Executive order good for crypto | BetaShares %

Executive order good for crypto

BY Justin Arzadon | 15 March 2022

Bitcoin traded in a tight range for most of the week, however rose on news of United States President Joe Biden’s executive order on crypto before giving up the gains a day later and finishing the week flat. Bitcoin was trading at US$39,134 at the time of writing.

Ether’s price action lagged bitcoin once again, down -2.16% vs bitcoin’s -0.63% over the last seven days.

Bitcoin’s market cap sits at $742.8B, market dominance is at 42.49%, and the entire crypto market is valued at $1.75T.

Price High Low Change from previous week
BTC (in US$) $39,134 $42,465 $37,260 -0.63%
ETH (in US$) $2,586 $2,761 $2,455 -2.16%

Source: CoinMarketCap. As at 13 March 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

News we are keeping an eye on

Last week, U.S. President, Joe Biden, signed an “historic” executive order on crypto assets, establishing “a national policy for digital assets across six key priorities,” the White House stated. The executive order asks various government organisations to produce reports within the next 30-180 days on bitcoin, cryptocurrencies, and blockchain technology, and specifies a focus on consumer protection, financial stability, illicit finance, promoting U.S. leadership, financial inclusion, and responsible innovation. Many people had been anticipating an abrasive government approach towards bitcoin and cryptocurrencies, however it looks like the government is looking to embrace this new technology and the potential positive impacts that it can have.1 “We applaud the White House for recognising this as a defining moment for U.S. innovation on the world stage,” said Faryar Shirzad, chief policy officer at the largest U.S. crypto exchange, Coinbase Global Inc., in a series of tweets.

The Swiss city of Lugano is making Bitcoin, Tether and its own LVGA legal tender, following the path of El Salvador. Lugano is Switzerland’s eight-largest city with approximately 63,000 people, and is hoping to become Europe’s bitcoin capital and a hub for blockchain adoption in Europe. Citizens will be able to use crypto for everyday transactions with the province’s businesses, and pay public service fees and taxes with the three cryptocurrencies, according to city director Pietro Poretti, who co-announced the news alongside Mayor Michele Foletti and CTO of Tether, Paolo Ardoino, in a live-streamed event titled ‘Lugano’s Plan B’ last week.2

Billionaire and legendary fund manager Bill Miller thinks that the current environment is “very bullish for bitcoin” given the war between Russia and Ukraine. In an interview with CNBC, he mentioned sanctions on Russia causing the Russian rouble and stocks of Russian companies to collapse. Miller explained: “If you look at Russia right now, Russia has 16% of their $640 billion of reserves in dollars. They have 32% in euros. So they have almost 50% of their reserves in currencies that are controlled by people who want to do them harm.” He continued: “So I think if you are a country out there that has a non-reserve currency — there are about a hundred of them — you might think about saying: ‘You know what, maybe we could have something else out there that other countries cannot harm us with, and is impervious to inflation or to being manufactured in greater quantities.’”3       

On-chain metrics

Bitcoin: Accumulation Trend Score is an indicator which reflects the relative size of entities that are actively accumulating/distributing their BTC holdings on-chain. A higher score closer to 1 reflects that over the last month, big participants (or a big part of the network) have been accumulating coins, whilst a lower score closer to 0 reflects that over the last month, big participants have not been accumulating coins or have been selling them. This provides insight into who is behind the price action, whether they are big players, who are able to move the price in a sustained way, or small players, who usually struggle to sustain positive price action over longer time periods.

Looking at data from on-chain analytics company Glassnode, it is interesting to note that although the price range going back to January has been between $36-43K, there was more whale or network activity in this price range, but since 24 February, when the conflict between Russia and the Ukraine started, the score has dropped by half, indicating those big participants are either selling or not accumulating. This suggests that the price may have trouble moving higher until activity from bigger entities picks up.

Source: Glassnode.

Bitcoin: Futures Open Interest Perpetual (USD) – All Exchanges looks at the the total amount of funds (USD Value) allocated in open perpetual (non-expiring) futures contracts.

Taking a look at the futures open interest in perpetual contracts, interest is much lower than a month ago. Participants in the futures market are usually larger entities and institutions, and the interest there looks to be mirroring the interest of large players who are investing directly as shown in the last metric, Accumulation Trend Score.

Source: Glassnode.

Altcoin news

The top-performing altcoin in the Top 50 over the last week was Waves (WAVES). It has continued a run that started about two weeks ago, after unveiling plans to launch a blockchain-agnostic Metaverse and establishing a new partnership with Allbridge, a protocol focused on facilitating the transfer of assets between all blockchain networks.

According to the Waves website, Waves is a global open-source platform for decentralised applications. Based on proof-of-stake consensus, Waves aspires to make the most of blockchain, with minimal carbon footprint. Waves technology stack can be of benefit in any use cases that demand security and decentralisation — open finance, personal identification, gaming, sensitive data and many others.4

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.

1. https://www.cnbc.com/2022/03/09/heres-whats-in-bidens-executive-order-on-crypto.html

2. https://www.forbes.com/sites/billybambrough/2022/03/05/a-legendary-investor-just-issued-a-stark-russia-warning-along-with-a-bullish-bitcoin-price-prediction/?sh=4195976e6211

3. https://www.ndtv.com/business/cryptocurrency-to-be-accepted-as-currency-in-swiss-city-of-lugano-2806382

4. https://waves.tech/about

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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