Bitcoin was lower, retreating after rallying over the past 24 hours to a new all-time-high price of $19,920, based on CoinDesk’s Bitcoin Price Index.
Cryptocurrency analysts predicted that bullish traders might next target the $20,000 threshold, though the market could struggle to break through if large potential holders choose to take profits at that level.
The “resistance into $20,000 could be more psychological than anything else,” said Denis Vinokourov, head of research at the digital-asset prime broker Bequant. “It would make sense that once we are finally able to get past this threshold, that the rally has legs.”
In traditional markets, European shares rose, led by banks and energy firms, and U.S. stock futures pointed to a higher open on the first day of the final month of a tumultuous 2020. Gold strengthened 1.2% to $1,798 an ounce.
All sorts of reasons were cited Monday as bitcoin pushed to a new all-time-high, ranging from PayPal’s recent entry into the space to the collective market shrug in response to the massive outflows from the OKEx cryptocurrency exchange following after a five-month withdrawal suspension was lifted.
What’s clear is that most analysts, traders and industry executives are talking about the sudden influx of big investors and Wall Street firms nosing into bitcoin and digital-asset markets for the first time. As noted Monday in First Mover, “institutional adoption” has become among the buzziest of buzzwords from bitcoin bulls and marketeers.
The key driver of their interest appears to be the desire for a hedge against inflation, during a year when the deep economic toll from the coronavirus has prompted the U.S. Federal Reserve and other central banks to pump trillions of dollars of emergency liquidity and monetary stimulus global financial markets.
“With so much excess liquidity in the system, the original investment case for bitcoin is being vindicated.” Rich Rosenblum, who heads trading at the crypto firm GSR, told CoinDesk’s Daniel Cawrey.
On Monday, just before bitcoin prices began their single-day price climb of 8.3% to end the month, the market was filled with chatter about a new endorsement from an analyst at the $631 billion investment firm AllianceBernstein. (“I have changed my mind about bitcoin.”) Later in the day, CNBC reported that strategists for another Wall Street firm, BTIG, said cryptocurrency had come of age, and that bitcoin should reach $50,000 by the end of next year.
“The stream of institutions commenting and allocating to BTC became a flood of good news that reinforced the narrative,” Matt Blom, head of sales and trading at the cryptocurrency-focused financial firm Diginex, told subscribers in an email.
CoinDesk’s Muyao Shen reported that support from institutional investors might help to sustain the latest rally, contrasted with the bull run of 2017 when prices briefly touched these levels before quickly tumbling and then hibernating in a bear market for most of 2018.
“Broadly speaking, institutional positions and high-net-worth individuals are leading the way this time,” Jason Deane, an analyst at Quantum Economics, told Decrypt.
Another difference from 2017 is that digital-asset markets appear to have evolved dramatically in the past few years and appeared to have handled the recent uptick in intensity and transaction volumes without too many glitches. (The well-trod fiat-to-cryptocurrency on-ramp Coinbase did report delays in processing some bitcoin withdrawals due to network congestion.)
“The trading, settlement and custody services are all far more sophisticated and mature, which instills confidence,” GSR’s Rosenblum said.
Major spot exchanges, where retail customers casually buy the world’s oldest cryptocurrency, have seen an uptick. Combined daily volume for Coinbase, Bitstamp, Kraken, Gemini and ItBit was at $1.5 billion as of press time Monday, much higher the $488 million average of the past six months, Cawrey reported.
Jeff Dorman, chief investment officer at Arca Funds, wrote in his weekly blog that some big investors, due to regulatory concerns, might be using futures on U.S. commodities exchanges or publicly-traded investment vehicles in traditional stock markets to gain exposure to bitcoin – instead of just jumping into digital-asset markets. He provided a chart showing how key closures on public U.S. markets over the past week coincided with big swings in 24-hours-a-day, 7-days-a-week cryptocurrency markets.
“The institutions are coming all right, but they are taking the local bus while the rest of us are on the express,” Dorman wrote.
