Bitcoin set another all-time high last week, reaching US$68,789, then fell over 9.5% before recovering to $64,797 at the time of writing. The price continued to experience volatility, trading in the range of US$62-69K for the week.
Some of the volatility could be attributed to inflation concerns, as the price jumped after the release of the U.S. CPI report, which showed higher than expected inflation in October, 6.2% higher than a year ago and the biggest surge seen in the last 30 years. The subsequent sell-off coincided with U.S. stockmarkets selling off, in the fear that faster inflation may lead to the Federal Reserve tightening monetary policy.
Ethereum set an all-time high for the third consecutive week, but managed only a 1.51% return over the last 7 days, underperforming bitcoin’s 4.57%.
Bitcoin’s market cap is up to $1.22T and market dominance is 43.25%, whilst the value of the entire crypto market has settled at $2.83T.
|Price||High||Low||Change from previous week|
|BTC (in US$)||$64,797||$68,789||$62,333||4.57%|
|ETH (in US$)||$4,631||$4,859||$4,485||1.51%|
Source: CoinMarketCap. As at 14 November 2021. 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
For the first time, the cryptocurrency market cap, comprising just over 10,000 different coins, eclipsed US$3 trillion last week before the sell-off. It took less than 13 years to surpass the mark, and was up from only US$775B earlier in the year. As a comparison, it took Microsoft almost 33 years from its IPO to achieve its first trillion dollar valuation in 2019.1
The first major upgrade to Bitcoin since 2017 took place over the weekend. The upgrade, called Taproot, which consists of three different proposals, will introduce Schnorr signatures and increase privacy for certain transactions, enable the execution of smart contracts on the blockchain and reduce the amount of data needed, which should lead to lower transaction fees.2
Most people consider bitcoin only as an investment, and don’t realise it is also a payment network or digital protocol that will continue to evolve. The Taproot upgrade will lead to new innovation on the protocol.
The BetaShares Crypto Innovators ETF (ASX: CRYP) took in over $100m of net inflows in the first four days of trading, setting a new record for an Australian ETF to hit that mark (excluding seeding events and conversions). The majority of flows came from retail investors.
The financial services and digital payments company Square is currently a small component of the BetaShares Crypto Innovators ETF. The company’s CEO, Jack Dorsey, reportedly wants to help bitcoin become the native currency of the internet and stated: “We have a number of initiatives toward that goal” that will “help bitcoin reach a mainstream audience while at the same time strengthening the network and ecosystem”. Dorsey mentioned building a hardware wallet, and a bitcoin mining system to help achieve the goal. “In Q3 the company reported US$1.82B in bitcoin revenue up 11% from last year. Its Bitcoin profits rose US$42 million, up 29% from last year.”3
This week we focus on: number of active addresses and number of transactions.
The two metrics collectively can give an idea of how busy the Bitcoin network is. Bitcoin bull-market cycles traditionally have ended with mass hype and ‘blow-off’ tops which are reflected in the charts of these demand dynamics. We can compare today’s metrics/charts against those from the end of previous bull cycles.
Citing data from on-chain analytics company Glassnode, we look at Number of Transactions and Number of Active Addresses (14d moving average). Both these supply dynamics have been recovering from lows set in July and are currently trending steadily higher, but still much lower than before the steep price correction in May, even though the current price is now even higher than in May. This may suggest that there isn’t the same type of hype and demand around bitcoin as we saw earlier in 2021, and could be interpreted as a positive sign.
Number of Active Addresses (14d moving average)
Number of Transactions (14d moving average)
Over the last week, Litecoin (LTC) returned 29.23% and is currently the 12th largest cryptocurrency by market cap. LTC was one of the first altcoins to be made, created back in 2011 as a faster and cheaper version of bitcoin.4 Although LTC rarely makes headlines these days, the coin has managed to hang in the top 20 after all these years, which is a testament to its staying power and the active community that continues to follow and invest in it.
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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.
3. https://www.businessinsider.in/investment/news/jack-dorsey-square-says-not-to-nfts-wants-to-make-bitcoin-the-native-currency-for-the-internet/articleshow/87607372.cms. Past financial results are not indicative of future results.
Off the Chain will be published every Tuesday, and provide highlights of key developments in bitcoin and the rest of the crypto market along with analysis, insights and the latest news in 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.