One of the most popular narratives surrounding bitcoin is that it is “digital gold”. At a time of unprecedented global fiscal and monetary expansion, one would have expected bitcoin’s physical counterpart to shine. Instead, it’s endured a rather torrid time that has left investors wondering whether it still has value in a diversified portfolio.
For the year the return on #Bitcoin is 277% and the return on #Gold is -13.6%. Over the last decade the annual return on Bitcoin is 132% and the annual return on Gold is 0%.https://t.co/YdNg8ArSGC
It’s well-documented by now that younger generations around the world are showing a distinct preference for all things digital. From India to Australia, millennials are choosing to invest in bitcoin over gold.
Gold has traditionally been considered a hedge against inflation, but over the past 18 months, gold bugs have had difficulty explaining its underperformance relative to almost all other assets, especially against bitcoin.
Financial return over last 10 years:
– Gold is down 3% – Bitcoin is up 469,482%
We are going to watch the contraction of gold's market cap in real time over the next decade. Will be so obvious in hindsight.
In considering the relative performance of bitcoin and gold, it is also useful to consider the performance of bitcoin priced in gold. Unfortunately for gold enthusiasts, this metric doesn’t paint a pretty picture either.
— Master⚡️250k BTC 3k LTC 2021 (@MASTERBTCLTC) August 8, 2021
Will Bitcoin Flip Gold?
With a current bitcoin price of US$43,121, bitcoin’s market cap is around US$809 billion. This is dwarfed by physical gold’s market cap, estimated to be around US$10 trillion. Commentators have long opined about when bitcoin would overtake gold’s market cap – the so-called “flippening”.
Based on the chart above, that may be out of reach for the foreseeable future, however given the surprises we’ve seen over the past 18 months, anything is possible.
While Bitcoin’s price action is determined by multiple variables, on-chain data provides useful clues of the direction in which the market may be heading. The latest data from leading on-chain analysts suggests that some sharp upwards price action may be just around the corner.
The proportion of #Bitcoin supply held by LTHs continues to trend higher as coins are held dormant.
Previous bull markets were triggered when LTH supply reached between 63.6% and 71.5% although often after many months at these levels.
Despite bitcoin being up 263 percent over the past 12 months, bitcoin bulls have undoubtedly had their conviction tested in 2021. From China banning bitcoin mining to seemingly endless sideways movement to persistent fear gripping the market, it hasn’t been smooth sailing for the king of crypto. However, on-chain analytics are offering some positive signs for the coming months.
For starters, the last week of July saw 100,000 bitcoins leaving exchanges, as well as hitting a 2021 low of 13.2 percent of circulating supply left on exchanges. As a reminder, outflows typically indicate a shift towards long-term holders.
Exchange inflows and outflows. Source: GlassnodeBalances on exchanges. Source: Glassnode
In addition, compared to the US$260 million in losses from the previous week, gains were almost 10 times higher.
Realised profit compared. Source: Glassnode.
Lastly, a useful lagging indicator highlighted by on-chain analyst Will Clemente is the supply shock ratio. Note how the price below lags materially behind the purple line. This indicates that bitcoin may well be under-valued at current prices with a potential price rise on the horizon.
While bitcoin has previously trended within the parameters of the four-year halving cycles, in a recent episode of the Wolf of All Streets podcast, analyst Willy Woo suggested this may no longer be the case and that we may be in the “last cycle”.
He argues that as the market has matured, miners have increasingly less influence on sell pressure and therefore prices. Going forward, it is possible that the market price will be more a function of macro supply and demand, than the four-year halvings.
While price predictions abound and are likely to be inaccurate, it does appear as if the market is slowly moving in a bullish direction.
At the time of publication, Bitcoin is up almost 6 percent on the week and trading at US$43,465.83.
Here are the top 10 coins showing percentage increases, including infamous coins like DOGE, which has surged 14,000%+ since 2017.
1- Bitcoin
Bitcoin (BTC) is the founding father of cryptocurrencies – a decentralised P2P online token launched in 2009 by a possibly fictitious person who goes by the name of Satoshi Nakamoto. Bitcoin has gained over 1400% since its previous all-time high in 2017.
