First Mover: Bitcoin’s rich list grows as whales recapture HODL and the price $ 18,000

Bitcoin hit new 35-month highs of over $ 18,400 during European trading hours. The cryptocurrency has failed to hold profits above $ 18,000 in the past two trading days. It will be interesting to see if prices break above these levels on Friday.

“The market showed a lot of resilience and little buying interest to shake off any immediate questions about the sustainability of the recent uptrend. So much so that Bitcoin has surged back above the $ 18,000 mark and is still on its way to retest the highs from earlier this week, ”said Denis Vinokourov, head of research at London’s prime brokerage Bequant.

Other cryptocurrencies also rallied, with Ether breaking the psychological barrier of $ 500 for the first time since July 2018.

In traditional markets, European stocks rallied, ignoring the dwindling prospects for additional US tax incentives and mounting coronavirus crises. However, US stock futures fell and gold gained when the Treasury Secretary announced plans to phase out several Federal Reserve emergency loan programs on December 31.

Market movements

Bitcoin has risen for seven straight weeks, the longest streak since early 2017, when prices began pushing towards the all-time high near $ 20,000 in December this year. And crypto traders are wondering how long this latest rally can last.

The upward move started in early October when prices were around $ 10,700 and Bitcoin is now changing hands at around $ 18,000. On an annual basis, the cryptocurrency has gained an astonishing 150%, the highest value since the 14-fold growth in 2017.

The climb has been so quick and powerful that analysts are starting to use terms like “parabolic,” with increases becoming exponential.

“Bitcoin’s recent continuous uptrend bears strong resemblances to the 2017 bull run, in which a parabolic trend rose to $ 20,000,” wrote Lennard Neo, research director at the cryptocurrency-focused structured products company Stack Funds, on Thursday in one weekly report.

Bitcoin has enjoyed its four seven-week winning streaks since its eight-week run in early 2017.

Source: TradingView, CoinDesk

For clues as to what is next, some cryptocurrency analysts are looking for data extracted from the blockchain to draw conclusions about what types of buyers are entering the market and who is selling, if any.

These indicators seem to show how few investors are willing to part with their Bitcoin, even as evidence mounts that a growing number of large institutional fund managers are pulling out of traditional markets in a year when few other trades appear to be from seduced by the oversized profits will produce big profits. The Standard & Poor’s 500 index of large US stocks is up 11% this year, and bond returns are hard to come by, with 10-year government bonds returning less than 1%.

“The price of Bitcoin is increasing because of the demand for [b]itcoin is rising at a time when there is relatively little bitcoin to buy, “Blockchain data company Chainalysis wrote in a report on Thursday.

The company created a graph that shows what appears to be “investor-held” wallets – those whose coins rarely or never move – versus “merchant-held” wallets that have more frequent sales. The number of Bitcoins in wallets held by traders or those that theoretically tend to take profits when prices rise has declined this year. Meanwhile, the amount of bitcoins held by investors has steadily increased.

The graph shows that Bitcoin “held by investors” (orange line) is rising, while Bitcoin “held by traders” (yellow line) continues to fall.

Source: chain analysis

Another blockchain data company, CryptoQuant, is tracking Bitcoin “whales” – those accounts large enough to send a huge sell order to an exchange that usually inundates buy orders from smaller traders.

The “Exchange Whal Ratio”, which is calculated by dividing the value of the top 10 deposits on the stock exchanges by the total amount of deposits, is currently below the 90% mark, which would indicate an extreme probability that a big drop in prices is imminent . The meter is currently at around 85%, with “the chance that prices will continue to rise is high,” wrote CryptoQuant in an email on Thursday.

“If you look at the movement of whales, it seems that the price hike will continue,” the report said.

The “Exchange Whal Ratio” is around 85%, below the 90% level that could indicate an imminent sell-off.

Source: CryptoQuant

Hong Fang, CEO of the San Francisco-based crypto exchange OKCoin, wrote in a comment on Thursday for CoinDesk Opinion that “the burning question is whether Bitcoin will be overpriced”.

She argued that it is not unreasonable to expect a price of around $ 100,000 next year, assuming 1 to 2 percent of the total US household fortune of $ 112 trillion will go to Bitcoin.

“This is a timing risk,” she wrote. “It is entirely possible that it will take a lot longer than expected for Bitcoin to become mainstream.”

The whales pose a short-term threat. If Bitcoin continues its parabolic surge, they could splash around.

Bitcoin clock

Bitcoin’s “rich list” grows with price, adding more credibility to the bull run.

Source: Glassnode

The rich list of Bitcoin, or the number of addresses with at least 1,000 BTC, continues to rise along with the price, indicating increased interest from institutions and wealthy investors.

The metric recently hit a record high of 2,237, which, according to the Glassnode data source, represents an increase of 5.6% since the beginning of the year. The list of the rich has grown by over 2.5% in the past six weeks, along with the rice from Bitcoin, from $ 10,000 to $ 18,000.

A single person can have multiple addresses. Crypto exchanges also store coins from traders at multiple addresses. Hence, the extensive list is not an accurate measure of increased institutional involvement or user acceptance.

However, there are good reasons to believe that the recent increase in the number of large addresses is due to the influx of wealthy individuals. Several publicly traded companies like MicroStrategy and Square have made roughly a foray into the Bitcoin market in the past eight weeks.

With strong hands backing the price rally, the cryptocurrency is likely to challenge record highs ahead of the year-end, as expected by some analysts.

What is hot

  • Mingxing “Star” Xu, CEO of OK Group, emerges from police custody as OKEx’s mysterious key holder returns, and crypto exchange signals that the suspension of customer withdrawals will soon end; Exchange token OKB increases in price by 23% (CoinDesk)
  • Ether trades over $ 500 for the first time since July 2018 (CoinDesk)
  • The Financial Times editors say that Bitcoin’s recent rally “took place alongside other risk assets,” and the “main factor” in the rise of the cryptocurrency is “the potential for greater mainstream adoption beyond hobbyists and speculators” (Financial Times).
  • Goldman Sachs Expects 1 Billion Digital Yuan Users in First Decade of China’s CBDC (CoinDesk)
  • Bitcoin options investors begin to hedge against a possible price decline (CoinDesk)
  • The majority of Bitcoin hashrate signals support taproot scaling, data protection upgrade (CoinDesk)

Analogues

The latest in business and traditional finance

  • China borrows $ 4.7 billion in European debt sale and pays negative interest rate for the first time (WSJ)
  • More Americans Filing For Unemployment Last Week At 742,000, First Up Since October (WSJ)
  • US Treasury Secretary Mnuchin urges the Federal Reserve to return all unused coronavirus aid funds, and the Fed issues a statement saying it “would prefer” that the emergency programs “continue to serve their vital role as backing” ( Politico via Yahoo Finance).
  • Venezuelan opposition battles creditors for control of billions of dollars in global assets (WSJ)
  • $ 6 billion in bond sales have been canceled across mainland China as fears of massive corporate bond defaults have forced many to cancel new issues (Nikkei Asian Review)
  • US President Donald Trump will meet Chinese President Xi Jinping at a virtual Asia-Pacific summit to discuss economic recovery on Friday amid the ongoing battle to contest election results (Reuters).

Tweet of the day

Sign up to receive First Mover in your inbox every weekday.

Comments are closed.