The upshot is that bitcoin is reaching new all-time-highs when institutional adoption hasn’t even really got going, in the truest sense.
– Bradley Keoun
Bitcoin’s one-month implied volatility has risen to 6.5-month highs, reflecting increased expectations of price turbulence over the next four weeks.
According to data source Skew, the metric influenced by demand for call and put options has increased to 89%, the highest level since May 18, having bottomed out near 44% in September. The doubling of implied volatility has happened alongside bitcoin’s rally from $10,000 to $19,920 and looks to have been caused by relatively higher demand for call options (bullish bets).
That’s evident from the record low one-, three-, and six-month put-call skews, which measure the cost of puts (bearish bets) relative to calls. The options market looks positioned for a continued rally.
Some analysts say a healthy pullback could be in the offing as bitcoin’s inflow to exchanges has exceeded outflows since the Thanksgiving sell-off, according to data source CryptoQuant. “That on-chain metric could indicate a short-term bearish trend, sending bitcoin back to a level of around $16,000,” said Ki Yong Ju, chief executive officer of CryptoQuant.
At press time, bitcoin is trading near $18,800, representing a 4% drop on the day.
Ethereum 2.0 Beacon chain goes live as “world computer” begins long-awaited overhaul (CoinDesk)
Coinbase reported delays processing bitcoin withdrawals on Monday as cryptocurrency’s price move to all-time-high created congestion on blockchain network (CoinDesk)
Over-the-counter cryptocurrency trading firms report uptick in purchases by institutional investors during latest bitcoin rally (The Block)
While some near-term pricing correction is likely to be expected, analysts who spoke to CoinDesk said bitcoin’s latest rally will be more sustainable for the long term compared with 2017 (CoinDesk)
European Central Bank President Lagarde says stablecoins “pose serious risks” to financial security (CoinDesk)
100x Group, holding company for embattled cryptocurrency exchange BitMEX, picks former head of German stock exchange as new CEO (CoinDesk)
Upstart bitcoin exchange LVL, backed by Anthony Pompliano, Jimmy Song and Willy Woo, cuts trading fees to ratchet up competition with Coinbase and Gemini, plans new debit card with Mastercard (CoinDesk)
Authorities shut off electricity to bitcoin miners in China’s Yunnan province (CoinTelegraph)
The latest on the economy and traditional finance
“Rather than seeking to create a Chinese-style digital dollar, Joe Biden’s nascent administration should recognize the benefits of integrating Bitcoin into the U.S. financial system,” economic historian Niall Ferguson writes in op-ed (Bloomberg Opinion)
Fed Chair Powell calls economic outlook “extraordinarily uncertain” in prepared remarks ahead of scheduled appearance Tuesday before U.S. Congress (CNBC)
China’s new anti-dumping rules on Australian wine could escalate tensions, signal broad effort to tamp down dissent among trading partners (Bloomberg)
As coronavirus cases surge in Hong Kong, banks including Goldman Sachs, Standard Chartered, UBS and Citigroup bring back work-from-home policies (Bloomberg)
$550M in Bitcoin Liquidations as Price Falls Below $19,000
After stopping shy of the $20,000 mark, the bitcoin price is currently on the downtrend, almost slipping below $18,000. Over 81,000 Traders Liquidated as Bitcoin Price Sheds $1.6K According to data from crypto derivatives data aggregator bybt, total bitcoin liquidations in the last 24 hours stand at over 30,000 BTC. This figure amounts to roughly … Continued
Over-optimistic bitcoin (BTC) traders have once again been caught by a swift reversal during a bullish phase with more than $550 million in liquidations over the past 24 hours.
After stopping shy of the $20,000 mark, the bitcoin price is currently on the downtrend, almost slipping below $18,000.
Over 81,000 Traders Liquidated as Bitcoin Price Sheds $1.6K
According to data from crypto derivatives data aggregator bybt, total bitcoin liquidations in the last 24 hours stand at over 30,000 BTC. This figure amounts to roughly $550 million.
