Bitcoin is the digital gold, says BlackRock boss Larry Fink

After the fuss over bitcoin ETFs, calm has returned. The price is stabilizing around $30,000 and the news mill seems to be on summer recess. Still, BlackRock CEO Larry Fink managed to put himself in the spotlight with comments on bitcoin. What did he say? You can read that, and more, in this Weekly!

This Weekly in brief
Market: The bitcoin price is quietly rippling sideways around $30,500. According to analysis company Glassnode, this means we have reached the mid-point of this cycle.

News: BlackRock CEO Larry Fink explained on television why his company is working on a bitcoin ETF. He called bitcoin an "international asset" and underscored for viewers that as far as he is concerned it is the "digital gold."

Behind the scenes: Bitcoin Algo is our algorithmic strategy that allows you to grow your bitcoin portfolio. Want to get started with this? You can arrange it yourself through the My Amdax web environment or contact your relationship manager.

Cryptomarket

The bitcoin price was around $30,500 for the third week in a row. Last Thursday, the rate briefly shot to $31,500, the highest rate in 2023. The last time we saw this price was 13 months ago.

We are now at the upper end of the price range of the weeks after the Luna crash, which runs from $25,300 to $32,500. If we get above that, you can say that the market has processed and digested all the woes of the bear market. The price declines of FTX, Celsius, and Luna will have been made up.

We are not there yet. We are now almost 4 months into this price range. Each time the price reaches a new high in this cycle, so much new supply becomes available that the price quickly drops back down.

Analysis company Glassnode made an interesting overview of bitcoin's past three market cycles, see the chart below.

They run the cycle from all-time high to all-time high for this analysis. This highlights the bull market of each period. That forms the price range within which such a period occurs, indicated in this chart by a particular color.

In such a period, you can pinpoint a price that stands out at various times and often falls fairly in the middle of the price range. Glassnode calls this the mid-point. In 2013-2016 this was $425, in 2017-2020 it was $6,500 and in the current period, it is $30,000.

Around this mid-point of $30,000, 75 percent of bitcoin is now at a profit and 25 percent at a loss. We saw the same ratio in 2016 and 2019 when the price reached the mid-point.

Let's see what it would look like if this market cycle took a similar course to the previous two. Then it would be another 15 months or so before we see a new all-time high, let's say the end of 2024. In the intervening period, the price largely sits between $20,000 and $48,000, with the mid-point of $30,000 playing a notable role.

But history never repeats itself exactly. It will again be different from before in its own unique way. We are very curious to see what developments play a role in that!

News overview

Since the announcement of BlackRock's bitcoin plans, market sentiment has shifted. This was further underscored yesterday by a revised price prediction from Standard Chartered Bank. According to the bank, bitcoin is expected to reach a price of $50,000 by the end of 2023, and it could potentially rise to as much as $120,000 in 2024. It's worth noting that Standard Chartered had predicted at the end of 2022 that the bitcoin price in 2023 could drop to $5,000.

Perhaps the bank analysts were influenced by remarks from Larry Fink, the CEO of BlackRock. He discussed the role of ETFs and his perspective on bitcoin and other cryptocurrencies on Fox Business. "I truly believe that in many ways, the role of crypto is like digitizing gold," said Fink. "Instead of investing in gold as protection against the severe problems of a particular country. Let's be clear: bitcoin is an international asset."

With this statement, Fink joins the ranks of Wall Street investor Paul Tudor Jones and Citi analyst Tom Fitzpatrick. Two years ago, Fitzpatrick already referred to bitcoin as "the gold of the 21st century."

They are referring to the unique properties that bitcoin has as a form of money. Normally, everything digital can be copied, such as documents, photos, software, music, or movies. Bitcoin is also digital but uniquely scarce and unforgeable. There are only 21 million bitcoins (divided into 100,000,000 pieces), and that's it. Currently, about 19.5 million of them are in circulation. New bitcoins are added daily at a rate specified in the bitcoin protocol. The result is "revolutionary money" with favorable characteristics:

• It's easy to transport.
• It's easy to verify authenticity.
• It can be divided into small pieces.
• It doesn't deteriorate or burn.
• It's scarce, and the government can't print more.
• It's uncensorable; no one is in control.

The digital scarcity is precisely what makes bitcoin attractive to investors. The supply of new bitcoins is even less responsive to demand compared to gold. Gold miners work harder and produce more gold when the price rises. However, if bitcoin miners work harder, it doesn't create more new bitcoins, only a more secure network.

Other news:

• The Australian regulator is searching Binance's offices as part of an ongoing investigation into the now-defunct local derivatives trading of the cryptocurrency exchange. The regulator hasn't disclosed what was found during the searches. Binance has stated its commitment to cooperate with the investigation and comply with all laws and regulations.
• Nearly 190,000 people are employed in the crypto industry, with nearly a third working for an exchange or broker, according to K33 Research. Europe and the United States account for more than half of the workforce, with 55 percent coming from these regions. Most employees work from home; remote work is the standard.
• More than 20 percent of all ether generates returns through staking. After the Shapella upgrade in April, it became possible to withdraw staked ether. However, the feared sell-off of ether did not occur; deposits outweighed withdrawals. There are now nearly 24 million ether staked, approximately 20 percent of the total. Since the Shapella upgrade, about 4.5 million ether has been added to staking. Want to generate generate returns on the ether you own? You can do so safely with Amdax!

Behind the scenes

Last week, Tim Stolte was a guest on the Cryptocast. Tim is a quantitative portfolio manager at Amdax and chimed in to explain how our asset managers beat bitcoin performance. At the very end of the episode, we talked briefly about Bitcoin Algo, our algorithmic strategy focused entirely on bitcoin. 

Bitcoin Algo is designed to outperform bitcoin, with the goal of achieving higher returns while reducing volatility in your portfolio. The algorithm takes advantage of price gains by buying bitcoin at the right times, and limits losses by selling at the right times.

And the icing on the cake? The performance of this strategy is measured in bitcoin instead of euro. Fees are charged only as the size of your bitcoin portfolio grows!

Want to get started with this? You can arrange it yourself via the My Amdax web environment or contact your relationship manager.