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🗞 Big gaps and bigger buys: 5 things to watch in Bitcoin this week
Vaccine, stimulus decision fuels risk appetite
On a wider macro level, talk is firmly focused on the United States agreeing a coronavirus stimulus package this week.
A major test of the dollar’s strength, negotiations have “no guarantee” of being successful, one government aide told mainstream media, but the cost of the package under discussion is around $900 billion.
As Cointelegraph reported, this will contain benefits for various economic sectors, but will crucially not involve a second stimulus check for ordinary Americans.
For Bitcoin, however, any major boost to USD is always a concern — 2020 has been characterized by the inverse correlation between BTC and the U.S. dollar currency index (DXY).
BTC price rebounds to crucial resistance
Within Bitcoin, the weekend has continued what is a relatively recent phenomenon for price action — more happening on Saturday and Sunday than during the week.
After a lackluster five days’ trading, BTC/USD rallied after Friday, rising from near $18,000 to highs of $19,400.
“However, traders should be aware that there is a possible likelihood of a ‘fakeout’ above this recent high, through which a bearish divergence starts to be applied and further rangebound continuation is likely.”
Another $1,000 futures gap joins the party
Countering the hope of a $20,000 showdown meanwhile, the weekend has ironically unleashed another “gap” in Bitcoin futures markets, providing downward pressure.
Roughly $1,000 in size, the difference between the end of Friday and the start of Monday trading for CME Bitcoin futures markets gives a lower price target of $18,100.
“There are two open CME gaps from recent price action. The first one didn’t fill completely as there's still open air at $17,015. The second one at $18,115 will be created due to the weekend's bullish price action.”
Institutional interest boosts Bitcoin's image
“One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
"Wholecoiner" wallets hit record numbers
According to statistics from on-chain analytics resource Glassnode, the number of Bitcoin wallets containing a whole coin or more is at a new all-time high. As of Sunday, almost 827,000 wallets had a balance of 1 BTC or more.
The difficulty in accruing a whole unit of Bitcoin has become an increasingly hot topic on social media amid the corporate investment narrative. This has combined with data showing that despite recent price rises, coins continue to leave exchanges for cold storage.
🗞 Jim Cramer bought Bitcoin while 'off nicely from the top' in $17,000s
Three months after seemingly changing course on crypto, the outspoken host of CNBC’s Mad Money is claiming he made a well-timed Bitcoin investment on Friday.
In an interview with TheStreet, Jim Cramer says he purchased Bitcoin (BTC) Friday morning when the price dipped under $18,000. The Mad Money host added he was treating the crypto asset as any other investment in a diverse portfolio.
“I will buy — like I usually do — as something comes down," said Cramer.
"I'll get bigger and bigger and bigger. I just think that you want to diversify into all sorts of asset classes. I have gold. I’m going to diversify into some Bitcoin — not a big position for me — but it's certainly important to be diversified, and Bitcoin is an asset and I want to have a balance of assets."
"[Bitcoin] is off nicely from the top. I like to buy something that’s off nicely from the top."
🗞 Former PBoC Governor: Digital Yuan Won't Threaten US Dollar
Zhou Xiaochuan, the former governor of China’s central bank, the People’s Bank of China, said in a conference on Sunday that the upcoming digital yuan is not being issued to replace existing fiat currencies, local publication SCMP reported this morning.
Instead, the digital currency will function alongside the currently used digital payment systems offered by nations and private operators.
Much has been written in the past few months about China’s upcoming digital yuan, officially the Digital Currency Electronic Payment (DCEP), and its aspirations to ease into global payment systems and gradually become the backbone of payments in Asia after its launch in 2022.
Tests have been widely successful so far. Over $300 million were transacted as of last month and a test last week—a “tap” payments feature that mimicked cash payments—saw a record $3 million in transactions over the weekend.
🗞 Crypto Long & Short: Bitcoin’s Relationship With Gold Is More Complicated Than It Looks
Earlier this week, JPMorgan published a global markets strategy note that points out that money has flowed out of gold and into bitcoin since October, and predicts that this trend will continue over the medium to longer term.
The easy conclusion is that investors are finally understanding that bitcoin (BTC, -0.90%) is a superior future store of value to gold, and are rotating out of one and into the other.
I’m not convinced that’s what we’re seeing. I agree with the analysts, though, that inflows into bitcoin will continue to increase, but not because investors are changing their minds. There’s something else going on.
In and out
Growing confidence
The GBTC trust mentioned above is only available upon issuance to accredited investors, who can sell on the OTC market after a six-month lock-up. The listed price carries a premium to the underlying value, which represents the strength of retail demand for bitcoin exposure. In what is known in the market as the “premium trade,” accredited investors that sell into the market after the lock-up capture both any bitcoin appreciation and the premium, and often reinvest all or part of the proceeds into new trust shares. Without strong retail demand, the GBTC premium would dwindle.
The sands of time
This week, financial advisor firm deVere released the results of a survey of over 700 of its millennial clients, which showed that two thirds of them prefer bitcoin to gold as an investment. This means that any new savings entering the market may be almost 70% more likely to be put in bitcoin than into gold.
Old and new
So, we are likely to have significant new demand for bitcoin as a portfolio investment coming in from younger retail investors, at a time professional investors are also taking notice. It’s not just bitcoin fundamentals at work. Many professional investors will be interested in bitcoin investment precisely because of this potential growth narrative – other people wanting bitcoin is enough to make them want bitcoin.
Balancing Act
This week he went even further: Not content with the $475 million already invested in the asset, MicroStrategy issued $650 million of convertible bonds (which was initially going to be $400 million and then got raised to $550 million and then got raised to … you get the picture), the proceeds of which will go to buy more bitcoin.
Is he nuts? Or is this the corporate treasury management of the future?
In my opinion, possibly both. Bitcoin is a relatively volatile asset, and corporate treasury is not the place to take risks. Citi seems to agree, as it downgraded its recommendation on MicroStrategy stock to a “sell” this week. At time of writing (Friday afternoon), the share price has fallen almost 15% over the week.
Anyone know what's going on yet?
🗞 Daily Crypto Calendar, December, 14th💰
Veros (VRS)
Roadmap Q1 2021 Publications Roadmap for Q1 2021 December 14, 2020.
PhoenixDAO (PHNX)
"Have fun everybody and we can't wait for the 14th December when you can get your hands on the app."
Perpetual Protocol (PERP)
Mainnet launch "delayed to Monday".
Nuls (NULS)
NULS is expected to announce several new partnerships this week.
NULS main-net upgrade to version 2.8.0 on December 14, 2020.
Aave (AAVE), Band Protocol (BAND), Chainlink (LINK), Compound (COMP), Ethereum (ETH), Kyber Network (KNC), Maker (MKR), Dai (DAI), Ocean Protocol (OCEAN), Secret (SCRT), Synthetix Network Token (SNX), TrueUSD (TUSD), Uniswap (UNI), yearn.finance (YFI)
"Launching December 14th, the Secret Ethereum Bridge brings the power of programmable privacy to $ETH and ERC-20s at low cost."
Horizen (ZEN)
Team updates at 3:30 PM UTC/ 11:30 AM EDT: Engineering, Node network, Product/UX, Helpdesk, Legal, BD, Marketing, CEO Closing thoughts, AMA.
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