece. The balance would then be shared among each of Newport’s 150,000 residents.

In the absence of council approval and as a last resort, Howell is prepared to go to court to gain access to the dump, saying: “I’ve been reluctant to go down that route in the past because I’ve not wanted to cause problems”, stressing that he instead “wanted to work with Newport City Council”.

Richard Hammond of Top Gear fame has interviewed Howells in a fascinating short documentary. It is well worth watching to uncover the lengths a person will go to when faced with the prospect of losing life-altering wealth:

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Bitcoin Crypto News

Tesla Offloads $936 Million Worth of Bitcoin Due to Negative Second Quarter

Last February, Tesla bought US$1.5 billion worth of bitcoin for its balance sheet. After selling 10 percent two months later to “test liquidity”, the inimitable car manufacturer has now sold US$926 billion following a poor second quarter.

According to Tesla’s financial statements, “As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency”, adding, “Conversions [bitcoin] in Q2 added $936 million of cash to our balance sheet.”

The quarterly report noted that Tesla’s Bitcoin holdings remained largely stable for three consecutive quarters, however by the end of March, its digital assets were worth just U$1.261 billion. Following the most recent sale, Tesla is now said to have just 25 percent of the bitcoin it originally acquired, valued at around US$218 million.

On the earnings call, Tesla CEO Elon Musk, who recently became embroiled in a legal tussle with Twitter, explained the reason for selling three-quarters of its bitcoin holdings:

The reason we sold a bunch of our Bitcoin holdings was that we were uncertain when the COVID lockdowns in China would alleviate, so it was important for us to maximize our cash position, given the uncertainty of COVID lockdowns in China.

Elon Musk, Tesla Inc, CEO

“Neither Here Nor There On Crypto”

Despite the sale, Musk make it clear that the company remain opened to increasing its holdings in the future:

This should not be taken as some verdict on Bitcoin.

Elon Musk, Tesla Inc, CEO

He then responded to a subsequent question, where he called crypto “a sideshow to the sideshow” and not the something the business spends any real time on, “We’re neither here nor there on cryptocurrency,” he said.

While some were quick to criticise Musk for having “paper hands”, others said that he could come back anytime knowing that “everyone gets the price they deserve”.

However from a pragmatic perspective, it seems as if Tesla had little choice if they wished to avoid a horrific quarterly result. As one commentator noted, in the absence of the bitcoin sale, Tesla’s cashflow would have been negative:

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Bitcoin Crypto News Market Analysis Markets

Bitcoin HODL Activity Suggests the Bottom Could Be In: Glassnode

According to on-chain analysts Glassnode, there are growing signals that the bottom may be in. Most recently, the firm revealed that over 80 percent of US dollar-denominated investments have not moved in three months, suggesting that holders are increasingly unwilling to sell any lower:

Bear Markets Look Alike

Glassnode argues that its “Realised Cap HODL Wave” metric clearly shows similar patterns to the bear markets of 2012, 2015 and 2018.

In brief, the metric intends to illustrate the relative economic weight stored by bitcoins of various holding times, and changes arising from holding and spending behaviour. For a more complete explanation, this useful overview is instructive.

BTC Realised Cap HODL Waves. Source: Glassnode

Bottom In?

Concurring with an earlier Glassnode assessment, Coinbase’s head of institutional research noted in its report that on-chain data revealed recent selling was “almost exclusively” short-term speculators. Long-term holders (in excess of six months), by contrast, were not found to be selling.

In fact, these HODLers were found to represent 77 percent of coins in circulation, which although down from 80 percent earlier this year, was viewed as a “positive sentiment” suggesting that holders were less likely to sell.

BTC HODLing. Source: Coinbase Analytics

Amid ongoing pressure of a negative macro and crypto environment, bitcoin’s price has remain subdued, recently slipping below US$19,000 on news of the US’ highest inflation print in 40 years.

Bitcoin has since somewhat recovered, and at the time of writing was trading at US23,300, above its 200-week moving average (MA) of US$22,600. Notwithstanding, technical analysts suggest that a definitive and sustained breakout above the 200-week MA is necessary to reverse the bearish trend.

