Editor’s note: Happy Chinese Lunar New Year! First Mover will not publish on Monday, February 15, which is President’s Day in the USA. Cryptocurrency markets will be open, as always.
Price point
Bitcoin (BTC) was lower after pushing on Friday morning to a higher price of $ 48,925, based on CoinDesk prices.
Market activity was quiet due to Lunar New Year celebrations across Asia and the President’s Day holiday in the U.S. on Monday, according to Craig Erlam, senior market analyst at foreign exchange brokerage Oanda. (It’s the year of the ox, by the way, which is seen by some traders as optimistic, in case you missed CoinDesk’s Muyao Shen story last week.)
In traditional markets, US stock futures were lower, with an investor telling Bloomberg News that “the investor’s exuberance has subsided somewhat.” Gold weakened 0.5% to $ 1,817 an ounce.
The news
JPMORGAN FEELS BITCOIN BURN: JPMorgan employees chased the top management of the commercial division during an internal city hall meeting about when the largest U.S. bank could enter the bitcoin market, CNBC reported.
BOOK THE CURRENCY STATUS? ECB President Christine Lagarde said it is “very unlikely” that central banks will maintain bitcoin in the near future. “I would say that is out of the question,” said Lagarde during a conference call organized by The Economist.
GIVE PEOPLE WHAT THEY WANT: United States securities and exchange commissioner Hester Peirce, also known as “Crypto Mom” because of her optimistic views on the digital assets industry, said the country’s capital markets are ready for a publicly traded product bitcoin. The SEC refused to approve a bitcoin-traded fund, despite several requests. People are already looking forward to negotiating a bitcoin ETP, and “so if we don’t give them the natural way, which I think would be an ETP, they will look for other (less ideal) ways to do that,” Peirce said Thursday on CoinDesk TV.
CANADA IS NOT WAITING FOR: The first U.S. ETF bitcoin was approved Thursday by the Ontario Securities Commission. “Maybe they are normal and the SEC is very conservative,” tweeted Eric Balchunas, senior ETF analyst at Bloomberg. “Either way, the United States generally follows soon after.”
FINANCE EXECS DEMUR ON BITCOIN: Top financial executives at Verizon, Cisco Systems and Mozilla see accounting risks and challenges in putting corporate money into bitcoin, the Wall Street Journal reported. These anecdotes defy the investment narrative that cryptocurrency should benefit from a wave of new demands from companies.
BAIR IS A BEAR: Bitcoin prices are at “bloody levels,” said Sheila Bair, former president of the US Federal Deposit Insurance Corp. and now president of state-owned mortgage finance company Fannie Mae. “Stay away from it,” she said Wednesday night in an interview with Bloomberg radio. “It is volatile. It’s at bloody levels now. We don’t know how sustainable that is. ”
FREE INDIA PERIOD: Lawmakers in India will provide a transition period if a proposal to ban the use of cryptocurrencies is approved as expected, Bloomberg reported. Thereafter, the use of cryptocurrency in all aspects will be banned through a new law to be introduced in the current parliamentary session through the Cryptocurrency and Regulation of the Official Digital Currency Act of 2021.
Market movements
How bitcoin reaches $ 1 million in 11 years, in the scenario of an analyst
First Mover did some unpredictable math earlier this week to illustrate how scarce the supply of bitcoin can be for the flock of new institutional investors and corporate treasurers now ostensibly considering an allocation for cryptocurrency, following Tesla’s announcement earlier this week of a $ 1 purchase , 5 billion.
Come now Charlie Morris, investment director at ByteTree Asset Management, who performed his own calculations along similar lines, making First Mover’s amateur efforts look like the squiggles of a little child.
About 363,500 bitcoins will be awarded this year to cryptocurrency miners for helping to protect the blockchain network, calculates Morris. He assumes the miners “are likely to sell more because that is their business.”
Posterior extrapolation leads to a figure of $ 18.17 billion: This is the amount of new bitcoin demand that would be needed this year to “sustain a price of $ 50,000 BTC”, according to Morris.
For context, Morris writes that gold-traded funds attracted $ 41 billion last year. “Considering the clearing flows for bitcoin at the time, the evidence points to gold investors switching to bitcoin,” writes Morris. “If bitcoin can attract $ 41 billion in 2021, as gold did last year, expect to see an average bitcoin price of $ 100K.”
