Bitcoin Flying At $55,000 Feet

Bitcoin Flying At $55,000 Feet

Dear Investors,

Please excuse the multiple messages today. I have a reason – I’ll be taking two weeks of paternity starting tomorrow, returning on 10/22 in time to prepare your October issue. You will still continue to get great content from the Forbes CryptoAsset and Blockchain Advisor team, both our Director of Data Analytics and Staff Writer Nina Bambysheva (who have both contributed to this research service) will send you updates next week. 

As I mentioned earlier as well, Javier will be hosting a subscriber-only webinar later this month to cover ETPs and derivatives, so please get your questions ready.

That said, if today is going to be my last post for a couple of weeks it is hard to think of a better way to temporarily ride off into the sunset. As I write this bitcoin is priced at $54,790. It briefly touched $55,000 today, and all of this happened after it finally poked its head over $50,000 yesterday for the first time since early September. As you know many of us had been waiting for the milestone to be reached, only for bitcoin to be rebuffed time and time again.

There is no single reason why this happened today. Short-term technical charts suggested the potential to retest levels above $50,000, and we’ve seen time and time again how bitcoin tends to have breakouts following periods of narrow trading (see below). In fact, it appears that we may still have some room to run.

Additionally, data coming out of the CME (seen as a proxy for institutional interest) is increasingly bullish. Javier just published an excellent report today highlighting how corporates and institutions have recently turned bullish once again and are staking out long positions. Additionally, bitcoin open interest at the exchange is starting to rise once more, which tends to be a positive driver of price action. But that’s not just good news for bitcoin. As we’ve detailed in the past, while some institutions have cycled out of bitcoin to move into ether or other assets, at least at the CME their ether positions are holding steady while they increase their exposure to bitcoin. Find out more in this terrific report.

Looking outward, I think that there are also more macro elements at play here. For instance, in successive weeks we’ve seen both Fed Chair Jerome Powell and SEC Chair Gary Gensler both publicly state their lack of desire to ban bitcoin and other crypto. This comes in direct contrast to China’s latest ban and represents an acknowledgement that this industry is legitimate and has a major role to play in the future of our economy. 

Additionally, there are growing hopes that we are going to see the first bitcoin ETF approved by the SEC in the coming weeks. According to Eric Balchunas, Bloomberg ETF strategist, there is a 75% chance that such a product will be approved this month. The catch is that it will be a futures product, which comes with certain restrictions, but it is better than nothing. I do believe that we are getting closer to an ETF being approved, but I would urge all of you not to put too much stock into this until it actually happens. Hardly anyone knows what is happening inside of the SEC until they state something publicly, and officials there do not care about our timelines.

Finally, before I go I wanted to make sure that all of you saw that Grayscale added Solana and Uniswap to its Diversified Large Cap Fund, a recognition of their growing market capitalizations, scale, and importance. As you know these have been in our core portfolio for almost two months, and they will likely benefit from the increased awareness and recognition that comes from being included by the world’s largest digital asset manager.

Have a great couple of weeks, and please feel free to reach out if you need anything.

Published at Wed, 06 Oct 2021 19:05:48 +0000