Bitcoin’s rise was mostly due to May’s 2020 halving, amplified by the institutional capital that came to the market in October last year. The first quarter of 2021 saw a massive influx of institutional investors, payment companies, hedge funds and asset managers embracing crypto and blockchain, which further accelerated BTC’s price surge.
2- Ethereum
Ethereum is an open-source platform for decentralised applications (dApps) that adds smart contract functionality to developers. Users don’t need to worry about third parties as smart contracts allow peer-to-peer agreements that execute themselves through a code that runs on the Ethereum blockchain.
Ethereum is the platform that most DeFi developers seek to build their dApps without downtimes, fraud or interference from a third party. It has raised 1200%+ since 2017.
Altcoin seasons are always contributors to Ethereum’s price rally. Another boom for Ethereum is largely thanks to institutional capital coming to crypto. It’s worth noting that some of these institutions have also taken interest in opening job positions for Ethereum developers such as JP Morgan or Amazon.
The Ethereum 2.0 upgrade and the London Hard Fork are two primary forces driving up ETH’s price. Just recently, Ethereum notched a 12-day winning streak, a new record for the token.
3- Binance Coin (BNB)
Binance Coin (BNB) is the native token of the centralised exchange Binance, used primarily as the utility token to pay for transactions and trading fees on the platform. BNB’s price soared over 60% in the past 30 days, and has gained a total 40,000%+ since its 2017 launch.
The more people come to Binance, the more people will use BNB. During the institutional bull run in the first quarter of 2021, Binance registered a massive influx of newcomers as crypto became mainstream. This further pushed BNB’s price to higher levels.
However, BNB’s price has been affected negatively by the number of rugpulls in the Binance Smart Chain – Binance’s decentralised exchange that adds smart contracts programmability for dApps.
4- Cardano (ADA)
Cardano (ADA) is an open-source Proof of Stake (PoS) blockchain with very ambitious ideas. The project is overseen by the Cardano foundation, founded by Charles Hoskinson in 2015.
Cardano has performed well during the first half of this year as the foundation announced the launch of “Alonzo”, an upgrade that would allow the platform to host smart contract compatibility for developers.
ADA has gained over 800% at ATH since 2017. Last week it gained 6% on a single day after trading in an uptrend last month. However, it has struggled to keep above levels of $1.40/1.50.
5- Ripple (XRP)
Ripple is an open-source money transfer network released in 2012 along with its native currency, XRP.
While XRP had performed steadily in the market during most of 2020, it fell sharply when the SEC announced on December 21, 2020 it was filing a lawsuit against Ripple, which traded in a downtrend during Q1 2021.
However, XRP managed to gain some ground after the company rallied in its fight against the SEC. A price boost for XRP came shortly after the judge denied SEC access to Ripple’s legal advice.
6- DOGE
DOGE, a cryptocurrency created by IBM software engineer Billy Markus that started as a joke, has skyrocketed 17,500% since 2017.
The coin debuted in the market in 2013. It only met popular demand when Elon Musk decided to talk about the memecoin, which massively boosted its popularity in the first months of 2021. Another boost for the token came after Coinbase decided to list DOGE on its trading platform.
Some people in and outside of the crypto community have claimed that Musk’s actions amounted to market manipulation as the price of DOGE is sensitive to whatever Musk says, good or bad. However, it appears that Musk’s recent efforts to pump DOGE are failing.
7- Polkadot (DOT)
Polkadot is a shared multi-chain platform that allows blockchain interoperability. DOT is Polkadot’s native currency, used for transactions and trading fees.
DOT started trading in 2020, which is why it looks different to the other charts, which started earlier.
DOT has managed to record a 1400%+ rise starting in the first months of 2021, turning it into one of the currencies with the best return on investments (ROI).
It peaked at US$373.19 after Facebook announced it was making an ecosystem for creators on the Polkadot Blockchain.
8- Uniswap (UNI)
Uniswap (UNI) is a decentralised exchange (DEX) that facilitates automated swaps between tokens on the Ethereum network. It was built by the company going by the same name on November 2, 2018.
