Why Bitcoin investors are increasingly focused on the long term.
The market is thinking about Bitcoin differently
This chart shows the duration of how long investors have been holding onto the cryptocurrency, by the percentage of supply.
- Bitcoin investors are increasingly long-term focused. In 2020, 57% of bitcoin’s (BTC) supply was held onto for more than a year
- Today, nearly 22% of BTC supply is held for more than five years
- Bitcoin hit a $1 trillion market cap milestone in the first quarter of 2021
According to research from Ark Invest, investors are holding onto bitcoin for longer and longer durations. By holding the asset rather than selling, it decreases the supply of coins available on the market at any given moment, which can drive up price. This suggests that market participants see the long-term value and potential future payoff the asset possesses.
In the past, durations of days and months were the most common holding periods for bitcoin investors, while holding for more than a year was practically non-existent up until recently.
| BTC Duration Held | % of BTC Supply |
|---|---|
| >5 years | 21.80% |
| 3 to 5 years | 13.38% |
| 2 to 3 years | 10.99% |
| 1 to 2 years | 10.70% |
| 6 months to 1 year | 8.30% |
| 3 months to 6 months | 7.07% |
| 1 day to 3 months | 27.76% |
Bitcoin should be worth about $400,000 says Guggenheim Partners CIO Scott Minerd
- Bitcoin should be worth $400,000 based on its finite supply and value compared with gold, Guggenheim's Scott Minerd told Bloomberg on Wednesday.
- "Our fundamental work shows that bitcoin should be worth about $400,000," he said. "It's based on the scarcity and relative valuation such as things like gold as a percentage of GDP."
- His comments came on the day bitcoin crossed $20,000 for the first time.
Guggenheim Partners CIO Scott Minerd asserted on BloombergWednesday that bitcoin's current price is well below fair value and that given its scarcity and the “rampant money printing” by the Fed, the digital token should eventually climb to about $400,000 per coin.
By the numbers: Bitcoin rose above $23,000 overnight (our data viz team made this chart at 3:40pm yesterday) bringing its 2020 gain to more than 200%.
- Last month, Guggenheim filed to reserve the right to invest as much as 10% of its $5.3 billion Macro Opportunities Fund in the Grayscale Bitcoin Trust, which invests solely in the cryptocurrency.
What he's saying: “Our fundamental work shows that bitcoin should be worth about $400,000,” Minerd said. “It’s based on the scarcity and relative valuation such as things like gold as a percentage of GDP. So you know, bitcoin actually has a lot of the attributes of gold and at the same time has an unusual value in terms of transactions.”
- Similarly, hedge fund manager Paul Tudor Jones said earlier this year he’s been buying bitcoin as a hedge against inflation after years of muted price increases.
Bulls on parade: “We have a new line in the sand and the focus shifts to the next round number of $30,000,” Antoni Trenchev, co-founder and managing partner of Nexo, a crypto lender, told Bloomberg.
- This “is the start of a new chapter for bitcoin. It’s a narrative the media and retail crowd can properly latch onto because they’ve been noticeably absent from this rally.”
Many of bitcoin's attributes are similar to gold, and it also has an unusual value in terms of transactions carried out, he said. Minerd's comments echo those of an incoming Senator Cynthia Lummis who thinks bitcoin is a better store of value than paper money because of its finite supply. The Senator-elect plans to teach Congress how to use bitcoin to reduce US national debt when she assumes office in January.
Guggenheim is among the institutional players that are validating bitcoin's legitimacy as a reserve asset. The firm last month filed to reserve the right for 10% of its $5.3 billion Macro Opportunities Fund to invest in the Grayscale Bitcoin Trust, a bitcoin-focused investment vehicle.
Three major players are holding up the massive interest around bitcoin this year. That can be pinned down to enthusiasm from institutional investors, Wall Street professionals, and retail investor participation, according to Garrick Hileman, head of research at Blockchain.com.
According to Hileman, as many as 100 million people own crypto assets.
Erisx Launches Regulated Bitcoin Futures Market BTC $BTC
Crypto trading platform Erisx has launched a bitcoin futures market regulated by the U.S. Commodity Futures Trading Commission (CFTC). Its physically-settled bitcoin futures contracts trade alongside its spot market which supports four cryptocurrencies. Erisx has obtained a license from the U.S. Financial Crimes Enforcement Network (FinCEN) and is currently approved to operate in 44 states, with a plan to expand to 53 states and U.S. territories.
Article Published on Bitcoin.com
Physically Settled, Regulated Bitcoin Futures
Erisx announced on Tuesday the launch of its regulated bitcoin futures market. The platform’s physically-settled bitcoin futures contracts are offered alongside its spot market for “price transparency and collateral efficiency,” the company detailed. Initially, only monthly and quarterly contracts are offered.