As bitcoin equaled its all-time high (ATH) on Monday, Nov. 30, profit-taking from traders likely triggered a wall of sell orders. Thus, over-leveraged longs looking to ride Monday’s bullish momentum appear to have been caught unawares again.
Bybt data shows that about 81,500 traders were liquidated in the last 24 hours. The largest single liquidation occurred on the Huobi platform with a trader losing over $6 million.
Data from crypto derivatives analytics provider Coinalyze also shows a significant decline in aggregated open interest (OI) across both crypto and US dollar-denominated contracts.
A reduction in OI points to funds flowing out of the futures market, reinforcing the notion that retail FOMO is ebbing slightly.
On Thanksgiving, over $1.9 billion was also liquidated from the crypto markets as the bitcoin price dipped 11%. The total market capitalization also shed more than $70 billion.
Price Drops Normal in a BTC Bull Market
Historical data points to previous bullish bitcoin advances dotted with between 20-30% price pullbacks. Thus, the current situation is in keeping with the established trend.
Bitcoin setting ascending local price tops in quick succession also reinforces the bullish expectation for the largest crypto by market capitalization. Indeed, November saw Bitcoin’s largest monthly close in US dollar terms, clearing $6,600 within the period.
However, the accelerated nature of the price increase in the last few weeks also offers the likelihood of a steep correction. Any significant interruption of the current bullish streak could see the BTC price reverting to support somewhere in the $13,000 to $14,000 price bands.
Before this current run, the $13,800 proved a multi-year resistance for Bitcoin and is likely the best candidate for a support level if BTC tanks.
Bitcoin proponents will be counting on the influx of institutional money flowing into the space to sustain the current bull market. As previously reported by BeInCrypto, Grayscale Investments recently added 7,300 BTC to its Bitcoin holdings.
Osato is a reporter at BeInCrypto and Bitcoin believer based in Lagos, Nigeria. When not immersed in the daily happenings in the crypto scene, he can be found watching historical documentaries or trying to beat his Scrabble high score.
Former Goldman Sachs president Gary Cohn said that Bitcoin’s system has no integrity because no one owns it.
“For all the reasons it’s a strong developing asset class, it may fail,” he said.
At the same time, Cohn praised central banks’ digital currencies as the evolution of money.
Gary Cohn, former president and COO of Goldman Sachs—who also served as Donald Trump’s chief economic advisor between 2017–2018—said that Bitcoin could fall just easily as it rose since its system has no transparency and integrity, according to Bloomberg.
“For all the reasons it’s a strong developing asset class, it may fail,” Cohn stated in an interview, noting that Bitcoin “lacks some of the basic integrity of a real market.”
Cohn voiced his criticism of Bitcoin just as the crypto experiences its second major price rally. It has recently broken its previous all-time high price—for the first time since late 2017—although has since dropped back down to $18,700.
However, Bitcoin’s main long-term problem is that it is not owned by any entity, according to Cohn.
“Part of the integrity of a system is knowing who owns it and knowing who has it and knowing why it’s being transferred. The Bitcoin system today has no transparency to it. So there are a lot of people that question, why would you need a system that does not have an audit trail,” he added.
Notably, Cohn expressed much warmer sentiment towards digital money in April, when he stated that, “The slow rise of digital currency has been given a gigantic boost by the pandemic.” However, it now looks like he actually meant only cryptocurrencies created by central banks.
“If central banks around the world created digital currencies, each person could have a segregated account. This idea is gathering steam,” Cohn wrote in April, adding, “If that happened, all banking would happen through a digital backbone and wallet. ATMs and bank branches, which are already closing at a rapid rate, would become obsolete. Earnings would deposit directly into an individual’s wallet and be spent directly out of it.”
So, basically, the same as Bitcoin but without the “fatal flaw” of not being owned by banks? Right.