Uniswap has had an overall solid market performance during the first half of 2021. The token seems to be gaining traction after trading negatively during May, but it seems the company is the subject of rumours about working with centralised institutions. A recent video emerged showing Uniswap’s growth lead, suggesting possible tie-ups with PayPal, E*Trade and Stripe.
9- Bitcoin Cash (BCH)
Bitcoin Cash (BCH) is a cryptocurrency product of a fork of Bitcoin, created in 2017. It has surged above 600% of its 2017 ATH, in a similar move to other high-market cap currencies.
BCH resulted from a disagreement between two groups over scaling issues. It offers lower transaction fees and greater throughput. While BCH was recovering from losses in previous sessions, it’s now trading in a downtrend as fear takes over the market.
10- Chainlink (LINK)
Chainlink is the leading decentralised oracle service built on Ethereum. Its native token, LINK, has surged over 10,000% at ATH since 2017.
LINK has become an efficient data provider from off-chain sources to on-chain smart contracts through oracles. It has been trading largely in an uptrend as many companies have embraced the oracle solution to rely on trustworthy real-time information.
Data from on-chain analysis firm Glassnode shows there has been a 30 percent increase in active Bitcoin (BTC) addresses. However, BTC has only risen above the US$40,000 mark a handful of times.
#Bitcoin has seen a resurgence in Active Entities over the past week, rising by 30% from 250k to 325k active entities per day.
This degree of activity was sustained in July 2020 when $BTC prices were around $11.3k in Q2-2020.
The Bitcoin network (BTC) has recently seen a notable increase in active addresses per day. According to Glassnode, in one week active addresses increased from 250,000 to 325,000.
This is the biggest surge recorded since the number of active Bitcoin wallets dropped 41 percent from 425,000 in January 2021 to below 245,000 addresses in early July.
Alongside a significant turnaround in active Bitcoin users, a one-year record volume of BTC outflows has been hit, comparable to peak outflows seen in November 2020. This is a bullish signal indicating that BTC has been bought on exchanges and is being moved to wallets for safekeeping.
Bitcoin (BTC) has only touched the US$40,000 mark a handful of times since its $63,000 high in April, and has since been ranging between $32,000 and $38,000. Recent rumours of Amazon accepting bitcoin, along with the positive talks between Jack Dorsey and Elon Musk at the B word Conference, spiked it up to $42,000 but to no avail, as the price dropped back down under $40,000.
Bitcoin Millionaires Hit New High
During this time, bitcoin millionaires have also been accumulating. Bitcoin held on addresses storing 100-to-10,000 BTC hit 9.23 million bitcoin (US$364 billion) as of August 1, which is a new all-time high for this group of investors.
In the last four weeks, these addresses have accumulated approximately 170,000 more BTC. This staggering pace was last matched in late December 2020, right before a massive bull run kicked off in 2021 where prices jumped from $29.0k to $40.8k in the year’s opening week.
Santiment data analytics
According to cryptocurrency data-tracking firm BitInfoCharts, there are now over 80,000 BTC millionaires, up from 25,000 just three months ago.
Over the 12 months to the June 2021 quarter, the official Australian Bureau of Statistics (ABS) inflation metric, the consumer price index (CPI), rose 3.8 percent year-on-year. This news comes as Bitcoin, which is argued to be a hedge against inflation, has bounced back from its 2021 lows.
The latest ABS CPI figures are materially higher than the 12 months to the March 2021 quarter, which measured 1.1 percent.
“Not to worry”, according to John Hawkins, senior lecturer in Politics, Economics and Society at the University of Canberra. He argues that the jump is only temporary as a result of several one-offs.
As the Reserve Bank told us back in May, a main cause is that in the depths of Covid lockdowns last year, the government heavily subsidised childcare, pushing the effective price to near zero. With removal of those subsidies the price has bounced back. This is a one-off – it can’t be repeated.
John Hawkins, School of Politics, Economics and Society, University of Canberra
Reasons Not To Worry
Hawkins cites a number of reasons not to be concerned:
Petrol prices collapsed as cities locked down last year, and have since returned to pre-Covid levels – a one-off that won’t be repeated.
