As I’m writing, I have J-POW in my ear talking about the most sudden economic downturn in history in his sweet, humdrum voice. At the same time, I am watching Twitter for running commentary from the people that I follow.
What’s most interesting to me is the way that bitcoin is taking an active role in this conference, and for the first time ever, is actually reacting in real time to the event, spiking up on mentions of additional stimulus and selling off when the Fed spoke about normalization.
In fact, out of the four primary assets that I’ve been watching throughout the event, bitcoin has by far been the most volatile, with a surge of 2%, followed by a plunge of 4%, only to retrace back to where it started. There’s no doubt in my mind that these price movements represented a direct response to the Fed this time. It’s been steady for days, and now suddenly it’s Speedy Gonzales.
Here, we can see bitcoin on the top left, the U.S. stock market on the top right, gold on the bottom left, and the U.S. Dollar Index on the bottom right.
Looks like until now, all the initial moves have been reversed. Except gold, which is somehow managing to hold onto its gains.
Front running the Fed today was a conference with Treasury Secretary Steven Mnuchin, who seems quite adamant that more fiscal stimulus is on the way.
The Secretary’s testimony was much less anticipated, but no less significant. The Fed’s magical power really starts and ends with the financial markets, and it really doesn’t have all that much direct power over the real economy.
The Treasury, on the other hand, has done its best to try and hold the economy up on its shoulders during the lockdown period, and it seems like its support will be critical during the recovery.
That’s not to say it’s not doing real damage with the amount of money it’s “pumping” in, but that will be future America’s problem. The national debt is now on the cusp of breaking $26 trillion as the brrrrrr continues.
Well, the Fed is off the camera now, as the zoom-conference has come to an end. Overall, I’d say things went rather smoothly. There were a lot of tough questions about wealth inequality and the detachment of the stock market from the economy, which Powell managed to cunningly dodge.
Stocks and bitcoin are flat on the day, while gold is up and the U.S. dollar is down. Really though, it’s not what they say on the stage, but what they do in real time that matters.
Taking a look at the size of their balance sheet, it’s pretty clear that as of last week, the pace of brrrrrr may have slowed a bit, but it still looks like a straight line up on the chart.
The 2008 response looks like a minor speed bump by now.
The Fed can’t tell the future, and they’re glad to say as much. But whatever does happen, we can be quite assured that the printing presses aren’t getting any rest tonight, nor any night for quite a while to come.
5 Reasons For Bitcoin’s Price Surge To New 15-Month High
At the beginning of October, Bitcoin’s price was particularly indecisive and trading slightly above $10,000, causing many to believe that the unfilled CME gap down at $9,600 would soon be closed.
Fast forward to the current date, October 27th, BTC is trading at $13,400, having just marked a fresh high for 2020. The cryptocurrency added around $3,000 to its value, representing an increase of around 30%.
With this said, this month was also quite eventful. Many things happened, and, as such, let’s have a look at five possible reasons that could have led to this substantial price increase.
PayPal Announcing Support for Bitcoin, Bitcoin Cash, Litecoin, and Ethereum
Undoubtedly, the most important piece of news that came out this month was PayPal announcing support for cryptocurrencies.
Now, PayPal is the world’s largest online payment processor. Data from Statista shows that for the second quarter of 2020, the company has processed over $221 billion. Moreover, the company has a network of over 26 million vendors, and it plans to enable users to spend their BTC at all of them, starting in early 2021.
Additionally, it’s worth noting that PayPal is a widely-accepted payment method, and most of the banks allow transfers from and to the platform. On the contrary, not a lot of banks support Bitcoin transactions, meaning that they would either have to reconsider their policy, or they would have to drop PayPal as a client altogether.
At this point, it’s unclear how this will be resolved, but it’s exciting to see how the situation develops. If one thing is certain, though, it would put Bitcoin and other cryptos at the forefront of an important discussion.
Major Banks Starting to Change Their Attitude Toward Bitcoin
There’s no clearer example here than JP Morgan – one of the world’s largest multinational investment banks.
The relationship between the bank’s CEO, Jamie Dimon, and Bitcoin is one worth following. In 2017, the high-ranked executive said that BTC is afraid and that if he saw any of his traders dealing with it, he would “fire them in a second.”
Well, fast forward a few years, and now the bank is posting bullish predictions on that very same cryptocurrency that Dimon labeled a fraud.
Just a few days ago, JP Morgan said that even a modest switch in capital from gold to Bitcoin could see its price triple.
Number of Publicly-Listed Companies Which Buy Bitcoin Increases
Perhaps as a direct consequence of the above, we can already see an increased involvement from publicly-listed companies.
The biggest buyer who put Bitcoin on its balance sheet became MicroStrategy, with its massive $425 million investment. Its CEO, Micael Saylor, has been particularly vocal about BTC’s merits.
Jack Dorsey’s Square also jumped on the bandwagon, purchasing $50 million worth of Bitcoin earlier this month.
Below is a list of all the publicly-listed companies and their holdings in BTC.
Publicly-listed companies putting BTC on their balance sheet is a huge deal for the nascent cryptocurrency, and industry experts have it that this effect will only snowball.
Singapore’s Biggest Bank Reportedly Launches a Bitcoin Exchange
As CryptoPotato reported just today, DBS Bank, a Singaporean multinational banking and financial services corporation and the city-state’s largest bank, has reportedly launched an exchange that offers fiat-to-cryptocurrency trading pairs.
