Wall Street mastodons underline growth opportunities bitcoin

The crypto market has been buzzing with activity again in recent weeks. There is no boom yet, but the contrast with recent months is stark. Part of that sentiment are statements from notorious billionaires and Wall Street acquaintances. What they are saying? You can read that, and more, in this Weekly!

This Weekly in brief
Market: The price of bitcoin has been around $34,000 for a week now, and that is a good sign. The recovery from the 2022 bear market is continuing and bitcoin is taking the lead within the crypto market.

News: Bitcoin's price rise is making the lips of prominent investors and Wall Street acquaintances. Their message: investors see in bitcoin - the digital gold - a safe haven.

Behind the scenes: Our Senior Compliance Officer Mauro Halve spoke at Chainforum about the laws and regulations surrounding cryptocurrencies. Want to stay up to date on that? Follow Mauro on LinkedIn, he posts regular updates there!

Cryptomarket

Last Tuesday, after seven months, we finally left the price range between $25,000 and $32,000. On the upside, thankfully. In a few hours, the price rose some 8% to this year's high at $35,100, then stabilised around $34,000.

And now? Have we put prices below $32,000 behind us for good, and have we started a new chapter?

There is something to be said for that. With Sam Bankman-Fried behind bars and a host of ETFs on the way, the deep bottom of the bear market seems long overdue. And then a halving is also on the calendar within six months.

But it would not be the first time we have been caught off guard by a false breakout. The price picks a side only to fall back to where it came from just as easily after some time. Sentiment can turn quickly. In the crypto market or financial markets in general.

With that in mind, we look at the data. And they are mostly positive. We just completed a weekly close and a monthly close above $32,000. Analysis firm Kaiko reported that trading volume is at its highest point in six months.

Furthermore, we see significant capital inflows to the 21 crypto funds monitored by ByteTree.Open interest on derivatives markets is at its highest point ever, not only on offshore platforms such as Binance and Deribit, but also on the highly regulated CME. This is a sign of increasing interest from professional investors.

In short, it strongly suggests that the rise above $32,000 is not noise, but signal.And that we have thereby unlocked access to the price range between $32,000 and $48,000.

It is a good time to zoom out and take a look at the chart on a somewhat longer-term horizon. We have drawn the 200-day average through it. This forms a nice dividing line between periods of falling and rising prices. This average is now at $28,400, and at $34,000 we are clearly above it.

Still, that is by no means a guarantee that we will stay above this price for the time being. Looking at the past, there are two characteristic periods: the rapid rise in the bull market with the price long above the 200-day average, and the rapid fall in the bear market with the price below it.

But between the rise in the bull market and the fall in the bear market, there is always a fairly long period of sideways movement, with the price swinging around the 200-day average. Short periods of rise and fall then alternate.

We are now in such a sideways period. The deep lows of the bear market are behind us, but the sharply rising leg of the bull market has not yet begun. It is a time of recovery from the fear and panic of the bear market, and return to a neutral price matching the value of the bitcoin network.

In the past, these periods were characterised by a relatively large role for bitcoin relative to other crypto assets. Bitcoin is seen by investors as the least risky in terms of volatility, regulation and existence.

This is reflected in declining altcoin dominance. Bitcoin is claiming an increasing share of the crypto market, leaving less room for the rest. In the chart below, the blue line at the bottom shows the course of altcoin dominance.

In the previous bull market, we saw only after bitcoin reached a new all-time high that altcoins started outperforming bitcoin for a long time. Colloquially, this is called alt season. There is no such thing now (yet). Even the ruling favourable to altcoins in the court case between Ripple and regulator SEC caused no more than a small jump in the chart.

That does not mean that all coins other than bitcoin are doing badly. There are always exceptions. Projects that break through. Networks that reach critical mass. But it requires in-depth knowledge and a keen eye to pick those out. For professionals, it's doable; for the layman, it's a gamble.

News summary

That bitcoin recently reached the highest price of the year is making tongues wag among investors of various kinds. In the past fortnight, it was noticeable that the price rise has also penetrated the highest echelon.

For instance, one of the world's most successful investors spoke highly of bitcoin. In an interview, 70-year-old multimillionaire Stanley Druckenmiller talks about his relationship with the "digital gold": "Young people see bitcoin as a good hoarding tool. It's a brand. I like it. I don't have it now, but I should own it." Druckenmiller's interlocutor, hedge fund manager Paul Tudor Jones, incidentally has been speaking positively about bitcoin for years.

Mexican billionaire Ricardo Salinas goes the extra mile. The businessman, who amassed his wealth in the telecoms sector, advises to "dump bonds and invest in bitcoin". In 2022, Salinas revealed that his liquid portfolio is 60 per cent bitcoin.

As the reason for bitcoin's good performance, most analysts point to the imminent spot bitcoin ETF as the main driver. The most prominent applicant of these is BlackRock. Its ceo, Larry Fink, recently classified bitcoin on television as a safe haven: "The price rise in recent weeks is a flight to quality."

This analysis of is shared by Mohamed El-Erian, who is chief economist at Allianz, one of the world's largest asset managers. Speaking to CNBC, he calls bitcoin "a haven for people who are losing faith in government bonds".

Other news:

• Open interest' in bitcoin derivatives rises to record high. The Chicago Mercantile Exchange (CME) announced via Blockworks that the number of active futures contracts has reached a new high. Data on the options market show that, in dollar terms, traders never before showed so much interest. The cumulative value of put and call options rose above $17 billion.
• Sam Bankman-Fried confesses mistakes, but denies fraud at trial. During the fraud trial on Friday, FTX founder Sam Bankman-Fried testified in his own defence, admitting that "a lot of people were hurt" by the collapse of his empire. Yet he insisted that he did not defraud anyone. He also believes he did not steal anything from his customers. Bankman-Fried confessed mistakes such as lack of risk management, but tried to blame it on former Alameda CEO Caroline Ellison.
• One of Thailand's biggest banks buys cryptocurrency exchange. Kasikornbank, the country's number two bank, now owns 97% of Satang's shares. This exchange has allowed Thai people to trade since 2017. K-Bank paid nearly $103 million for the shares. Soon, Satang will be renamed Orbix and split into three: Orbix Custodian, Orbix Invest and Orbix Technology. In September, the bank launched a $100 million fund to finance AI and Web3 startups.