Big jumps in the prices of some fruit and some vegetables due to a shortage of pickers and heavy rainfall are also viewed as one-offs.
The “trimmed mean” measure of so-called underlying inflation used by the Reserve Bank of Australia (RBA) to see through transient influences was only 1.6 percent and is “a better guide to what is going on”.
The RBA has echoed the sentiments of other countries that the increase in inflation is likely temporary, and it expects inflation to be below 2 percent by the end of the year, reducing to 1.5 percent by 2022. In addition, most economists and traders forecast inflation to average around 2 percent.
Too Much Money Printing?
Hawkins downplayed concerns of “too much money printing” and criticised cryptocurrencies for pushing the narrative in the form of memes such as “Money printer go brrr”.
Further, he argued that the same was said after the 2008 crisis, yet nothing happened.
Hawkins doesn’t mention that the scale of the latest quantitative easing (QE) programs around the globe dwarf those of 2008. In addition, most developed countries around the world have reached record levels of debt-to-GDP as central bank balance sheets have piled the debt on over the past 18 months. And when you have unprecedented levels of debt, there are only a few ways out:
2/ Currently there is too much debt. $255 Trillion globally.
With debt, from a systemic point of view you have 3 options. #1 – Default on the debt. #2 – Pay off the debt. #3 – Debase what the debt is denominated in (either create more debt or print money).
Default is rarely a possibility, so currency debasement in the form of increased money supply and consequent inflation is typically the route chosen to reduce national debt.
Bitcoin Bounces Back
While Hawkins recommends inflation-adjusted bonds as an inflation hedge, those in the crypto community would say Bitcoin:
The dollar is designed to debase in perpetuity. #Bitcoin is engineered to become harder to produce quadrennially for the next 120 years, programmatically.
After a lacklustre quarter, Bitcoin has bounced back over the past week, up close to 20 percent over the month.
BTC performance over the past month. Source: Coinbase
Most in developed nations have no experience of hyper-inflation, unlike those in developing nations. In countries such as Argentina, for example, the case for Bitcoin is self-evident for large swathes of the population.
In a year of ups, downs and unprecedented levels of fear, uncertainty and doubt (FUD), more than half of bitcoins in circulation haven’t moved. Bitcoiners have once again proved their conviction in a year full of challenges.
Illustration showing percentage of BTC that hasn’t moved in a year. Source: Pete Humiston
What is the Significance?
The fact that more than half of HODLers haven’t shifted their coins in a year offers a few possible interpretations:
high levels of conviction in the asset (ie diamond hands)
growing levels of long-term investment, rather than trading of the asset
belief that a bull market is under way and the top is not yet in
bitcoins being taken off exchanges and put into cold storage in growing numbers
On-chain analytics and, more specifically, HODL waves highlighted by such data provide useful indications of market trends such as those identified above. Crypto News Australiareported earlier this year on the relationship between HODL waves and bull markets and is certainly worth a read for those keen to learn more.
While Bitcoin sceptics often highlight the asset’s volatility as a weakness, history has shown that those who have the stomach to withstand the ups and downs tend to be rewarded in the long run with exponential returns.
It’s thus far been a bumpy ride for Bitcoin HODLers. After a strong start to 2021, Q2 posted the worst returns in over eight years. Regulatory and environmental concerns have provided the greatest headwinds, in addition to the after-effects of China banning bitcoin mining.
What is a bull market and bear market? Whether talking about cryptocurrencies, equity, or real estate, all markets have periods where we can categorise them as either “bearish” or “bullish”. These terms refer to market conditions where a joint situation occurs over a medium or long-term period, usually lasting 1 year or more.
What is a Bull Market?
A bull market is where most assets surge in price gradually. Supply is big and investors are buying more as demand rises. We can say that the market is bullish when most assets of a specific market are in an uptrend.
When investors say they’re bullish on a market, they expect prices to rise for a long period. However, no one knows exactly how much a bull run can last, but they are usually longer than bearish markets and are less volatile.
