Welcome to a new edition of the Bitcoin recap. Where we analyze the core stats and metrics on the Bitcoin Markets. We also touch base and cover the Institutional news.
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BITCOIN (BTC)
Bitcoin price during April has been quite intense and active in its trading. On April 2th closed on a price of USD 60,220 and then decreased down to USD 57,235. During that short period BTC closed on April 5th on USD 59,710 per coin.
The following 2 days, Bitcoin experienced a sell-off. Decreasing the price down to USD 55,982 per coin. From April 7th to April 14th, BTC price reached an all time high (ATH) of USD 64,666 USD.
Bitcoin (BTC) plunged to $50,528 on April 18, once again demonstrating the manner correlation between price action and hash rate. After losing psychological support of $60,000 earlier this week, BTC/USD tried to consolidate once again, but the selling pressure was too high that $10 billion worth long positions were diluted in a matter of few minutes. The clear demonstration of well-known phrase “price follows hash rate,”the Bitcoin-US dollar pair lost valuation. According to Willy Woo, “Price and hash rate has always been correlated.”
Data shared by Wu Blockchain has shown a Bitcoin mining pool hashrate plummet in Chinese based operations this week. According to reports, this comes as China initiate a government-instituted blackout in the North-West part of the country for safety inspections. On the 16th a chart shows that Antpools fell by 24.5%, BTC.com by just under 19%, Poolin by 33% and Binance by 20%. In the last two days, the hashrate has made a recovery and is almost back to typical levels.
Additional to that, 9000 BTC was deposited into Binance, provided enough selling pressure to drop the Bitcoin price below $59k support, forcing the $4.9b of liquidations.
STOCHASTIC OSCILLATOR.
To understand it better, a stochastic oscillator is based on the idea that in an upward trending market prices will close near their high and in a bear market prices will close near their low. A stochastic oscillator will show oversold when it is below 20 and overbought when it is above 80.
We can note from the graph that when the price of Bitcoin was around 55-56K USD, the stochastic was showing a metric below 20.00. (As you ca note in the graph on April 4th went down the metric to -0.10.
Same case happened when Bitcoin was above 64K USD, the indicator (stochastic) was above 80.00. (to be more precise around the levels of 99.78).
COINBASE IPO
The New IPO Coinbase (COIN) was a total success. Closing at $328.28 per share after direct-listing on the Nasdaq Wednesday -and the stock's run may not yet be done. BTIG analyst Mark Palmer made the case for Coinbase stock reaching $500 a share within a year (nearly 50% upside) and for several specific reasons.
Few facts on Coinbase
$223 billion in crypto assets stored on its platform through the end of Q1 2021. That's 11.3% of all cryptocurrencies in existence currently, and triple the cryptocurrency market share that Coinbase possessed three years ago
The company had 56 million "verified users" at the end of Q1 2021 notes Palmer, up 30% from the end of Q4 2020.
In a Q1 2021 estimated earnings report released April 6, Coinbase revealed that its revenues were $1.8 billion for the quarter, which was more than the company's revenue for all of fiscal 2020
Trading volume also appears to be accelerating, up nearly four-fold sequentially to $335 billion in just the three months from Q4 2020 to Q1 2021
And Coinbase is already a profitable operation.
When observing the SOPR metric we can review is at full reset. The profit from long-term holders are completing, very little sell power unless investors dare to sell at loss. It’s calculated from spent outputs. It’s the realized value (USD) divided by the value at creation (USD) of the output. Or simply: price sold / price paid.
When SOPR > 1, it means that the owners of the spent outputs are in profit at the time of the transaction; otherwise, they are at a loss. Currently at the time of press release is down to 1.00.
Former CIA Director Finds Bitcoin's Use in Illicit Finance to be Minimal
Former CIA Acting Director, Michael Morell, authored a report recently that looked into Bitcoin's use in illicit finance. In short, he found that illicit use of Bitcoin is far less than many people assume, and probably even a significantly smaller share of the bitcoin-economy than illicit use of dollars are vs global GDP.
The blockchain ledger on which Bitcoin transactions are recorded is an underutilized forensic tool that can be used more widely by law enforcement and the intelligence community to identify and disrupt illicit activities. Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool.
According to a recent study by blockchain analytics firm Chainalysis, illicit activity among all cryptocurrencies as a percent of total cryptocurrency activity from 2017 to 2020 was less than 1 percent. For Bitcoin specifically, blockchain analytics firm CipherTrace estimates that illicit activity makes up less than 0.5 percent of total transaction volume.
All of this together suggests a broader point—that the illicit use of cryptocurrencies in general and Bitcoin in particular, as a share of total market activity, is certainly not higher than it is in the traditional banking system and is most likely less.
Bitcoin Futures
Bitcoin futures open interest reachs new highs ahead of Coinbase’s direct listing on the Nasdaq on April 14. More than 27 BN USD when BTC reaching new ATH.
Crypto market data aggregator Glassnode states that Bitcoin open interest has exceeded $27 billion for the first time as Bitcoin (BTC) pushed into new record highs above $63,000. The milestone suggests traders may be speculating on higher prices, although some may also be hedging against incoming volatility.
Main trading activity is on Binance, where the $5.2 billion in positions accounts for almost 20% of all outstanding positions being held on the exchange. It’s followed by Bybit with $4.66 billion, OKEx with $3.75 billion, and then Huobi, FTX and CME with roughly $3 billion each.
GRASYCALE PREMIUM
The downtrend in Grayscale Bitcoin Trust premium has extended. At the time of publication, the premium stands at -12.02%.
Marlton’s data indicates that GBTC’s premium discount represents an estimated $3.1 billion in losses to stockholders. The firm has called for a modification to the stock trading mechanism that would allow them to sell or buy shares at specific prices and at a specific time.
As Ben Lilly points out, the advent of new options to gain Bitcoin exposure in Canada appears to be hurting GBTC. Researcher Jan Wuestenfeld supports this thesis:(GBTC) trading at a discount since the beginning of march and their Bitcoin holdings have been stagnating. It looks like with new alternatives coming to the market investors might turn to other products to get exposure to Bitcoin
Grayscale investors have started to express discontent. Investment firm Marlton issued a press release on April 6, to call for Grayscale to take “immediate action to address GBTC’s significant discount to net asset value” (NAV).
In parallel, the Security and Exchange Commission (SEC) is under a lot of pressure to approve a Bitcoin ETF. The Commission has received over 6 petitions to approve a Bitcoin ETF in the U.S. in under 4 months. The discount in the GBTC suggests that investors are favoring products with better trading mechanisms. The performance of Canada’s BTC ETF could create even more pressure for the U.S. regulator. As we can now observe Purpose Bitcoin ETF has been growing with a recent inflow of 836,628 Bitcoin (BTC).
That`s all for today folks.
Thank you for reading our Bitcoin weekly recap. Stay tuned as we will be publishing more newsletters on the following markets from Bitcoin, Ethereum - DeFi and Stablecoins.