Wall Street bulls charge into crypto

Record prices without the euphoria

This Tuesday, Bitcoin’s price soared to $66,888, with little public excitement. Social metrics aren’t anything to write home about, yet.

Social media activity and search volume is still lower than it was in April, despite Bitcoin’s price record:

Above: Weekly twitter followers of Crypto Exchanges, Google search volume for Bitcoin, Ethereum and Coinbase, New weekly Crypto Subreddit subscribers and Tweet volume on Bitcoin and Ethereum. Source: The block

Who’s been buying Bitcoin in the last two weeks, then? Industry insiders and institutions. Confirming this guess are BC2C, and the CME data:

B2C2, one of the largest cryptocurrency liquidity providers, reported mostly institutional buying in the last two weeks, with retail still on the sidelines. The institutional oriented CME was also the first major exchange to break out to new Open Interest records, a few days before the price record, passing $3.26B on the 14th and $5.09B by the time of writing.

Open interest on the CME was also affected by the first Bitcoin Futures ETF launched on Tuesday, becoming the fastest growing ETF in history to hit $1 billion in assets.

Left: Bitcoin accounts with over 1,000 coins. Right: Percentage of Bitcoins on exchanges. Source:Glassnode

While real FOMO hasn’t started yet, there are some encouraging numbers: Bitcoin on-chain accounts with over 1,000 Bitcoin are less than in April, though this has been recently going upwards.

Bitcoin’s on exchanges, reflecting coins which may be available for sale, dropped since Tuesday to a new 3 year low, reaching 13% of the supply.

Showing the growing draw of cryptocurrency, Facebook announced this week its own stablecoin wallet and prominent Silicon Valley investor Sam Altman launched WorldCoin. Will Silicon Valley be able to compete with the successes of Tether?

Meanwhile, another Bitcoin futures ETF, by VanEck was approved today, with a spot ETF waiting for approval on November 14th.

2.1 Quadrillion Satoshi Source: OpenSea

The natural speculative market cycle will likely result in a similar situation as previous cycles, as institutions and professionals sell their holdings to the retail speculators, who get caught holding when the bear returns.

Market wrap

Since our last newsletter Bitcoin has risen steadily from $55,000 and broke through the previous all time record price (made on April 14th 2021). Tuesday’s all-time record was $66,958 though leveraged quickly got out of hand and was followed by yesterday’s flash-crash. Bitcoin’s price descended to $61,800 before recovering to around $63,000 at the time of writing.

Low leverage during Tuesday’s breakout, indicated by the perpetual funding rates, was close to 8 times lower than during April’s previous price record, showing that this price move is more spot driven and sustainable.

Average daily Bitcoin perpetual contract funding rates. Source:Bybt

As you can see above, by Thursday funding rates started getting out of hand again, followed by the latest correction.

Market share in BTC futures and perpetuals according by OI. Source: Arcane

Changes in the exchange landscape: Through the summer, FTX exchange has gained users, coming into second place to Binance when counting OI in perpetual and futures contracts.

Above: Ethereum NFT volume by quarter. Source: Coin Metrics

NFT trading is also not slowing in popularity, with over 900,000 people signing up for early access to Coinbase’s NFT market and growing trading volumes.

Mining

This week another mining operation that left China, Atlas, announced it will start operations in the US, and Bitmain announced it will no longer ship mining machines to China.

CBECI’s latest August 2021 mining data shows the new Bitcoin mining world order: US at the lead with 35.4% of the hashrate, Kazakhstan in second place with 18%, and Russia in third place with 11.9% .

This week’s highest selling NFT, Bored Ape Yacht Club #8585 was sold for 696 ETH. Global NFTs volume in the last 30 days was $3.8 billion. Above: ctrl + alt + generate

News & links

Regulatory oversight has been the biggest theme of the last two weeks in cryptoland:

  1. SEC fines Tether $41 million for ‘misleading’ information on USDT’s backing
  2. Binance launch $1 billion growth fund for Binance Smart Chain and stop derivatives offerings in South Africa
  3. Decentralized exchange Uniswap exchange hires former Obama spokesman
  4. Chinese government tracks down 77 entities mining cryptocurrency with GPU on government property
  5. New York attorney general targets crypto lending services

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Efficient Frontier

Efficient Frontier

Leading research & algorithmic trading firm for the cryptocurrency markets efrontier.io

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