Editor’s Note: Happy Chinese Lunar New Year! First Mover will not publish on Monday, February 15, which is President Day in the US cryptocurrency markets will be open, as always.
Price point
Bitcoin (BTC) was lower, after pushing to an all-time high price of $ 48,925 early Friday, based on CoinDesk prices.
Market activity was silent According to Craig Erlam, senior market analyst for the foreign exchange brokerage Oanda, this is due to the Chinese New Year celebration in Asia and the upcoming President’s Day in the US on Monday. (It’s the Year of the Ox, by the way, which is seen as bullish by some traders, in case you missed the story from CoinDesk’s Muyao Shen last week.)
US equity futures were lower in traditional markets, an investor told Bloomberg News that “investor exuberance has diminished somewhat.” Gold weakened 0.5% to $ 1,817 an ounce.
The news
JPMORGAN FEELS BITCOIN BRAND: JPMorgan employees chased senior management of the trading division during an internal town hall meeting about when the largest U.S. bank could get into bitcoin, CNBC reported.
RESERVE CURRENCY STATUS? ECB President Christine Lagarde said it is “very unlikely” that central banks will hold bitcoin in the near future. “I would say it is out of the question,” Lagarde said on a conference call hosted by The Economist.
GIVE THE PEOPLE WHAT THEY WANT: US Securities and Exchange Commissioner Hester Peirce, also known as “Crypto Mom” for her optimistic views on the digital assets industry, said the country’s capital markets are poised for a bitcoin exchange-traded product. Despite multiple filings, the SEC has declined to approve a bitcoin exchange-traded fund. People are already eager to trade a bitcoin ETP, and “so if we don’t give them the natural way, which I think would be an ETP, they’ll look for other (less optimal) ways to do it, ”Peirce said on CoinDesk TV Thursday.
CANADA DO NOT WAIT: The first North American bitcoin ETF was approved by the Ontario Securities Commission on Thursday. “Maybe they are normal and SEC too conservative,” Eric Balchunas tweeted, senior ETF analyst at Bloomberg. “Regardless, the US usually follows soon after.”
FINANCE IMPLEMENTS DEMUR ON BITCOIN: Top financial executives at Verizon, Cisco Systems and Mozilla see risks and accounting challenges in putting corporate money into bitcoin, the Wall Street Journal reported. Such anecdotes challenge the investment story that the cryptocurrency will benefit from a wave of new demand from companies.
BAIR IS A BEAR: Bitcoin prices are at “nosebleed levels,” said Sheila Bair, former chairman of the US Federal Deposit Insurance Corp. and now chairman of the government-owned mortgage company Fannie Mae. “Stay away from it,” she said in an interview with Bloomberg Radio late on Wednesday. It’s fleeting. It’s now at nosebleed level. We don’t know how sustainable that is. ”
INDIA GRACE PERIOD: Policymakers in India will offer a transition period if a proposed ban on the use of cryptocurrency is passed as expected, Bloomberg reported. After that, the use of cryptocurrency will be banned in all aspects through a new law that will be introduced in the current parliamentary session through the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
Market is moving
How bitcoin will reach $ 1 million in 11 years, in the scenario of one analyst
First Mover did some back-of-the-envelope math earlier this week to illustrate how sparse bitcoin’s supply could be for the bevy of new institutional investors and corporate treasurers now ostensibly considering an allocation to the cryptocurrency, following Tesla’s announcement earlier this week of a $ 1.5 billion purchase.
Now comes Charlie Morris, chief investment officer of ByteTree Asset Management, who performed his own calculations along similar lines, making First Mover’s amateur endeavors look like the doodlings of a toddler
About 363,500 bitcoins will be awarded to cryptocurrency miners this year for helping secure the blockchain network, Morris estimates. He assumes the miners “will probably sell the most, because that’s their business.”
Further extrapolation results in a figure of $ 18.17 Billion: This is the amount of new bitcoin demand it would take this year to “maintain a BTC price of $ 50,000,” Morris said.
For context, Morris writes that exchange-traded gold funds raised $ 41 billion last year. “Given the offsetting flows to bitcoin at the time, the evidence suggests that gold investors are switching to bitcoin,” Morris writes. “If bitcoin can attract $ 41 billion by 2021, as gold did last year, expect an average bitcoin price of $ 100,000.”
