The TIE Weekly Insights (Dec 21)
Highlights from last week:
- Bitcoin Sets New All Time High
- Bitcoin Whale Emerges with $1B, Alan Howard’s Backing
- Coinbase Files Confidential S-1 Ahead of Potential IPO
- Senator-elect Cynthia Lummis Wants to Spread Bitcoin Awareness in the US Government
- “Crypto Cowboy” Tyler Lindholm is Joining Lummis as the State Policy Director of Wyoming
- Italian Bank Banca Generali Buys $14M Stake in BTC Wallet Conio
- Self-hosted Bitcoin Wallets Become Front Line in Fight Over Crypto Regulations
- CI Financial Galaxy Bitcoin Fund is Now Listed on Toronto Stock Exchange
- DigitalMint Partners with Kerma Tech to Expand Bitcoin ATM Locations
- Quontic Becomes First FDIC-Insured Bank to Launch Bitcoin Rewards Program
- Mining Market NiceHash Refunds Users 4,640 Bitcoin Lost in 2017 Hack
- Guggenheim Interested in Bitcoin Due to “Rampant Money Printing” by Fed
- Kraken to Launch Bitcoin Lightning Integration in 2021
- $20B Asset Manager Ruffer Announces Bitcoin Allocation After Dumping Gold
- RG Alts Launches First Tactical Gold and Bitcoin Mutual Fund
- Sovryn Launches Bitcoin-powered Trading and Lending Platform
- Binance Starts Shipping Bitcoin Visa Cards in Europe
Since November, mainstream media coverage on Bitcoin has been extremely bullish. The most frequently used words in mainstream media headlines mentioning Bitcoin have been: All-Time, Rally, High, Record, Surge
Unlike 2017, Bubble isn't even among the 50 most frequently used words in mainstream media coverage on BTC during the 2020 rally.
Media attention surrounding Chiliz, a sports and entertainment fan-token issuer, surged by 283% this week following the announcement of the firm’s strategic partnership with Binance and the launch of Paris Saint Germain (PSG) and Juventus (JUV) football clubs’ tokens. Coinbase also saw a massive spike in media attention, following the firm’s announcement that they had confidentially submitted a draft registration statement on Form S-1 ahead of a potential IPO.
The total cryptocurrency market cap increased by +19.6% this week, growing from $560B to $670B. Bitcoin market cap dominance is currently 66.2%. Weekly returns were green across the board, with the median asset returning +8.9%. Investor sentiment remains positive on the majors. Trading volume and Tweet volume followed with both sets of metrics up by +28%.
Weekly Performance of Major Cryptocurrencies
After a pullback last week, the majors have rebounded with full force. All 10 assets saw positive returns over the past 7 days as they moved in a highly correlated fashion. Litecoin had the best performance among the majors, returning over +40%, followed by Bitcoin Cash (+27%) and Bitcoin (+23%).
Institutions Can't Get Enough of Crypto
A surge in cryptocurrency prices and unprecedented monetary-policy moves are increasingly attracting big money investors to an area that had largely been the realm of retail speculators. Additional large scale institutional investors entered the market this week as Bitcoin broke through all time high.
Eric Peters, chief executive officer of One River Asset Management, set up a new company to seize on the growing interest in cryptocurrencies. Peters stated that in addition to their recent purchases, One River Asset Management has commitments that will bring its holdings of Bitcoin and Ethereum to $1B as of early 2021.
On a Bloomberg appearance Wednesday, Scott Minerd, CIO of Guggenheim, commented that the firm’s “fundamental work shows that bitcoin should be worth about $400,000.” Minerd explained that the firm’s. interest in BTC is tied to macro factors including the Fed’s policy and money printing. It's worth noting that Guggenheim may seek investment exposure to Bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust, per the SEC filing the firm made on November 27.
Ruffer Investment Company announced that its portfolio now includes a 2.5% allocation to Bitcoin. This translates into a $15M purchase. The company has described their Bitcoin investment as a “defensive move”, stating “We see this as a small but potent insurance policy against the continuing devaluation of the world’s major currencies”. Additionally, Ruffer mentioned a reduction in gold holdings in order to get exposure to Bitcoin.
Morgan Stanley’s head of digital asset markets says decentralized finance (DeFi) isn’t going away in the coming year. “I would say an evolution of this current momentum in terms of significant interest in the topic will continue through 2021”. He continues on with some positive comments regarding the programmable features of the new technology as a way to rethink digital financial infrastructure.
American Express dives deeper into crypto with an investment into the trading startup FalconX. While the amount invested wasn’t disclosed, Amex has been actively investing in blockchain technology and monitoring the digital asset space for a number of years.. The company rolled out an app that uses blockchain to let contractors and vendors reconcile invoices and timesheets. Amexalso tested blockchain technology as a way to let merchants create tailored offers involving membership rewards points, and enabling international B2B payments.