Of course, we’ll only know in hindsight whether bitcoin bottomed out at US$17,500. However, from a Bitcoiner’s perspective, the fundamentals remain unchanged and if anything it’s offered a priceless opportunity to stack more sats for less.

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Bitcoin Economics Investing Markets

Bitcoin Dips Below $19,000 Amid Highest US Inflation Print in 40 Years

Bitcoin briefly dipped below US$19,000 on July 13 following the announcement of a higher than expected Consumer Price Index figure in the US. 

Economists were tipping a June year-on-year inflation number of 8.8 percent, but the announced rate came in at 9.1 percent – the highest figure in over 40 years – leading to an immediate and sudden dip in BTC’s price.

Recovery Follows 4.5% Dip

According to data from CoinMarketCap, in the hour following the CPI announcement BTC’s price dropped more than 4.5 percent, from US$19,989 to US$18,999. The price has since recovered and at the time of writing BTC was changing hands at US$20,234.

Prior to the current crypto bear market and skyrocketing inflation in the broader economy, BTC had been widely considered an inflation hedge. In January, despite rising inflation, BTC appeared to find support at around US$43,000, but as inflation has continued to surge and the crypto market has hit significant turbulence, its price has tumbled.

Since January, BTC’s price has dropped by almost 60 percent leaving many questioning whether Bitcoin truly is an effective hedge against inflation:

Where To From Here?

The record high inflation numbers will likely see central banks around the world, including in the US, continue to hike rates in an attempt to restore price stability at the expense of short-term economic growth.

Speaking at a recent European Central Bank forum, US Federal Reserve chair Jerome Powell affirmed the importance of getting on top of rising inflation:

Is there a risk we would go too far? Certainly there’s a risk … The bigger mistake to make – let’s put it that way – would be to fail to restore price stability.

Jerome Powell, chair, US Federal Reserve

Generally speaking, higher interest rates mean less money circulating in the economy resulting in downward pressure on consumer spending and inflation, which may also translate into less money in the pockets of crypto investors and further falls for crypto prices.

This picture is further complicated by the unique factors causing the current wave of inflation – the war in Ukraine and ongoing complications from the Covid pandemic – which aren’t easily addressed with interest rate rises, resulting in significant economic uncertainty in the medium term.

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Bitcoin Crypto News Onchain

Bitcoin Addresses Breach 1 Billion as Pressure Mounts on Diamond Hands

Despite 2022 being a “bear market of historic proportions” and waning institutional interest, on-chain analytics firm Glassnode has revealed that the total number of unique Bitcoin addresses now exceeds 1 billion:

Bear Markets Bring About Wealth Redistribution

In its latest report, Glassnode notes that one of the main outcomes of a lengthy bear market is the redistribution of wealth among those who remain. This typically occurs in two distinct phases:

  1. Post All-Time High Phase (“Phase 1”) – short-term investors and speculators “gradually come to terms with the bear market reality and exit into a depreciating price trend”. In addition, some try to counter-trade any ongoing relief rallies.
  2. Bottom Discovery Phase (“Phase 2”) – characterised by “diminishing profitability and an extended period of financial pain”, which creates declining demand and further capitulation.

Mirroring the previous cycle, the report notes that the current 2022 market displays a clear pattern of redistribution around US$30,000 (Phase 1), and then as bitcoin gradually declined, US$20,000 represented a “significant trigger point for both investor capitulation, and new buyers, thus being a node for coins changing hands” (Phase 2):

Bitcoin Price Distribution. Source: Glassnode (Live Chart)

Capitulation of Diamond Hands

The report further notes that as bitcoin plummeted below US$30,000, even those with “diamond hands”, namely HODLers and well-capitalised miners, were selling at an average loss of 33 percent:

Bitcoin Losses for Long-Term Holders. Source: Glassnode (Live Chart)

While volumes have declined on both the retail and institutional fronts, it notes that on average, long-term holders are 14 percent in the red:

Bitcoin Losses/Gains for Long-Term Holders: Source: Glassnode (Live Chart)

Notwithstanding weak price action and significant macro headwinds, “shrimps”, defined as addresses holding less than one bitcoin, have been scooping up coins at a record rate:

At the same time, the Lightning Network capacity just hit an all-time high of 4,200 BTC, offering some welcome good news against a rather pessimistic backdrop.