Since the contracts are physically settled, “settlement will be made by the movement of the digital currency to the buyer of the futures contract and US dollars to the seller of the contract,” Erisx’s website describes. The current requirement to become a member of the platform is a minimum balance of $10,000.
Erisx’s current futures product.
Prior to Tuesday’s launch, the company ramped up its team and developed technology for its exchange’s matching engine (TME) and clearinghouse’s clearing system (TCS). The company also developed risk-mitigating functionality to enable efficient price discovery such as self-match prevention, price banding, and maximum order sizes. Its futures clearing platform was built from scratch. Currently, Erisx’s spot trading platform supports BTC, BCH, ETH, and LTC, which can be traded against the USD or BTC >> READ MORE
Why Every Portfolio On The Planet Should Be Holding Bitcoin
Editor’s Note: Art Jonak is an investment analyst with both a wide and deep synthesis approach to research data. His commentary threads on titans like Netflix, Amazon and Facebook are a minor legend for their insight, detail and clarity. He also navigates venture funding, and emerging sector data, in a narrative, often with striking visualization, that reveals trends in their formation long before they are visible. It should not need to be said for investment disclosure that Art is holding crypto assets himself. He is obviously making a case of why everyone should.
Here is Art’s 2019 message thread for investing in Bitcoin, in particular. In our eyes, it slams the case for why every single portfolio on the planet should be holding Bitcoin, and treated as a portfolio asset class.
Here's one case for why some should consider adding Bitcoin to their investment portfolio:
* Bitcoin is a non-correlated asset — This is the holy grail of any portfolio. Bitcoin’s current 180 day correlation to the S&P 500 is 0 and the correlation to the dollar index is near zero as well. Investing in non-correlated assets should reduce the risk and increase the returns of a portfolio according to modern portfolio theory.
* Bitcoin has an asymmetric return profile — There is much more upside than downside in owning the asset. The downside (loss of capital) is capped at the total amount of capital invested, yet the upside is ~100X+ (if Bitcoin only becomes gold equivalent).
The modern portfolio theory argument for investing in Bitcoin is quite strong. But how has theory played out in practice?
Bitcoin has been the best performing asset over the last 10 years. It has experienced a 1,300,000X+ increase in value from $0.003 to ~$4,000 today. It has beat the S&P 500 for the last 10 years, the last 5 years, and the last 2 years. As a fixed supply asset, I believe Bitcoin will continue to outperform traditional assets in the future as demand continues to increase too.
Although I believe in Bitcoin’s future outlook, most people should not put significant funds at risk in this investment opportunity. It is risky and speculative. They could lose 100% of the money that they invest. For that reason, each person needs to evaluate their current situation, their goals, and the amount of capital they would be willing to lose.
If the thesis plays out how many smart people anticipate though, an investment of 100 basis points or less would materially change the performance of your portfolio fund, which ultimately changes the quality of life you will live when you retire. Most institutions have permanent, long-term capital which allows them to stomach more volatility than most investors.
For example, an investment of 1% of assets at $4,000 BTC price would yield a 25% increase in your portfolio total assets if Bitcoin reached $100,000. If you decided to invest 0.1% of assets, the same price appreciation would increase total assets by 2.5%.
However, the exciting part is that many people believe Bitcoin will not only reach $100,000 one day, but rather be worth $1,000,000+. If that comes to fruition, a 0.1% investment today could lead to the same 25% increase in total assets for your portfolio. These types of trade-offs are the definition of an asymmetric return profile.
And still, most people's portfolios have 0% exposure to Bitcoin and crypto. Something to consider as we head into 2019.
Bitcoin (BTC) transaction average & median fees
Transaction fees make the bitcoin blockchain go round. The miners are compensated for their efforts, not only through inflationary block rewards but also through fees charged to users for adding their transaction to blocks. While fees on average make up about 4% of the total miner revenue per day, with the lion’s share coming from block rewards, sometimes economic shocks cause those fees to rise.
The average fee per transaction is approximately $1.63 with the median being $0.88 over the past five years. The fees are the prices charged for a transaction to get into the limited space of a 1 MB block that occurs every 10 minutes. This results in about 1,800 transactions (~556 average transaction size in bytes) that are able to fit into a block. If the standard 144 blocks are mined per day, we observe a ceiling of about 260,000 transactions per day. Thus there is always a backlog of unconfirmed transactions that reside in the mempool awaiting miners to select them for inclusion in the blockchain.
