Wishing all you lovely people a Merry Christmas and a Happy New Year!
Unless there are fireworks over the holidays, next news update will be mid-January.
Is this the beginning of a bear market in crypto? With the fear / greed index reading fear levels similar to the cycle lows of December 2018, you might be tempted to think so. But the amount of bitcoin on exchanges is also very low (a sign that no one is selling) and it is only 5 weeks since the all-time high. Bitcoin is making higher lows since July and news of institutional investments just keeps on growing. Eg. this week, UAE’s sovereign wealth fund with $243bn AUM announced it has invested in the crypto space. The fear levels are mainly due to a lot of new investors in the market, who are yet to be hardened to the wild swings of crypto’s highs and lows.
As happens regularly in bitcoin bull markets, Saturday 4th December saw a spectacular drop in the price from $52,000 down to $42,000 before recovering to $45,000. Most of the crypto market followed bitcoin with some tokens dropping 20% in less than 24 hours. In the process over $600m of futures positions were wiped out along with substantial amounts of leverage. Trading exchanges offer leveraged trades to their customers but the general consensus is that it is bad for bitcoin: it causes both significant peaks and drops because so-called whales see the amount of ‘open interest’ (derivative contracts that have not been settled) and trade to take the maximum amount of bitcoin from inexperienced, over-emotional traders. The bitcoin Open Interest has remained above 365,000 BTC for the last month. This is considered excessive. A flushing out of that much leverage is healthy but it’s not much consolation to those watching their portfolio drop in value. Take heart from remembering that bitcoin is still young, still volatile and still the fastest growing asset on the planet when we look at the price year to year and the growth of the network. No one ever said HODLing was easy: if you can’t take the pain, you don’t get the gain.
As to why such a large dip happened, it seems the market responded poorly to the Federal Reserve chairman Jerome Powell saying inflation isn’t transitory (many of us knew that already), along with poor job numbers on Friday 3rd Dec, and Covid anxieties. There was a general sense of ‘risk off’ amongst all assets. Bitcoin, being so new, is still not understood as THE anti-inflation hedge and it is no longer operating quietly in its own ecosystem. The crypto market generally is becoming absorbed into the mainstream financial system. This means an enormous potential upside in terms of crypto asset prices but with the downside that it is affected by the same forces affecting all markets: interest rates, central bank policies, laws, exchange rates, stock market bubbles. It is a small fish in a very large pond. This is perhaps another reason for the delayed bull run peak. Many traditional financial companies are quietly buying bitcoin. They do not want to buy at $100,000+, so they will trade to keep the prices suppressed. This can only continue for so long of course: once bitcoin is seen as the anti-inflationary asset that it is, competition amongst corporations and countries could drive prices substantially higher.
One other point: when the dollar is strong, bitcoin is often weak. And generally, the dollar is strengthening, particularly against very weak fiat currencies such as the Turkish Lira. Hence the ongoing price weakness in bitcoin. There is a general understanding that with the US financial year end approaching (31st December), institutions are rebalancing portfolios, taking profits for the year, and selling to pay tax bills. January should see new portfolio allocations for hedge funds and a fresh start for the crypto markets – along with the somewhat elusive second leg of the bull run. Nothing is guaranteed though, so, sit back, relax, enjoy Christmas and don’t check your phone for the bitcoin price until January! Oh, and remember we would have been ecstatic to have $47k bitcoin a year ago – perspective!
If you have time to watch just one video, make sure it is this one: Raoul Pal has a macro view of the entire crypto / DeFi / NFT space that is head spinning. His overview is so comprehensive and what is happening is so overwhelming, even he is struggling to keep up with it or make sense of it. Humanity’s evolution is accelerating and Raoul’s positivity for the future here is infectious:
And if you want just one piece of news to give you a little bit of hope, read this:
400 Savings Banks in Germany Can Start Crypto Trading Next Year. Even a small percentage of 1.2 trillion Euros will significantly boost the entire crypto market.
Jeff Booth Interview: Bitcoin – the Price of Today. Amazing, depthful overview of the chaos we are witnessing by one of the foremost entrepreneurial thinkers in bitcoin. He outlines a clash between the old inflationary system with its ever-increasing demand for raw materials and increasing prices, and technology, which is always deflationary. Bitcoin is naturally deflationary so it fits harmoniously with the massive technological leaps that are happening and which are increasing in number and scope. The old system has to concentrate power and money in fewer and fewer hands in order to maintain its existence. Bitcoin allows everyone to participate on an even playing field. Which one do you want?
Federal Reserve Is Faced With a 3rd Nuclear Option – It’s Bad. Long winded but important financial macro overview. Don’t ignore this. The loss of purchasing power of our currencies should be of concern to everyone and the Fed’s solution (think 1940’s) will cause great hardship in the US, and that will have a knock on effect globally. It also might cause a hot war with China.
Bitcoin Is Self Preservation. Central planning has been so pervasively normalized that whole sectors of society have become dependent on the largesse of the fiat monster. Bitcoin fixes this.
Bitcoin on Track to Surpass Gold’s Market Cap with Alex Tapscott | Stansberry Research. Bitcoin will surpass gold in terms of its size and its relative importance in the economy and investor portfolios, concluding that, “we are still at the very, very beginning of this cycle.”
Seeking Alpha: Gwyneth Paltrow invests in green bitcoin miner TeraWulf. Actress Gwyneth Paltrow is one of several investors in a recently announced $200M debt and equity financing round for green bitcoin miner TeraWulf (NASDAQ:IKNX). I ask the question again: why would they be doing this if bitcoin is not here to stay?
Bitcoin Touches New Milestone With 90% of Total Supply Mined. However, the last of the 21 million coins won’t get mined until February 2140.