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Bitcoin Crypto News

Wall Street Expects Bitcoin to Plummet to $10,000: Survey

A recent study by MLIV Pulse has revealed that 60 percent of Wall Street investors surveyed believe that bitcoin is more likely to drop to US$10,000 than rise to US$30,000.

Investor Sentiment Remains Negative

According to 950 institutional investors, 60 percent believe that bitcoin’s value will more likely be cut in half than rise by 50 percent to reach US$30,000. This notably bearish bias is likely the product of both macro and crypto-specific factors.

MLIV Pulse Survey. Source: Bloomberg

Aside from troubles experienced by crypto lenders such as BlockFi and Celsius, and in addition to U$2 trillion being shed from the sector’s market capitalisation since November 2021, tighter monetary conditions have driven investors to seek refuge in less risky assets.

As one venture capitalist noted:

It’s very easy to be fearful right now, not only in crypto, but generally in the world.

Jared Madfes, partner, Tribe Capital

Madfes suggested that people’s expectations of a further collapse in bitcoin’s price reflected the “inherent fear in the market”.

Crypto Anxiety Pervasive

Interestingly, it wasn’t just notoriously conservative institutional investors who expressed doubts about the industry. Close to a quarter of retail investors described cryptocurrencies as “worthless”, although a similar amount believed they were “the future”:

MLIV Pulse Survey. Source: Bloomberg

One other conspicuous finding was that retail investors were twice as likely to be seen as Bitcoin maximalists. And it’s little wonder that venture capitalists prefer other cryptos over Bitcoin, particularly when one considers the exponential returns available with initial coin offerings (ICOs), premines and discounted tokens.

Kevin O’ Leary, an experienced investor of Shark Tank fame, believes that crypto is yet to see see the bottom as there hasn’t been a “panic event”, typical of most other asset classes:

Wrong or right? Nobody knows, but either way it would be prudent to expect the unexpected.

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Bitcoin Crypto News Hackers

Mt. Gox Exchange Finally To Release 150,000 BTC to Users After 8 Years

The end may finally be in sight for creditors of the infamous Mt. Gox heist. Authorities were only able to recover an estimated 150,000 of the 850,000 stolen BTC. Creditors, forced to HODL through multiple cycles have seen their stash soar in value, and now need to decide whether to take their respective proceeds in Bitcoin, Bitcoin Cash or US dollars.

Mt. Gox Recap

Mt. Gox was originally founded in 2006 as an exchange to trade “Magic: The Gathering Online” cards, hence the acronym MTGOX. In 2010, it transformed into a Bitcoin exchange to provide an easy platform for users to buy and sell BTC.

At one stage, it handled over 70 percent of all bitcoin transactions globally, however through a combination of ignorance, naivety and security mismanagement, around 850,000 BTC were stolen between 2011 and 2013, the vast majority belonging to its customers.

According to blockchain analytics firm Glassnode, the Mt. Gox stash represents 0.72 percent of total supply and 1.03 percent of long-term-holder supply:

Mt Gox supply. Source: Glassnode

For a compelling account of the entire saga, crypto analyst Miles Deutscher’s Twitter thread is well worth reading:

The End is Nigh

In October last year, the rehabilitation trustee for Mt. Gox released a formal rehabilitation plan to which 99 percent of creditors agreed. Although planned distribution of the proceeds has been somewhat delayed, an email sent by Mt. Gox trustee Nobuaki Kobayashi indicates that creditors now have an important decision.

According to Kobayashi, “rehabilitation creditors” have the following choices at their disposal:

Extract from Trustee email. MtGox.com

Twitter users joked that Bitcoin Cash was even an option:

Impact on Price Action?

Given that bitcoin is 35 times higher than it was at the time of the hack, some have argued that it would be “realistic” to expect a flood of BTC sold, resulting in further price capitulation. Others have argued the opposite, suggesting that those who bought in early are likely to have had their conviction strengthened over the years, and probably wouldn’t sell into a bear market.

Time will tell how things play out, though as Ark Invest analyst David Puell notes, 2022 has thrown the proverbial kitchen sink at Bitcoin.