According to Blockchain.Info, there are about 3.4 million bytes awaiting inclusion in the mempool. Miners will usually include the transaction with the highest fees and work their way down as capacity dwindles to the lower fee transactions. Imagine you are commuting to work and...
Transitioning from bitcoin depression to disbelief to opportunity
Based on market cycle psychology, depression is the state where people have lost all hope in the market. They believe that the downtrend is a bottomless pit and the market will never again reach its former glory. This discourages everyday investors from entering the market when in fact, this is the point of maximum financial opportunity. Time and time again, markets bottom out when ordinary people have abandoned them.
This is exactly what we’re seeing in Bitcoin (BTC/USD). The hype that surrounded the cryptocurrency almost a year ago is completely gone. The interest over time, when looking at google trends, is at its lowest in 12 months. More importantly, many people believe that it can go significantly lower.
Current market sentiment maybe depressive but the charts show that the end is almost near. In this article, we show how Bitcoin may be transitioning from depression to disbelief.
A Comparison of Market Cycle Psychology Chart and Bitcoin Chart
Disbelief is the state where the market shows signs of life but participants ignore them. They do so because they think that the downtrend is not yet over and the rally is just another pump and dump scheme to slaughter newbies.
We believe Bitcoin is getting ready to make you a non-believer. To understand why we have this point of view, allow us to first show you the market cycle psychology chart.
Disbelief comes after a boring and depressed market. If you’ve been following Bitcoin’s price action since September, you’d know that the past few months have been the longest. Volatility has been almost non-existent. There were times when Bitcoin traded within a $10 range. At that point, we knew that Bitcoin was in a state of depression.
If you’re skeptical, the next chart should help alleviate your concerns.
Bitcoin daily chart over market cycle psychology chart
We overlayed the Bitcoin daily chart on top of the market cycle psychology chart and we have an almost perfect representation of market sentiment over the last twelve months.
Currently, the market is so depressed that...
Bitcoin Price Analysis: #BTC/USD Goes Haywire with USDT Decline
Bitcoin on Monday pursued a fake upside action across several exchanges, mainly BitFinex, after stablecoin Tether (USDT) started falling.
The BTC/USD responded to the upside action witnessed in the BTC/USDT market. USDT traders started exiting their positions amidst growing concerns about BitFinex’s insolvency and its impact on the coin’s liquidity. The more traders swapped USDT for other coins, the larger it dropped, eventually founding support near 85 cents. By that time, Bitcoin had established its upside just shy of $8,000 on BitFinex only – so as other top coins which recorded massive gains.
So far, Bitcoin has corrected towards $6,346. But indeed, the latest price action has messed up the technical outlook.
BTC/USD Technical Analysis
The Coinbase chart indicates that BTC/USD is struggling to find support near its 50H moving average for a potential reversal. If it drops below the pink curve, the pair will enter into a near-term bearish bias, which is further supported by the RSI indicator, which is on the verge of inflection, and the Stochastic oscillator which could continue its drop into...
Bancor Trade Recommendation
The Bancor/Bitcoin (BNT/BTC) pair dropped to as low as 0.00017359 on September 12, 2018. At that price, the market lost over 84% of its value from this year’s high of 0.00110062.
It looked as if the pair had more room to plummet. This is because bears managed to breach historic support of 0.000185. However, bulls held their ground and lifted BNT/BTC above the support. This created a bear trap and gave the market the strength to carve a bottom. More importantly, it provided bulls the fuel to kickstart a bull run.
Technical analysis shows that BNT/BTC is positioning to take out resistance of 0.000227. Breach of this resistance would trigger the breakout from the symmetrical triangle pattern on the 4-hour chart.
On top of that, we can...
EOS 1st, BTC 17th in China's Latest Government Crypto Rankings
The 2nd China government-backed cryptocurrency rankings were released.
The second round of China’s state-backed monthly ratings of cryptocurrencies and blockchain projects has been released, Cena News reported June 21.
Dubbed the “Global Public Chain Technology Evaluation Index,” this latest round was announced at the Shanghai Science Hall on June 20, and ranks EOS 1st, Ethereum (ETH) 2nd, and Bitcoin (BTC) 17th, out of a total of 30 analyzed cryptocurrencies.
China’s monthly “Global Public Chain Technology Evaluation Index” is published by the China Center for Information Industry Development (CCID) of the Ministry of Industry and Information Technology, and is said to be compiled by “first-rate domestic experts and scholars,” according to the original Index press release.
EOS’ top ranking is attributed to the “outstanding technical advantages in transaction confirmation efficiency, network throughput, and transaction costs” of the protocol.
While conceding the EOS...