Satoshi slaughter - BetaShares

Satoshi slaughter

BY Justin Arzadon | 7 December 2021
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For most of the week bitcoin traded in a tight range, but on the weekend the price tumbled over 16% from US $52K to $43.5K in less than an hour. The price has since recovered to $49K. Currently ~28% off its all-time high, this recent drawdown becomes the second most severe of the year, the worst being the 54% drawdown in May-July.

Ether held up relatively well in comparison, managing a return of 3.36% in the last 7 days vs bitcoin’s drop of  -9.42%.

Bitcoin’s market cap is back below $1T, sitting at $934.5B, market dominance is sitting at 40.08%, and the value of the entire crypto market dropped to $2.33T.

Price High Low Change from previous week
BTC (in US$) $49,464 $59,113 $42,874 -9.42%
ETH (in US$) $4,207 $4,780 $3,739 3.36%

Source: CoinMarketCap. As at 5 December 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

The next major development for cryptocurrencies may be a more liquid options market, as more traditional financial firms pile into the rapidly growing asset class, according to Goldman Sachs Global Head of Crypto Trading, Andrei Kazantsev. He noted that they are already seeing a lot of demand for more derivative-type hedging. In the first half of 2020, open interest in bitcoin options rarely exceeded $2 billion, however the latest data from Skew, a subsidiary of Coinbase, shows that the total value of outstanding contracts is now up to $12 billion.1

Haim Israel, a strategist from the Bank of America, sees opportunity in the metaverse for the entire crypto ecosystem. He told The Insider that the metaverse could take crypto ‘mainstream’ because people would start using cryptocurrencies widely for transactions, stating, “I definitely believe this is a massive, massive opportunity … You need the right platforms … that is definitely going to be a big opportunity for this entire ecosystem.”2

Crypto equities

Microstrategy, which is the fifth largest holding in the BetaShares Crypto Innovators ETF (ASX: CRYP), added another 7002 bitcoin to its holdings, now totalling 121 044.3 It was the first publicly listed company to add bitcoin to its treasury holdings.

The CEO, Michael Saylor tweeted: “Microstrategy has purchased an additional 7,002 bitcoin for ~$414.4 million in cash at an average price of ~$59,187 per bitcoin. As of 11/29/21 we hold ~121,044 bitcoins acquired for ~$3.57 billion at an average price of ~$29,534 per bitcoin.”

Another holding in the CRYP index is Block, which last week announced a name change from Square. Jack Dorsey announced his resignation last week as Twitter CEO, but will remain CEO of  Block. In the Q3 earnings call last month, Dorsey expressed that Square is “focused on helping bitcoin reach a mainstream audience while at the same time strengthening the network and ecosystem. Our focus is on helping bitcoin to become the native currency for the Internet … We have a number of initiatives toward that goal. Cash App is just one.”4

On-chain metrics

This week I take a look at the difference in volumes flowing into and out of exchanges i.e. the net flow of coins into/out of exchanges. Net inflows typically mean more selling pressure and can be seen as a bearish signal, whilst net outflows can be interpreted as a bullish signal, suggesting investors are willing to take their bitcoin off exchange and place into storage.

Citing data from on-chain analytics company Glassnode, we look at the Net Transfer Volume from/to All Exchanges with a 7-day simple moving average to smooth it out. In the chart you can notice an acceleration of inflows as the price started to chop around under $60K over the last two weeks. Will the recent drawdown further accelerate flows back onto exchanges ready to be sold, or was this drop enough to entice buyers to step-back in? This is a metric worth keeping an eye on over the next few weeks to gauge sentiment.

Bitcoin: Net Transfer Volume from/to All Exchanges (7d Moving Average)

Bitcoin: Net Transfer Volume from/to All Exchanges chart

Source: Glassnode.

Altcoin news

In a tough week for crypto markets, one of the the top-performing altcoins and breaking into the Top 10 is Terra (LUNA) which returned 58.41% in the last 7 days. LUNA is the native token for the Terra blockchain. According to the Terra 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.”5 One of the reasons for the recent spike is most likely a network upgrade and upcoming changes to their tax reporting app. According to the website Defillama.com, Terra is the third-largest smart contract platform by total value locked (TVL) at $14.57B. TVL refers to the total value of cryptocurrency committed to DeFi protocols built on a blockchain.

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.coindesk.com/markets/2021/12/02/goldman-sachs-sees-crypto-options-markets-as-next-big-step-for-institutional-adoption/
2. https://news.bitcoin.com/bank-of-america-massive-opportunity-metaverse-entire-crypto-ecosystem/
3. https://fortune.com/2021/11/29/microstrategy-buys-more-bitcoin/
4. https://news.bitcoin.com/square-help-bitcoin-become-the-native-currency-for-the-internet/
5. https://www.terra.money/


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.

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