How to Identify a Bull Market Trend
Trends are never straightforward, they have periods of fluctuation and price drops categorised as higher highs and higher lows.
It’s reasonable for a trader to follow the trend and not go against it. This is why it’s important to pay attention to price declines or consolidations when they appear. They don’t usually break the current trend (unless a big event occurs that completely flips it) but they can give you a window of opportunity to enter the market.
What Factors Can Create a Bull Market?
Several forces drive demand up or down. Take for example how the COVID-19 pandemic boosted the crypto market and practically shut down the global economy. What did happen during that time of crisis? Well, to name a few things:
Small, mid-size businesses started closing and unemployment rates skyrocketed.
Governments started sending relief packs embedded as monthly checks and injected trillions of dollars trying to help their citizens in the time of crisis.
Global central banks started printing trillions of dollars to help stabilise their respective countries.
Remote jobs became a priority for most companies globally, and people were forgetting about physical cash and paying for things using digital money on the Internet, like e-commerce websites. This reinforced and highlighted the benefits of cryptocurrencies, not only in times of financial crisis but in general.
How Did Institutional Capital Boosted the Crypto Market?
Investors knew that as central banks printed more and more money, so they wanted to hedge against fiat hyperinflation, and cryptocurrencies became an attractive alternative for them. Thus institutional capital flocked to the crypto market as more clients demanded alternative assets that could make up for a better store of value.
Investment banks like JP Morgan, Goldman Sachs, and Morgan Stanley; Payment Giants like Visa, Mastercard and PayPal; Hedge funds and institutional investors —the list goes on. They all at first condemned cryptocurrencies and their usefulness in real-time situations, and now most of these companies support them.
Investment banks started offering Bitcoin trading services among other crypto-related services to their clients. JP Morgan even offered job positions for Ethereum blockchain developers. PayPal allowed crypto custody and crypto-payments just like Visa and Mastercard.
News, adoption, and the overall benefits of crypto during these periods gave the crypto market and the decentralised finances (DeFi) ecosystem, which is now over US$60 million in total value locked, a dramatic boost.
Crypto Adoption is Accelerating
In January 2020, BTC was priced at over $7,000. By December, it was breaking one of the toughest psychological barriers: $20k, reaching over $24,000 that month. This is an increase of 224%. When institutional capital came into play and cryptocurrencies were all over the news, Bitcoin surpassed astronomical price records of over $40,000 in January 2021.
This doesn’t mean the market didn’t experience fluctuations during its bull run. The most notorious price corrections happened on February 21, when it dropped more than 20% between February 21 and 23, shortly after reaching a price record of US$58,322.
However, crypto adoption only accelerated with time, and now most institutional investors plan to own crypto by 2026.
What is a Bear Market?
Within a bear market, most assets are in a downward trend. Demand is low and most investors are selling their positions, further pushing the downtrend. However, most investors won’t call it a real bear market unless it loses 20% from recent highs. In essence:
Bearish periods apply to every market
Most assets move in a downtrend
Negative investors’ sentiment takes over
We all know The COVID-19 outburst shut down the entire economy and caused one of the toughest stock market crash in history. However, it accelerated Bitcoin’s rise to the eye of investors and amplified the narrative of Bitcoin as a safe store of value against the decaying purchasing power of the U.S. Dollar.
Bitcoin’s market performance in 2017 and 2020
Large price drops will trigger weak hands. This is usually called “panic selling.” There’s an interesting feature within the crypto market when this happens: most crypto holders (called HODLers) would look at this as an opportunity to buy as many coins as they can and profit from the next bull run. Interest is low and the usual buyers in these periods are miners and Bitcoin maximalists who want to stack as many BTC as they can.
And why do crypto traders do this? Because the crypto market has a finite supply in contrast to the infinite supply of fiat currency.
On the other hand, bullish crypto markets are dynamic with supply and demand in a perpetual state of flux as new participants and older HODLers compete for block-space, testing each other’s resolve to HODL in the face of parabolic price growth.
Let’s take Bitcoin as an example. While Bitcoin has surged in value over 9000% since 2015 it doesn’t mean the market hasn’t experienced bearish periods. In December 2017, it had one of the largest bearish runs that extended to mid-2019.
