Bitcoin Revisits January Lows | BetaShares

Bitcoin revisits January lows

BY Justin Arzadon | 10 May 2022

Fear amongst investors of stagflation, or high inflation, slow economic growth and recession due to further interest rate hikes, permeated the crypto market, sending it tumbling over the past week. Bitcoin breached the $35K level, a price not seen in over 70 days. At the time of writing, bitcoin was trading at $34,594.

Ether also traded down -7.89% vs bitcoin’s -9.04% over the last seven days.

Bitcoin’s market cap fell to $659.4B, while the total crypto market dropped to $1.59T. Bitcoin’s market dominance also fell slightly to 41.5%

Price High Low Change from previous week
BTC (in US$) $34,594 $39,902 $34,378 -9.04%
ETH (in US$) $2,556 $2,956 $2,531 -7.89%

Source: CoinMarketCap. As at 8 May, 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.

Source: Glassnode. Past performance is not indicative of future performance.

News we are keeping an eye on

Italian high-end luxury fashion house Gucci announced that it will begin accepting cryptocurrencies at some of its stores this month, with plans to accept crypto for all of its directly operated North American stores by this summer. Gucci joins other luxury retailers such as Off-White and Phillip Plein to offer this service. In-store shoppers will be sent a link via email with a QR code that would allow them to pay directly from their crypto wallet. More than ten cryptocurrencies will be accepted, including Bitcoin, Bitcoin Cash, Ethereum, Wrapped Bitcoin, Litecoin, Shiba Inu, Doge and five stablecoins pegged to the US dollar. Marco Bizzarri, the president and CEO of Gucci, commented: “Gucci is always looking to embrace new technologies when they can provide an enhanced experience for our customers.”1 Gucci has already released some NFTs and is also establishing a presence in the metaverse and will be developing digital real estate in The Sandbox.

A survey conducted by the Bank of International Settlements (BIS) revealed that 73 out of 81, or 90%, of central banks are exploring how to release their own central bank digital currency (CBDC) and half of those financial institutions are already developing or in experimental phase. Besides China, which recently ran an experiment with the digital Yuan as a payment method during the Beijing Winter Olympic Games, other countries exploring the potential launch of such a project or conducting trials include Malaysia, Thailand, Zambia, Indonesia, and Mexico. The BIS stated: “Globally, more than two-thirds of central banks consider that they are likely to or might possibly issue a retail CBDC in either the short or medium term. Central banks consider CBDCs capable of alleviating key pain points such as the limited operating hours of current payment systems and the length of current transaction chains.”2

A report released by Coinbase shows that crypto adoption in the United Kingdom has continued to rise, with a reported 33% of the country’s consumers having invested in such assets. The figure is up 4% from six months prior, and is second in Europe only to the Netherlands’ huge 47% statistic. Other European countries reported less crypto investment overall, with the UK’s ownership figures ahead of Spain (26%), Italy (25%), Germany (24%), and France (17%). The report found that 61% of Britons who already own cryptocurrency plan to increase their positions within a year, up from 54% in October 2021. Of that group, about two-thirds plan to increase their position in the cryptocurrency they are already holding, versus just 23% who wish to expand into new assets.3

On-chain metrics

Bitcoin (BTC): Percent Supply in Profit (7d Exponential Moving Average) shows the percentage of circulating supply in profit, i.e. the percentage of existing coins whose price at the time they last moved was lower than the current price. This metric is interesting to look at as it helps investors gain fundamental insights into the current state of the market, understand investor sentiment, or model the value of Bitcoin. It answers the question ‘how much of Bitcoin’s circulating supply is in profit or loss — and to what extent?’

Looking at data from on-chain analytics company Glassnode, the percentage of supply in profit has dropped dramatically from 78% at a price of $46.6K to only 60.5% at the current price of  $35.5K. This percentage is at a two year-low and reflects how much of the circulating supply’s cost base sits in the $35-46K range.

Source: Glassnode.

Bitcoin (BTC): Circulating Supply shows the total amount of all coins ever created/issued, i.e. the circulating supply.

The Bitcoin halving occurs approximately every four years after 210,000 blocks have been mined. Halving refers to the reduction in the number of BTC issued as a reward to miners. Currently 6.25 BTC is issued as a reward to miners for each block mined. After the next halving, currently scheduled to take place in Q2 2024, the reward decreases by half, to 3.125 BTC for every block mined, likely causing another ‘supply shock’. The system will continue until roughly 2140, when the last Bitcoin is mined.

Based on the chart, Bitcoin has crossed the halfway line of its third halving cycle (the four years between the third and fourth halving), which the community tends to see as a bullish sign for its price since the issuing rate is reduced by 50%.

Roughly 90% of the 21 million BTC that will ever be issued has been mined, and less than 7% of the total supply will be available as the network kicks off its fourth halving cycle in two years. Historically, the halving has resulted in strong upward price action. After the May 2020 halving, BTC soon entered a months-long bull market, breaking the all time high set back in 2017 and later reaching the $60,000 price level on multiple occasions last year.

Source: Glassnode

Altcoin news

Only two altcoins in the top 50 bucked the negative trend this week, one of them being Algorand (ALGO) due to an announcement that it had been selected as the official blockchain of FIFA, the globally recognised international governing body for soccer. In one of the most notable partnership deals for a crypto project in recent months, FIFA Chief Business Officer, Romy Gai, commented: “This announcement is an exciting moment for FIFA, as it officially enters into the world of blockchain and the opportunities this presents across various applications. At FIFA, we must constantly strive to identify and explore the most cutting-edge, sustainable and transparent means of increasing revenues to continue to support global football development. Algorand is clearly a forward looking, innovative partner that can help us achieve these goals.”4

According to the Algorand website, the proof-of-stake blockchain claims to be ‘The world’s most decentralised, scalable, and secure blockchain infrastructure. From decentralised finance to generative NFT art (and everything in between), our sustainable blockchain is powering the economic models of the future.’5 After the announcement, ALGO traded higher by as much as 28%, and finished the week strongly.

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.

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