First Mover: Bitcoin ‘Rich List’ Grows as Whales HODL and Price Retakes $18K
Bitcoin hit new 35-month highs above $ 18,400 during European trading hours. The cryptocurrency has not been able to hold profits above $ 18,000 in the past two trading days. It will be interesting to see if prices gain a foothold above this level on Friday.
“The market showed a lot of resilience and strong buying interest to shake off any immediate questions about the sustainability of the recent uptrend. So much so that Bitcoin has risen above the USD 18,000 level and remains on track to retest the highs from earlier this week, ”said Denis Vinokourov, head of research at London-based prime broker Bequant.
Other cryptocurrencies also rallied, with aether breaking the $ 500 psychological barrier for the first time since July 2018.
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Related Topics: Market Wrap: Bitcoin Hits $ 18.8,000 as Total Crypto Locked in DeFi exceeds $ 14 billion
In traditional markets, European stocks rallied, ignoring the dwindling prospect of additional fiscal stimulus in the US 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.
Bitcoin has been up for seven straight weeks, the longest streak since early 2017, when prices began to surge towards the all-time high near $ 20,000 in December this year. And crypto traders are wondering how long this final rally can last.
The spike began in early October when prices were around $ 10,700 and Bitcoin is now changing hands at around $ 18,000. Since the start of the year, the cryptocurrency has risen a staggering 150%, most since the 14-fold growth in 2017.
The climb has been so quick and powerful that analysts are starting to use terms like “parabolic,” where the increases become exponential.
Related: 10 Metrics Bitcoin Has Already Hit New All-Time Highs
"Bitcoin's recent continuous uptrend bears strong resemblances to the 2017 bull run, which saw a parabolic trend soar to $ 20,000," Lennard Neo, research director for cryptocurrency-focused structured products company Stack Funds, wrote in a weekly Thursday Report.
To get clues as to what's next, some cryptocurrency analysts look for data extracted from the blockchain and deduce 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 leaving traditional markets in a year when there seem to be few other trades Being seduced by the oversized profits will produce big profits. The Standard & Poor's 500 Index for US Large Stocks is up 11% this year, and fixed income returns are hard to come by as 10-year Treasury bills yield less than 1%.
"The price of Bitcoin is rising because the demand for [b] itcoin is increasing at a time when there is relatively little Bitcoin available to buy," the blockchain data firm Chainalysis wrote in a report on Thursday.
The company created a chart that tracks what appears to be wallets held by investors - those whose coins rarely or never move - compared to wallets held by merchants, where sales are more frequent. The number of Bitcoin in wallets held by traders, or those that are theoretically more likely to take profits when prices rise, has decreased this year. The amount of Bitcoin held by investors has now steadily increased.
Another blockchain data firm, CryptoQuant, is tracking bitcoin whales - those accounts large enough to send a huge sell order to an exchange, which usually crowds buy orders from smaller traders.
The "Exchange Wale Ratio", calculated by dividing the value of the 10 largest deposits on stock exchanges by the total amount of the deposits, is currently below the level of 90%, which would indicate an extreme probability of an impending large price decline. The meter is currently at 85%, where "the likelihood of further price increases is high," wrote CryptoQuant in an email on Thursday.
"If you look at the movement of the whales, prices seem to continue to rise," the report said.
Hong Fang, CEO of the San Francisco-based crypto exchange OKCoin, wrote in a statement for CoinDesk Opinion on Thursday: "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% of the total US budget of $ 112 trillion goes 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.
- Bradley Keoun
The extensive list of Bitcoin or the number of addresses with at least 1,000 BTC continues to rise along with the price, which indicates an increased interest from institutions and wealthy investors.
The metric recently hit a record high of 2,237, up 5.6% year over year, according to data source Glassnode. The list of the rich has grown over 2.5% from $ 10,000 to $ 18,000 in the past six weeks alongside Bitcoin Rice.
A single person can have multiple addresses. Crypto exchanges also store coins from traders at multiple addresses. Therefore, the extensive list is not an accurate measure of increased institutional participation or user adoption.
However, there is strong reason to believe that the recent surge in the number of large addresses was due to the influx of wealthy individuals. Several publicly traded companies such as MicroStrategy and Square have entered the Bitcoin market in the past eight weeks.
With strong hands helping 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 the OK Group, emerges from police custody as the mysterious OKEx key holder also returns. The crypto exchange signals that the suspension of customer withdrawals will soon end. Exchange token OKB jumps 23% in price (CoinDesk)
Ether trades above $ 500 for the first time since July 2018 (CoinDesk)
According to the Financial Times, Bitcoin's recent rally has taken place "alongside other risk assets" and the "main factor" behind the rise of the cryptocurrency is "the potential for greater acceptance by hobbyists and speculators" (Financial Times).
Goldman Sachs Expects 1 Billion Digital Yuan Users in First Decade of China's CBDC (CoinDesk)
Bitcoin option investors are starting to hedge against a possible price decline (CoinDesk)
The majority of bitcoin hash signals support taproot scaling and privacy upgrade (CoinDesk).
The latest on economics and traditional finance
China borrows a $ 4.7 billion European debt sale and pays negative interest rates for the first time (WSJ)
More Americans claiming unemployment benefits at 742,000 last week gained weight for the first time since October (WSJ)
US Treasury Secretary Mnuchin asks the Federal Reserve to return any unused coronavirus aid funds, and the Fed issues a statement "preferring" the emergency programs to "continue to play their vital role of backing" (Politico via Yahoo Finance).
The Venezuelan opposition is fighting creditors for control of the billion dollar global fortune (WSJ).
$ 6 billion bond sales were canceled in mainland China as fears of mass corporate bond defaults forced many to cancel new issues (Nikkei Asian Review)
In the battle for the election results, US President Donald Trump will meet with Chinese President Xi Jinping on Friday at a virtual summit of heads of state and government in the Asia-Pacific region to discuss the economic recovery (Reuters).
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First step: Bitcoin's "rich list" grows when Whales HODL and Price get back $ 18,000
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