Bitcoin’s market performance in 2017 and 2020
Why Timeframes are Important
Using time frames properly is key to understanding the current state of the market so you trade it accordingly. Time frames can be classified as primary (longer periods), intermediate, and short-term, and each one will give you a different perspective of the market.
A rule of thumb is to always trade the primary time frame as market signals are more reliable. On shorter time frames, traders might find cluttered charts with exaggerated long spreads. However, this time frame works well for short-positions, so everything depends on the trader and the way he wants to trade.
Ideally, a trader bases his first technical analysis by studying the longer time frame to define in what direction the market is going. Bull markets usually last months or years, so to do a proper market analysis, setting a higher timeframe will help you have a better notion of what’s happening.
How Long Do Bear and Bull Markets Last?
Nobody knows how long these periods last. Usually, bull markets have greater and stronger rallies —they could last one year or exceed 10 years. On the other hand, bear markets have a shorter duration, but they come with more abrupt movements and volatility.
In the case of the stock market, assets don’t usually fluctuate by high points of percentage. Fiat currencies, for instance, are not stable —the degree to which they fluctuate is small and that’s why people consider them stable.
The Volatility of the Crypto Market
In contrast, the crypto market is volatile. Crypto assets can fluctuate by hundreds or thousands of points per day, and as crypto becomes mainstream and financial institutions start digging into crypto and blockchain technology, the price has been subject to harsh market corrections and explosive price surges.
News, institutional adoption, major events (like the China FUD), or even a comment from a wealthy influencer can cause powerful price surges or corrections that either boosts the market or stagger it, shrouding investors’ sentiment with pessimism or optimism.
Closing Thoughts
bull and bear markets can always be traded. Identifying what are the market conditions will help you to better manage your capital and invest more smartly.
During a bull run, most traders would follow the trend by applying their trading strategy. Traders entering the market set lower time frames after identifying the primary trend to define their next position.
During bear markets, traders are wary and try to protect themselves from larger price drops. It’s advisable to stay in cash during these periods, wait and study the market to catch an opportunity to trade it.
The crypto market is becoming euphoric following the sudden increase in the price of Bitcoin. BTC reportedly touched US$40,000 on July 25 and is currently trading at US$38,632 on CoinMarketCap.
It’s been about six weeks since Bitcoin was seen above the US$39,000 price level, and this has got many bears squeezed.
Over $1 Billion in Bitcoin Shorts Liquidated in 10 Minutes
On-chain analyst Will Clemente tweeted that about US$111 million worth of Bitcoin short positions were liquidated in about 10 minutes. These are traders who got over-leveraged as BTC suddenly crossed US$38,000.
A further glance at ByBt’s liquidation data confirmed that about US$1.02 billion worth of Bitcoin shorts were liquidated in 12 hours leading up to press time, and US$1.11 billion within the previous 24 hours from nearly 100,000 crypto traders.
The largest single liquidation was US$29.3 million on the Huobi exchange, according to Bybt.
Are the Bulls Back in the Paddock?
Bitcoin hasn’t made this quick a move in some weeks, if not a month. Thus many people in the market have high hopes that the bulls are back in control.
Since hitting an all-time high above US$63,000 in April, Bitcoin dropped by more than 40 percent as the bears took over the market. Some factors or developments, such as the Chinese ban on miners, may have contributed to the bearish state of the market. However, a lot of short-term holders lost confidence in the market as their positions went underwater.
This led to increased panic-sells, especially among those short-term holders. Although the current price of Bitcoin looks bullish, some traders await a US$40,000 to $42,000 price as confirmation of the presence of bulls.
Bitcoin Reacts to Bullish News
Notionally, the price of BTC has been green for most of the time after Elon Musk and Jack Dorsey discussed Bitcoin at last week’s ‘B Word’ conference. At the time, Musk revealed that he personally owns Bitcoin, including SpaceX and Tesla. He also mentioned that Tesla might reconsider accepting payments in BTC for the second time.
Bitcoin bull runs have historically been triggered by supply squeezes. A number of indicators suggest that a bullish move may be in progress.