Derivatives exchange operator Cboe Global Markets is preparing to launch crypto indexes after securing a partnership with trading software firm CoinRoutes. This gives the firm exclusive rights over the CoinRoutes RealPrice benchmark and could lay the foundation for an ETF. CoinRoutes CEO recently said that the data addresses a number of concerns previously outlined by the SEC, including a level of transparency needed for regulators.
Building on the success of their Bitcoin futures and options, CME Group will be adding Ether Futures to the cryptocurrency risk-management solutions and trading will begin on Feb 8, 2021. This is a huge milestone for Ethereum from an institutional standpoint.
Bitcoin Enters Price Discovery
It has been quite the week for Bitcoin as it put in its best performance of the year in addition to setting a new all-time-high! The price of BTC traded within a 28.1% range, from a low of $18,967 to a high of $24,300. This is nearly double its average weekly range of 14.2%. Investor sentiment was positive for the majority of the week as indicated by The TIE’s hourly sentiment score. Despite a slow start Monday, BTC experienced a spike in price and sentiment starting early on Wednesday which continued throughout the week. The market saw a dip on Sunday, as it was the first day that BTC closed down within the past 7 days.
Over 100,000 Tweets Sent Out About BTC on a Single Day
As the price of BTC finally smashed through $20k to set a new ATH, Tweet volume surged to its highest level in 3 years. On December 17th, BTC tweet volume surpassed 100,000, just shy of its record of 135K set in January 2018.
Litecoin Surges to New Yearly High
In last week's insights we highlighted a clear shift in sentiment on Litecoin. This week, Binance Loans and Bitfinex Borrow both added Litecoin to the growing list of borrowable assets. As Litecoin sentiment has continued to rise, Litecoin’s price has surged to new yearly highs. Additionally, 30 day average trading volume has surged to a new high of $6B.
EOS Launches EOSIO 2.1 and PowerUp Model
On Tuesday, Block One introduced EOSIO 2.1 with the goal of providing new and improved tooling for developers and enhanced capabilities for private and public administrators. They followed this up on Thursday with a proposal for a new resource model on EOS. They call it the EOS PowerUp Model, which is updated with feedback and now ready for the community to transition into.
Elon Musk Sends Doge Flying With 1 Tweet
As the classic relationship goes, Doge follows BTC on its moon mission. The memecoin was sent flying after a tweet mentioning the currency was posted by Elon Musk. Since Elon’s tweet, Doge tweet volume spiked by 795% while the price increased by 15%.
Weekly Performance of DeFi Tokens
The US Commodity Futures Trading Commision (CFTC) had their eyes on DeFi this week as the CFTC Technology Advisory Committee heard a presentation covering the ins and outs of decentralized finance. This was a high level overview of the existing landscape and also hinted that CFTC regulators may be seeking the most effective way to apply liability without stifling innovation. Ultimately the subcommittee concluded with a wait and see approach to better understand where risk of illegal activity would occur within the sector.
BNT (+25.2%) and SNX (+24.6%) stood out as the clear winners in DeFi this week after being listed on Coinbase. Overall the majority of DeFi tokens performed positively. The median asset return was +3% over the past 7 days.
Coinbase Lists Aave, Synthetix, and Bancor
Coinbase has actively been adding new assets to the exchange, and this week was no different as they listed AAVE, BNT, and SNX. Following the listings, each asset saw a significant increase in Twitter conversation within 24 hours: AAVE (+45%), BNT (+690%), SNX (+268%).
Money is Flowing into Bancor
Bancor has attracted increased attention since the launch of Bancor v2.1 and the introduction of BNT liquidity mining. The protocol has actively been adding multiple new tokens every 2 weeks to its LM program. While the recent rise in prices is impressive, it's also worth noting that these new initiatives have increased the Total Value Locked (TVL) within the protocol. Since November, TVL in Bancor has exploded from $15M to now over $132M. That is an increase of +786% in under 2 months. The price of BNT has increased by +112% in the same time period.
The Release of Compound Chain
The decentralized credit lending and borrowing platform Compound just launched the Compound Chain this week. Following this announcement, the price of COMP spiked +13.6% before falling back to its mean weekly price. Following the launch, COMP Tweet volume increased by +116% at its peak.
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This Week's Podcast Episodes
Ep. 32 - Betting $100M+ on North American Crypto Mining with Mike Colyer (DCG Foundry)
In our thirty-second episode Mike Colyer (CEO of DCG Foundry) discusses Digital Currency Group's $100M+ investment in North American cryptocurrency mining, providing financing to miners, miners (shrinking) influence over price, why producing new equipment is so difficult, and more. Listen here
Ep. 33 - Market Making for Digital Assets with Anton Golub (flovtec)
Anton Golub (CEO of flovtec) joins The TIE's podcast to chat STOs, colored coins, liquidity, making markets, and why the lightning network will never work. Anton is a crypto OG, and this episode is a can't miss. Listen here