Purportedly, the new exchange would support the “top digital currencies in circulation,” namely Bitcoin, Bitcoin Cash, Ethereum, and Ripple’s XRP. Traders would be able to exchange them against SGD, HKD, JPY, and USD.
More interestingly, the exchange would supposedly only accept financial institutions and professional market makers, as its users. The venue would be regulated by the Monetary Authority of Singapore, which is also its de-facto central bank.
Needless to say, a central bank-backed and regulated exchange aimed at institutional investors should, in theory, facilitate the involvement of larger players in the field.
Uncertainty Around the Upcoming 2020 US Presidential Elections
Undoubtedly one of the most important moments for the global macroeconomic outlook is the upcoming US Presidential Elections, set to take place on November 3rd.
CryptoPotato did a survey, and it turned out that the elections are the biggest concern for Bitcoin investors in 2020.
It is, perhaps, no surprise that billionaire Paul Tudor Jones III came up with a statement, saying that he likes “Bitcoin even more now than then [when he bought BTC in May].” He also said that it’s going to be the best inflation trade.
SEC Director Who Said Ethereum is Not a Security Leaving the Watchdog
William Hinman, a director of the U.S. Securities and Exchange Commission (SEC) known for his statements in favor of greater clarity for the crypto ecosystem and other ICOs and fintech, announced his intentions to leave his post in the upcoming months.
Since 2017, Hinman has served as a director of the SEC’s Division of Corporation Finance, an office responsible for giving investors material information to help them come with good financial decisions. His office also provides interpretative assistance to companies with respect to SEC rules. It also makes recommendations to the Commission in different regulatory areas.
William Hinman Paved The Way for a Better Crypto / Fintech Ecosystem
In addition, Hinman participated in creating the SEC’s Strategic Hub for Innovation and Financial Technology, better known as the FinHUB, a program aimed at promoting fintech developments in the country, offering advice on regulatory matters and clarifying somewhat confusing criteria regarding digital assets.
This is Hinman’s best-known area of work when it comes to the world of cryptocurrency. In the heat of conflicting opinions within the SEC on blockchain technologies and cryptocurrency ETFs and ICOs, Hinman gave Ethereum a thumbs up, declaring that, in his view, it was not a security.
For Hinman, Ethereum’s decentralization made it incompatible with the Howey Test’s requirements —a longstanding test used by regulators and the United States justice system to determine whether or not a particular offer constitutes a security.
During his famous speech “Digital Asset Transactions: When Howey Met Gary,” Hinman explained that Ethereum and Bitcoin could not be securities, even though Ethereum went through a funding round. Decentralization was the key:
“Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.
The Need For Clarity Remains
So far, it remains unclear what the minimum decentralization level is for a project not to be considered a security. Regulatory uncertainty remains a conversational topic to the point that several projects – like Ripple – have considered moving outside the United States in search of greater regulatory clarity.
The SEC has been key for many drawbacks in the crypto industry. The rejection of every single Bitcoin ETF, the halts of major projects like Facebook’s Libra, the Telegram Open Network and KIK’s token KIN are one of the most important blows received by the crypto ecosystem.
The official SEC press release does not elaborate on the reasons behind the resignation. William Hinman thanked Commissioner Jay Clayton and his team for their “professionalism, expertise, and commitment to public service.”
When William Hinman effectively leaves his post, Shelley Parratt, who serves as the deputy director of Hinman’s corporation finance division, will temporarily replace him.
Retail Investment in Bitcoin Soars to a New All-Time High
Just a few hours back, bitcoin (BTC) price surged back higher to $13,500 and established a new high for this year. But along with BTC’s near exponential rise in valuation, retail buyers of the cryptocurrency have also soared and are now at an all-time high. Is this a direct result of a rally-induced FOMO?
Bitcoin Addresses Holding BTC Worth $10, $100, and $1000 At ATH
Number of #Bitcoin addresses holding at least……$10 worth of BTC: 17.6M ––– ATH…$100 worth of BTC: 9.7M ––– ATH…$1000 worth of BTC: 3.6M ––– ATH
BTC Millionaires Are Also Steadily Increasing
While small bitcoin wallets (with less denomination) have clocked at an all-time high of 31 million, BTC millionaires haven’t stayed back either.
According to another bitcoin address update that Glassnode shared yesterday, now there are 20,000 wallets owning more than a million dollars worth of BTC. The on-chain analysis firm noted that this is the highest number seen since January 2018.
While the number of addresses holding bitcoin holding $1 million is comparatively less, the BTC holding valuations are far higher. Does this mean that the market will be left in shambles due to another dump? Not really.
Whales Might Not Dump Anytime Soon
In September, after the notorious crash, Willy Woo, a noted on-chain analyst, had shared a macro market outlook where he said that it is ‘very unlikely we’ll see any kind of a catastrophic dump in price.’ Adding further to his statement, Woo commented:
Zooming out to the mid macro (months ahead), we’re in a really nice zone of Difficulty Ribbon compression, post halvening (red verticals), this is quite a reliable indicator of bullishness.And moving to the full macro picture here’s RVT Ratio (very generally you can think of it as a PE Ratio for Bitcoin, a better version of my older NVT Ratio). Obviously we have a lot of room for growth in this cycle.
Woo’s argument makes it pretty clear that bitcoin millionaires are not selling anytime soon. As a matter of fact, it appears that the next leg of the BTC rally may have well begun.
One question still remains. Is this increment in retail and whale bitcoin addresses a direct result of BTC’s expanding price tag? It seems so. After all, with the given geopolitical and global economic scenario, everyone wants to jump in on the bandwagon and make some free money while they can, right?
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