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- 🥜 Why you're underestimating Bitcoin
🥜 Why you're underestimating Bitcoin
PLUS: Holders Are Selling
GM to all 38,307 of you. Crypto Nutshell #208 trudgin’ through. 🐘 🥜
We’re the crypto newsletter that's less puzzling than deciphering the mysteries of a secretive island... 🏝️ 🗺️
What we’ve cooked up for you today…
🏎️ ETFs off to a flying start
💥 Are we underestimating Bitcoin?
💪 Long-term holder check in
💰 And more…
MARKET WATCH ⚖️
Only the top 20 coins measured by market cap feature in this section
ETFs OFF TO A FLYING START 🏎️
BREAKING: Spot bitcoin ETF trading volumes hit $1.8B on trading day 3
The Bitcoin ETFs are off to a flying start.
The first 3 days of trading saw total volume of ~$10 billion. 😱
That is mental.
To show how insane these numbers are, ETF analyst Eric Balchunas shared an interesting stat.
There were 500 ETFs that launched in 2023. Yesterday, all of those ETFs did a combined $450m in volume.
Whilst the 10 newly launched Bitcoin ETFs did a combined $1.8 billion in trading volume yesterday… 🤑
In fact, BlackRock alone almost did as much volume as the 500 ETFs that launched in 2023.
Balchunas went on further to explain that out of the 500 ETFs that launched in 2023, half did less than a million in volume yesterday.
This just goes to show how incredibly successful the launch of the Bitcoin ETFs has been.
The big boys have well and truly arrived. 💪 🪨
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ARE WE UNDERESTIMATING BITCOIN? 💥
The best comparison to the new Bitcoin ETFs is the launch of the gold ETF in 2004.
In the 8 years that followed the gold ETF launch, gold rallied 450%. With not a single down year.
In her latest tweet, Cathie Wood pointed out that gold actually underperformed during this period.
Which means - we may be underestimating Bitcoin.
The gold ETF is the best comparison we have to the Bitcoin ETFs for 2 reasons:
Bitcoin is classified as a commodity by regulators
Bitcoin is ‘digital gold’
You may have seen this chart floating around. (We’ve brought it up a few times too 👀)
It shows the effect the first gold ETF had on the price of gold.
The similarities in price action to Bitcoin so far are quite spooky:
A big run-up in price in anticipation to the ETF launch
A cool down / consolidation following the ETF launch
A huge melt upwards in the years that followed (still to come?)
However, Cathie retweeted this chart and pointed something out:
After regulators approved the gold ETF, gold actually underperformed many other commodities.
She also pointed out that the period in which the gold ETF was launched, was a period of aggressive monetary easing. AKA, the cutting of interest rates.
Which is just like the period it appears we are entering.
Inflation is falling fast & the U.S election is coming up. This means the odds of aggressive monetary easing is high too.
If gold largely underperformed during this period (rallying 450% in 8 years)… are we underestimating how far Bitcoin will rally?
Only time will tell.
But so far, the gold / Bitcoin ETF price similarities have been spooky. 👻
LONG-TERM HOLDER CHECK IN 💪
Today we’ll be taking a look at what the long-term holders have been up to.
Quick reminder, long-term holders (LTHs) are those who have held their coins for longer than 155 days.
The Long-Term Holder Net Unrealized Profit/Loss (LTH-NUPL) metric simply measures the degree of profitability (or loss) of LTHs.
This week saw the LTH-NUPL reach 0.55.
This means that the average LTH is currently sitting on an unrealized profit of 55%.
0.55 has been a point of resistance during prior cycles (checkout the red arrows in the chart below).
BUT, breaking through this level has resulted in Bitcoin reaching new all-time highs. (we’ll revisit this metric as the cycle progresses)
So unrealized profits are great and all but did have long-term holders actually sold? 🤷♀️
Yes they have.
The 4th of January was the largest profit taking event we’ve seen since November 2021. 🤑
A whopping $1.3 billion in profits were locked in.
Glassnode notes that profit taking during market uptrends is perfectly normal.
Nothing to worry about.
The real question is whether the inflow of new demand will be sufficient to soak up all the selling.
We think it already has.
The price of Bitcoin has stabilised since the 18% price correction following the launch of the ETFs. (hinting that the selling pressure has been absorbed)
CRACKING CRYPTO 🥜
BlackRock’s IBIT continues to lead Bitcoin ETF volume among 'Newborn Nine'. BlackRock‘s Bitcoin ETF IBIT has maintained its lead in total volume on the third day of trading, generating buzz about its potential to become the largest holder of Bitcoin (BTC).
Grayscale Bitcoin Trust ETF transfers another $376M in BTC as price stabilizes. Some traders blamed GBTC’s 1.5% annual management fee for the surge in outflows.
IRS says businesses can hold off on reporting crypto, for now. There are fresh reporting requirements for crypto, but the Treasury says businesses get a pass until they can finalize the new rules.
Tether says UN needs more blockchain education in response to USDT report. “USDT on the TRON155 blockchain has become a preferred choice for regional cyberfraud operations and money launderers alike,” UN staff wrote.
WHAT WE’RE READING ✍️
Want to get even smarter? Check these out.
p.s. all completely FREE
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CAN YOU CRACK THIS NUT? ✍️
Select your answer below and you’ll be redirected to the results page. (answer explanation can be found after “Meme Corner”)
Instead of storing money, Bitcoin wallets store something called “ _____”. |
MEME CORNER 😂
Because what would the crypto world be without its share of memes?
Trivia Answer: A) Keys 🥳
Bitcoin wallets are totally different from physical wallets. Instead of storing money, Bitcoin wallets store something called “ keys”.
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DISCLAIMER: The content of this newsletter is not financial advice. This newsletter is strictly educational and is not investment advice. Please be careful and do your own research.
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