Who is Satoshi Nakamoto, the creator of Bitcoin? The conspiracy of Satoshi is one of the greatest mysteries this world has ever seen. Is it Craig Wright? Is it Hal Finney? Is it the cypherpunks? Or could it possibly be a government agency like the CIA? The answer to that question is worth over 1 million Bitcoin, now worth fifty billion dollars!
Survey Finds More Than Half Of Bitcoin Investors Got In During 2021 | ZeroHedge. And most of them understand that bitcoin is an inflation hedge and are in it for the long haul.
Bitcoin Exit Strategy? Trick question. Bitcoin IS the exit strategy. Good, brief summary of ‘why bitcoin’.
Why The Yuppie “Elite” No Longer Dismiss Bitcoin. There has been a distinct change in attitude amongst well-off professionals in the last 18 months in favour of bitcoin.
Bitcoin Drops 26% ⚠ | Is It Time For Caution? Yes. Or at least patience. Nicholas Merton at DataDash is one of the better technical analysts on YouTube and here gives a good summary of his thesis that the cycle has lengthened and that we may not see the bull run peak until November NEXT year – a long way away but it’s good to have these perspectives.
Daily Report – Bitcoin and Market Update (December 6 2021) – The Birb Nest. We are still in a bull market.
The Bitcoin Chart NO ONE Is Discussing. Crypto Bull God (!) discusses the 12 hour chart along with the 200 and 50 SMA’s and how it indicates the potential for a short-term 3 month bear market in bitcoin.
Bitcoin Market Cycle. Interesting analysis by Benjamin Cohen. He’s been talking about a lengthening market cycle for a while. Here he discusses several possibilities and his theory that we may not get a peak until Summer 2023. And we thought November 2022 was late…
What Happens If Governments Shut Down All Crypto Exchanges? One of the essential questions that bothers both existing and potential crypto investors alike. That would require all governments to cooperate – highly unlikely. And it won’t stop bitcoin anyway.
Is Ethereum A Security? Ether may be hot in a lot of investors’ eyes right now, but it is also being scrutinised by the SEC. It clearly qualifies as a security and therefore holding it – along with many alt coins and DeFi tokens that run on Ethereum – may be more of a risk than is currently being discussed or priced in.
Bitcoin Dominance And The Flippening. With all the talk of Ethereum replacing bitcoin as the top crypto (the ‘flippening’), it can be useful to get a more balanced perspective. The metrics used to measure market cap are largely illusory, especially with altcoins. And governments are likely to become more hostile to crypto altogether as their fiat systems crumble – that’s when the lack of decentralisation of altcoins such as Ethereum might be problematic.
Only 10% of the Bitcoin supply left to mine. Fresh data shows 90% of the total Bitcoin supply is mined, but the rest will take a little longer to produce. About 120 years!
Bitcoin processes more dollar value than PayPal, could surpass Mastercard by 2026 | CryptoSlate. Ethereum turns over more dollar volume but that is spread across thousands of alt coin projects.
Expectations of Bitcoin – Actuaries in government. Here’s a trainee actuary talking about trading and holding bitcoin and cryptos on a UK government-run blog. Just the fact that this is happening – even if it is low-key – signals a change of wind direction about crypto in the UK. So far, the UK government, Bank of England and major banks have been notably hostile.
Hedge Funds Buying BTC. EY, who are one of the biggest consulting and auditing firms in the world, have carried out a survey suggesting that 1 in 4 hedge funds plan to increase crypto exposure within the next year. These findings were based on conversations involving 210 managers and 54 investors. This research is compelling, especially when considering the fact that hedge funds globally manage around $4 trillion of assets.
Goldman Sachs and Other Wall Street Banks Exploring Bitcoin-Backed Loans: U.S. banks want to use bitcoin as loan collateral without touching the bitcoin. Could this be the reason Nexo, BlockFi and others were banned from offering their crypto-backed loans recently?
Paul Tudor Jones: NO ONE Is Telling You This About Bitcoin… Very good analysis of why one of the biggest names on Wall Street is using bitcoin as an inflation hedge.
Kevin O’Leary: Trillions Is Coming To Crypto Because Of THIS! He’s referring to regulation. Regulators will give large institutions permission to invest big money but until then, they are dabbling.
Wallet Maker Ledger Launches Crypto-Linked Debit Card for Customers in US and Some European Countries. Once again, the notion that ‘you can’t use bitcoin for purchases’ is proven untrue.
UAE Wealth Fund Mubadala Investing in Crypto Ecosystem. While “many people are skeptics, I do not fall in that category,” said CEO Khaldoon Al Mubarak. Some of their $243bn AUM is already invested in crypto – likely miners and other businesses.
Myanmar shadow government declares stablecoin USDT an official currency. Myanmar’s shadow government, the National Unity Government (NUG), led by the supporters of jailed leader Aung San Suu Kyi, has declared United States dollar-based stablecoin Tether (USDT) as an official currency for local use. Per a report published in Bloomberg, the NUG will accept Tether for its ongoing fundraising campaign seeking to topple the current military regime in Myanmar.
Bank of Russia to ban mutual funds from investing in Bitcoin. Mutual funds in Russia will not be allowed to provide crypto exposure to qualified or unqualified investors. Retail investors can still buy the one ETF product available in Russia, with others planned. The old system has detected the threat bitcoin represents and will probably try to ban it completely at some point, as its power wanes.
CRYPTO RESET coming – Nearly the entire crypto ecosystem appears to be based on DIGITAL fiat currency counterfeiting operations tied to communist China. Well, not likely, but just to put the other side, a bit like a cold plunge after a sauna. There are one or two good points made in this – particularly about Tether’s potential connections to Chinese property companies and the crash that could trigger. It may not happen but just keep an eye on it.
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