It’s pretty bullish, in other words, but not insanely far-fetched. As First Mover reported earlier this week, $ 2.02 billion has already flowed into bitcoin-focused investment products this year, based on a report from Tuesday from digital asset manager CoinShares. And the CoinShares report doesn’t even cover the demand from investors or corporate treasurers buying bitcoin directly through their own accounts, or purchasing from retailers looking for a slice of the action.
Factor in the Bitcoin blockchain’s four-year halves, where miner incentives are halved and the investment threshold is lowered every four years. “It continues to fall thereafter, meaning high prices will be easier to sustain in the future than they are now,” Morris writes.
So what does that mean for bitcoin prices? Morris estimates that a $ 1 million price for bitcoin is reasonable by 2044 at a rate of $ 41 billion in new inflows per year. Bitcoin will hit the $ 1 million mark by 2036 if consumer price inflation averages 2.5%, or by 2032 if the average inflation rate is 5%. That’s only 11 years from now, which equates to a 20-fold gain from the current price level.
Mastercard / BNY Mellon Reax
Gavin Smith, CEO, Panxora Group: “The entry of BNY Mellon and Mastercard into the cryptocurrency space brings bitcoin two huge steps closer to mainstream adoption.”
David Mercer, CEO, LMAX Group: “Financial institutions are now preparing to track their customers.”
Don Guo, CEO, Broctagon Fintech Group: “We hope that increasing adoption will prompt the industry to prioritize liquidity provision by improving crypto infrastructure. This ensures that both existing and new participants consistently have access to the best prices and that the industry reaches the next level of maturity. “
Edward Moya, Senior Market Analyst, Oanda: “Improved mainstream adoption for cryptocurrencies is addressing most regulatory concerns for now.”
Anthony Pompliano, Morgan Creek Digital, in one tweet “Ultimately, every company will participate in the revolution.”
Bitcoin Watch
The number of major bitcoin addresses is on the rise, CoinDesk’s Omkar Godbole writes
Bitcoin’s blockchain data supports the popular story that bitcoin’s rally is fueled by increased institutional demand.
- According to data source CoinMetrics, the number of bitcoins locked in the addresses has increased significantly by between 1,000 and 10,000 BTC since the end of 2020. The group now has more than $ 5 million in coins, or 30% of its total supply of bitcoins. This is a sign of increased participation of wealthy individuals and institutions.
- Retailers also participated in the rally, with addresses between 0 and 10 BTC gaining market share since mid-2020.
Token Watch
Ether (ETH): Joel Kruger, cryptocurrency strategist at exchange LMAX Digital, offered CoinDesk’s Muyao Shen some price points to watch: [$1,840] will open the door to a test of massive $ 2,000 resistance, which represents a critical psychological barrier and a measured upward rise, ”said Kruger. “We are seeing the first support level at USD 1,680, with a pause below to release the immediate pressure from the upside and open the door for a correction back to the USD 1,500 area.”
Avalanche (AVAX): According to the Avalanche developer team on Reddit, the network is nearing a halt after a “bug in the cross-chain functionality” failed under high load. The price of the AVAX token has already gone up 15 times this year.
Necklace (USDT): The dollar-linked stablecoin’s market cap surpasses $ 30 billion.
Economy in transition
REMOTE WORKSTICKS: A new year of remote working looms as companies delay plans to reopen offices until September or beyond, in many cases refusing to stick to specific dates, the Wall Street Journal reports. As First Mover wrote in November, “There may be a secular transition to commuting, perhaps one of the greatest transformations of the workforce since the industrial revolution, which has drawn people to cities…. Governments and central banks will likely have to give a lot of help and incentives to make the transition smooth, keep society together, that people can make it. ”
US debt> 100% of GDP: Government indebtedness is on track to exceed the size of the entire US economy this year, largely thanks to the $ 4 trillion in emergency spending approved since March to combat the pandemic and boost production. The debt is expected to amount to 107% of the gross domestic product in ten years.
Opinions and comments
PAY NOW OR PAY LATER: Mohamed El-Erian, chief economics adviser to the German financial colossus Allianz, writes in a column for Bloomberg Opinion: “What is beneficial to policy and markets is now increasing future risks, starting with financial instability. The more Wall Street rises in the short term, the more difficult it is to ultimately improve economic conditions to validate the ever-increasing asset prices in an orderly manner. “