If Bitcoin navigates this period as proponents expect, it is likely to emerge stronger and more antifragile on the other end:

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Bitcoin ETFs

World’s First Short BTC ETF Sees Interest Explode 300% in Days

Following its hotly anticipated launch two weeks ago, the Proshares Short Bitcoin exchange-traded fund (BITI) initially got off to a rather lacklustre start. However, according to Arcane Research, interest of late has soared by over 300 percent:

BTC short ETF inflows. Source: Arcane Research

Betting on More Downside?

As bitcoin managed to claw its way above US$20,000 amid ongoing fears of a recession, investors appeared to take a particular liking to BITI, resulting in some US$51 million worth of inflows over the past week.

Speaking to CoinDesk, Pawel Cichowski, the head of dealing at crypto exchange XBO, suggested that market consensus appeared to favour more pain on the horizon:

People who are involved in the market think that the bottom is still to come, so if they can’t make money on the rise, they want to make money on the fall by shorting Bitcoin.

Pawel Cichowski, head of dealing, XBO

Cichowski added that “with signs of a global recession coming up and the bond yield curve inverting, nobody knows for sure where the price of bitcoin will go next. However, based on ProShares statistics, people are preferring to expect the worst”.

Inflows Back into Crypto Mask the Reality

In its latest report, CoinShares reveals that despite a lack of good news, investment flows are returning to crypto products:

Daily crypto inflows. Source: CoinShares

Analysts were however quick to note that despite seeing inflows of US$64 million over the past week, the “headline figures obscure the fact that a significant majority were into short-bitcoin investment products (US$51 million)”.

Addressing the issue of whether increased inflows into BITI offered evidence of renewed negative sentiment, CoinShares argued that it was possibly instead due to “first-time accessibility”, reflected by some US$20 million inflows into bitcoin long products from Canada and Europe (Germany in particular).

Whatever the reality, the figures in question remain a long way off recent record weekly outflows of US$423 million, witnessed shortly after news broke that Celsius was in trouble and the contagion that followed.

As bitcoin continues to trade in the US$17,500 to US$20,000 band, it remains unclear whether the bottom is in. Of course, for those with conviction dollar-cost-averaging over the long term, it’s perfectly irrelevant:

HODLers don’t focus on the price. Source: In Bitcoin We Trust
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Bitcoin Crypto News Hackers Ransomware

Dutch Uni Recovers Double the Ransom it Paid in BTC During 2019

In a compelling display of how bitcoin is unsuitable for criminal activities, Netherlands-based Maastricht University has shared a positive tale of how the bitcoin it paid in ransom in 2019, since tracked and recovered, has appreciated significantly in the interim:

A Profitable Ransom

As outlined by the university, it suffered a ransomware attack in 2019 that prevented more than 25,000 staff and students from accessing critical research data, email, or library resources. The hackers encrypted hundreds of Windows servers and backup systems, denying access to business-critical services pending a ransom payment of €200,000 (US$208,000) in bitcoin.

As reported by Dutch newspaper De Volkskrant, the university agreed to pay the attackers after a week, “partly because personal data was in danger of being lost and students were unable to take an exam or work on their theses”.

After launching an investigation, Dutch police traced a Ukrainian bank account belonging to a known money launderer. Investigators were able to establish that a relatively small amount of the ransom money, some €40,000 (US$41,000) worth of bitcoin, had been paid.

Chain analysis at work, used to identify the hacker. Source: Bitquery

Prosecutors were able to seize the offending account in 2020 and, through chain analysis techniques, were able to trace the remaining bitcoin. While information remains limited on why it took so long to return the funds, it appears as if the tedious wheels of bureaucracy might have worked in the university’s favour.

Since paying the ransom, the €200,000 (US$205,000) worth of bitcoin has more than doubled to €500,000 (US$515,000), even despite bitcoin plummeting some 75 percent below its all-time high.

Needy Students to Benefit from Recovery

Commenting on the windfall, Maastricht University ICT director Michiel Borgers said it would be directed to students in need:

This money will not go to a general fund, but into a fund to help financially strapped students.

Michiel Borgers, director of ICT, Maastricht University

De Volkskrant has reported that the investigation remains ongoing as authorities search for those responsible for the exploit. As crypto crimes soared to new heights in 2021, efforts to combat ransomware attacks have been increasingly ramped up by authorities including the US Federal Bureau of Intelligence, which recently established its crypto crime unit.