Indications of a Supply Squeeze
During Q3 2020, long-term holders (LTHs) controlled 80 percent of the supply. Today, that figure is 75 percent and growing, according to on-chain analytics.
Bitcoin’s supply shock is currently equivalent to levels it was at earlier this year, between US$50K – US$60K a coin. The two charts that follow illustrate the shift in coins towards LTHs:
Bitcoin moving from weak hands to strong hands. Source: Will Clemente III
Coin circulation to strong hands over cycles. Source: Will Clemente III
Another bullish indicator to be aware of is the relative strength index (RSI), a momentum tool used to identify overbought and oversold levels. Generally:
values of 70 or above indicate that an asset is becoming overbought
values of 30 or below indicate that an asset is oversold or undervalued
The RSI has been in a downtrend for seven months but may be turning a corner, as illustrated below:
Another interesting metric showing evidence of a potential short squeeze is the the perpetual funding rate. This is the mechanism that pegs the perpetual contract to the index (weighted average price of all major exchanges). When funding is positive, longs are paying shorts to keep their positions open; when negative, vice versa.
Generally, prolonged positive funding is bearish, whereas prolonged negative funding rates is bullish. We’ve seen mostly negative funding rates since late May. The last time we had prolonged negative funding like this was following the March 2020 Covid-19 capitulation, after which the price dramatically rose to an all-time high in December.
After months of sideways action and a drop below US$30,000 amid market fear, Bitcoin seems to be turning a corner. Last week, Crypto News Australia reported that there was evidence of Bitcoin bears retreating, and perhaps this is coming to fruition.
At the time of writing, Bitcoin has been making sharp bullish moves suggesting that a supply squeeze may in fact be underway. Consider Bitcoin’s recent performance:
1 Month: +24.67%
1 Week: +20.67%
24-Hours: 12.96%
Evidently, things tend to move fast in crypto. At the time of publication, Bitcoin was trading at US$38,228.
American banking giant Goldman Sachs has reported that 60 percent of family offices are interested in purchasing cryptocurrency and other digital assets. Fears about high inflation and currency devaluation seem to be encouraging this interest.
*NEW* Goldman Sachs Wealth Management Lead talks family office #Bitcoin investments on Bloomberg.
This revelation comes soon after the multinational investment bank alleged that cryptocurrency is “not a viable investment“.
The survey was conducted among 150 family offices of which 15 percent reported that they already owned digital assets, while a further 45 percent indicated they were interested in buying crypto in the future. Family offices refer to private wealth firms that manage the money of the world’s wealthiest individuals.
Fear of Monetary Debasement the Driving Force Behind Buying Crypto
Many firms are looking to crypto as an investment solution, citing it as a hedge against inflation, prolonged low interest rates and concerns about monetary debasement following a year of global fiscal stimulus.
While some are interested in acquiring crypto, 39 percent of global family offices have raised concerns regarding the long-term staying power of digital assets. Additionally, market volatility and issues with infrastructure surrounding crypto are also holding many back from entering the cryptosphere.
Goldman Sachs has found that interest in bitcoin and other cryptocurrencies varies geographically. The survey results concluded that 24 percent of family offices in the Americas have already invested money in digital assets, while only eight percent in both Asia and Europe, the Middle East and Africa (EMEA) have.
Goldman Sachs Operating in the Cryptosphere
Goldman Sachs (GS) acknowledges that many investors continue to invest in real estate and equities, but a great deal also invest in special purpose acquisition companies (SPACs). GS does, however, state that family offices have been interested in cryptocurrencies since the 2017 bull run.
The company has itself started to move into the world of crypto. Earlier this year, GS filed a BTC ETF application with the US Securities and Exchange Commission, joining the likes of Morgan Stanley. Along with the all-important ETF filing, GS has begun facilitating BTC derivatives trading for clients, bridging the gap between BTC and Wall Street.
Meena Flynn, a Goldman Sachs private wealth management executive, has highlighted the significance of blockchain technology:
This technology is going to be as impactful as the internet has been from an efficiency and productivity perspective.
