Bitcoin managed to squeak a positive return over the last week despite a 12% drawdown after Russia’s military invaded the Ukraine. The bitcoin price fell to US$34,459 but rallied going into the weekend, and is trading at $38,861 at the time of writing.
Ether’s price action was slightly better, up 3.80% vs bitcoin’s 0.26% over the last 7 days.
Bitcoin’s market cap sits at $736.1B, market dominance is 41.81%, and the entire crypto market is valued at $1.76T.
|Price||High||Low||Change from previous week|
|BTC (in US$)||$38,861||$39,630||$34,459||0.26%|
|ETH (in US$)||$2,740||$2,849||$2,308||3.80%|
Source: CoinMarketCap. As at 27 February 2022. Past performance is not indicative of future performance. Performance is shown in U.S. dollars and does not take into account any USD/AUD currency movements.
News we are keeping an eye on
Last September, El Salvador was the first country to make bitcoin legal tender. The country has seen a positive impact on its GDP and local tourism development, despite the IMF urging El Salvador to reverse its decision. According to Salvadoran Tourism Minister, Morena Valdez, the tourism industry is up more than 30% since the adoption, based on a poll. Prior to adoption, most visitors were from neighbouring countries, however, up to 60% are now arriving from the U.S. Tourism growth has exceeded expectations, reaching 1.4 million versus the 1.1 million tourists previously projected. The country’s president, Nayib Bukele, announced in a tweet that El Salvador’s GDP grew 10.3% in 2021. Its exports (a main driver of economic growth) grew 13% (year over year) this January from January 2021. El Salvador had never had a double digit GDP growth before 2021.1
BNY Mellon Wealth Management conducted a study that found 77% of family offices are interested in or are already involved in crypto. Over the next 24 months, over 66% are looking to increase their crypto holdings and 40% thought crypto was important to include in their investing strategy. 54% preferred crypto exposure through ETFs, whilst 42% preferred direct ownership and custody. The main reasons cited for crypto investments are to stay on top of trends, and the investment opportunity that crypto has to offer. The study involved over 200 family offices, with each office managing over $150 million in assets.2
Coinbase (COIN) reported strong fourth-quarter results last week. Based on data from Factset, fourth-quarter revenue was $2.5 billion versus analyst estimates of $2.0 billion, while adjusted earnings per share came in at $3.32 , versus estimates of $1.94. The company posted $2.3 billion in transaction revenue in the fourth quarter versus $1.1 billion in the third quarter. Despite the strong quarter, Coinbase expects some headwinds in the first quarter. Coinbase attributed the change to decreased crypto asset volatility and a 20% decrease in crypto market capitalisation quarter to date: “Declining market cap is driven by macroeconomic factors like geopolitical instability and the Federal Reserve signaling a tightening of financial conditions.”3
Block (formerly Square) also beat fourth-quarter estimates. Total revenue was up 29% year over year (yoy) to $4.08 billion vs analyst consensus of $4.04 billion, while adjusted earnings per share was $0.27 versus estimates of $0.19. Excluding bitcoin, revenue totaled $2.12 billion, 51% higher than the prior year. Block currently allows the approximately 70 million users of its Cash App to buy and sell bitcoin. Revenue from Bitcoin purchases in the fourth quarter was up 12% yoy to $1.96 billion. Gross profit generated by Bitcoin sales was just $46 million, a 14% increase yoy, but a small slice of the total company gross profit for Q4 of $1.18 billion. In the works for the company is building a decentralised bitcoin exchange and funding bitcoin developer projects.
Bitcoin: The HODL Waves measure is a bundle of all active supply age bands. Each coloured band shows the percentage of Bitcoin in existence that was last moved within the time period denoted in the legend. This metric can provide insight into the mindset of different cohorts ranging from short to long-term holders.
Looking at data from on-chain analytics company Glassnode, bitcoin has continued to reflect strong holding behaviour – currently 76.5% of bitcoin’s supply hasn’t moved in at least six months, an all-time high.
Bitcoin: Number of Active Addresses (7d moving average) looks at the number of unique addresses that were active in the network either as a sender or receiver. Only addresses that were active in successful transactions are counted. This metric can indicate how much excitement in the market there may be for the asset.
Bitcoin: Number of Active Addresses (7d moving average) has continued to be relatively quiet, unsurprisingly given the recent price action. Bitcoin has struggled to get back to levels seen during the previous all-time high, down 29% since last April.
One altcoin that managed to buck trend over the last week, returning 60.28%, was Terra (LUNA). The outperformance looks partly to be due to the news around the $1 billion raised to establish a Bitcoin reserve for Terra’s stablecoin UST. According to Terra’s website, Terra is a public blockchain protocol deploying a suite of algorithmic decentralised stablecoins which underpin a thriving ecosystem that brings DeFi to the masses. The more demand for Terra stablecoins (UST), the more value captured by LUNA – Terra’s decentralised reserve asset.5
Investing in crypto assets or companies servicing crypto-asset markets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto-asset markets.
Investing in crypto assets or crypto-focused companies is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment.
Any investment in crypto assets or crypto- focused companies should only be considered as a very small component of an investor’s overall portfolio.
Off the Chain will be published every Tuesday, and provide the latest news on bitcoin and the rest of the crypto market along with analysis and insights into the world of crypto.
It provides general information only and is not a recommendation to invest in any crypto asset, crypto-focused company or investment product.