It’s very optimistic, in other words, but not madly 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 by digital asset manager CoinShares on Tuesday. And the CoinShares report doesn’t even cover the demand from investors or corporate treasurers who may be buying bitcoins directly through their own accounts, or purchases from retail traders who are looking for a piece of the action.
Factor the four-year halves of the Bitcoin blockchain, where miners’ rewards are cut in half and the investment barrier decreases every four years. “It continues to fall after that, which means that high prices are easier to sustain in the future than today,” writes Morris.
So, what does this mean for bitcoin prices? Morris estimates that a $ 1 million price for bitcoin will be reasonable in 2044, at a rate of $ 41 billion in new entries per year. Bitcoin will reach the $ 1 million mark in 2036 if consumer price inflation is 2.5%, or in 2032, if average inflation is 5%. That is only 11 years from now, representing a 20-fold gain over current price levels.
Mastercard / BNY Mellon Reax
Gavin Smith, CEO, Panxora Group: “The entry of BNY Mellon and Mastercard into the cryptocurrency space moves bitcoin two big steps closer to mainstream acceptance.”
David Mercer, CEO, LMAX Group: “Financial institutions are now preparing to accompany their customers.”
Don Guo, CEO, Broctagon Fintech Group: “We hope that the growing adoption will encourage the industry to prioritize the provision of liquidity by improving the cryptographic infrastructure. This will ensure that both existing and new participants have consistent access to the best prices and that the industry reaches the next level of maturity. “
Edward Moya, senior market analyst, Oanda: “The improved acceptance of cryptocurrencies is completely alleviating most regulatory concerns for now.
Anthony Pompliano, Morgan Creek Digital, in a tweet: “Eventually, all companies will join the revolution.”
Bitcoin Watch
The number of large bitcoin addresses increases, writes Omkar Godbole of CoinDesk
Bitcoin blockchain data supports the popular narrative that the rise of bitcoin was fueled by increased institutional demand.
- According to CoinMetrics data source, the number of bitcoins blocked at addresses between 1,000 and 10,000 BTC has increased significantly since the end of 2020. The group now holds more than $ 5 million in coins, or 30% of the total bitcoin stock. This is a sign of greater participation by individuals and institutions with high net worth.
- Retailers also participated at high, with addresses between 0 and 10 BTC gaining participation since mid 2020.
Token Watch
Ether (ETH): Joel Kruger, cryptocurrency strategist at the LMAX Digital exchange, offered CoinDesk’s Muyao Shen some price points to note: “A break up [$1,840] it will open the door to a massive $ 2,000 endurance test, which represents a critical psychological barrier and measure of range of motion, ”said Kruger. “We see the first level of support at $ 1,680, with a break below to take the immediate pressure off the top and open the door for a correction back to the $ 1,500 area.”
Avalanche (AVAX): The network almost came to a halt after a “bug in cross-chain functionality” failed under high loads, according to the Avalanche developer team on Reddit. The price of the AVAX token has increased 15 times this year.
Tether (USDT): The market value of the dollar-linked stablecoin exceeds $ 30 billion.
Economy in transition
REMOTE WORKING STICKS: Another year of remote work is approaching, as companies postpone plans to reopen offices until September or later, in many cases refusing to commit to specific dates, reports the Wall Street Journal. As First Mover wrote in November: “A secular transition to Internet transport may be taking place, perhaps one of the biggest transformations in the workforce since the industrial revolution, which attracted people to cities…. Governments and central banks are likely to have to provide a lot of help and encouragement to ensure that the transition goes smoothly, that society stays together, that people can manage. “
US DEBT> 100% of GDP: The government’s debt burden is on track to oversize the entire US economy this year, largely due to the $ 4 trillion in emergency spending approved since March to combat the pandemic and stimulate production. The debt is expected to reach 107% of gross domestic product in a decade.
Opinions and Observations
PAY NOW OR PAY LATER: Mohamed El-Erian, chief economic advisor to the German financial giant Allianz, writes in the Bloomberg Opinion column: “What is favorable for politics and markets now increases future risks, starting with financial instability. The further Wall Street advances in the short term, the more difficult it will be for an eventual improvement in economic conditions to validate the increasingly high prices of assets in an orderly manner. “
