Expressed in currencies of countries with high inflation, the price of bitcoin records new highs.
Grayscale’s bitcoin fund exceeds 500,000 BTC in custody.
Several of the indicators of the Bitcoin network have reached their all-time high in the recent bull cycle, notes an analysis by Coin Metrics co-founder Nic Carter, published on November 18. It is “entirely plausible,” says the executive, that the price of bitcoin reaches the desired all-time high of $ 20,000 in the coming weeks or months.
This bull cycle has been “without fanfare,” says Carter. He gives as an example that this time the fever of the initial coin offerings that occurred in 2017 and that pushed the price of bitcoin has not occurred.
You also notice much less interest in Bitcoin during this bullish boom, according to the document, than was reflected in 2017. Even Google searches and comments on social networks, which registered records three years ago, have dropped, Carter says.
Many may be wondering what is the cause of the renewed energy of Bitcoin. I will present below several graphs related to Bitcoin that are already showing All-Time Highs (ATHs), to clarify this phenomenon.
We present below the most prominent Bitcoin indicators, among those addressed by Carter, which have been ahead of the all-time high of the price of BTC.
Addresses with a balance of USD 10 or higher
As seen in the graph below, the number of Bitcoin addresses with a balance of USD 10 or more is well above the 2017 level. This shows that the supply of Bitcoin is more distributed, especially in the retail investor segments.
The distribution of BTC becomes less concentrated. Source: Coin Metrics.
The chart, Carter says, is very similar to other segments that also show all-time highs: $ 1, $ 100, or $ 1,000. According to the document, although a Bitcoin address does not necessarily correspond to a user, they are useful metrics to verify the growth of Bitcoin adoption.
Bitcoin effective capitalization
The effective capitalization of Bitcoin is an alternative to the market capitalization that, for a certain group of BTC, uses the price of the last time those funds were moved, instead of giving the last market price to all BTC.
Effective capitalization seeks a more realistic weighting of the market. Source: Coin Metrics.
The effective capitalization is USD 129,000 million, the document explains, and it is well above its peak of $ 90 billion in early 2018. This would further motivate investors to retain their BTC. “A higher effective capitalization is an indication of greater maturity and patience for today’s investors,” says Carter.
Open interest of bitcoin futures options
The open interest of the options is the sum of the value of the unsettled option contracts. Carter explains that miners sell options contracts to finance their operation, and that the growth of options means there are more alternatives for miners to hedge their exposure. This would mean that the bitcoin mining industry is more stable.
Bitcoin options represent more sophisticated investment instruments. Source: Coin Metrics.
These instruments did not exist in 2017, the document notes, and would allow more sophisticated miners and investors to bet more on bitcoin’s volatility (or lack thereof) than to simply bet on a price.
Price of bitcoin in countries with inflationary environment
As an example of the growing use of bitcoin in countries with an inflationary environment, Carter uses the price of bitcoin expressed in Turkish lira to highlight that it has already surpassed the highs of 2017-2018. However, it warns that the demand for the cryptocurrency has also driven the price of national currencies such as the Argentine peso, the Colombian peso, the Venezuelan bolivar and the Brazilian real, among others.
With a 284% increase so far this year, bitcoin is approaching ARS 2,000,000. Source: es.investing.com
As an example of those exposed by Carter in the Latin American context, in recent days, CriptoNoticias has reported historical highs for the price of bitcoin in Argentina, Chile and Colombia. Particularly in Venezuela, where there is hyperinflation, bitcoin has appreciated 2,500% against the bolivar in 2020.
Bitcoins in Grayscale’s GBTC Fund
In contrast to the current bull cycle of bitcoin with the bubble of 2017, the document raises one of the most representative cases of the institutional adoption of bitcoin: the investment fund based on bitcoin of Grayscale (GBTC). This fund recently exceeded half a million BTC, as reported by CryptoNews.
Grayscale’s GBTC fund exceeds $ 10 billion. Source: Ycharts.
Exposure to bitcoin, with GBTC, is done through stocks, the document explains. Each share has a nominal price, but because the shares can be traded in secondary markets, they exhibit a premium of close to 20%.
Institutional investors pay that premium, Carter says, because they can make a subsequent profit when they sell such positions. Since trading the shares requires waiting six months after they are acquired, this is “slow-motion arbitrage,” Carter notes.
Carter flatly rejects the thesis he evaluates the volume growth on Tether as a factor driving the price of bitcoin. He even cites academic research that has shown that the evolution of the Tether issue is not correlated with the price of BTC.
The value of stablecoins has increased 50 times since 2017. Source: Coin Metrics.
However, it highlights that when the all-time high in the price of bitcoin occurred, there were only stablecoins that represented a value of USD 1.5 billion. Today, that value has risen to $ 22.7 billion, an increase of almost 50 times. Even if the most popular pair on exchanges, USDT-USD has replaced BTC-USD, the document states, the price of bitcoin remains robust.
The document highlights a positive evolution of the banking stance vis-à-vis Bitcoin compared to the situation three years ago. It refers to specific banks in the United States with services related to cryptocurrencies, such as Silvergate, Signature, and Metropolitan. “Additionally, two new entities, Avanti Bank and Kraken Financial, have received authorization to operate through a special law in the state of Wyoming, which means that they are eligible to access the Federal Reserve,” says the document.
The growth of P2P credit programs, which the document describes as “cryptocurrencies” is another novelty that was not present in 2017, according to the document. These new programs allow quick access to loans through various providers such as Genesis and BlockFi. Even with the appearance of units within the large exchanges that are offering these loans, it is possible to block liquidity in several of them, simultaneously.
Among its conclusions, the study maintains that the current market is much more mature, more supervised, more orderly and more liquid than the market that propelled the bubble of 2017. Positive catalysts such as a Bitcoin ETF appear more plausible in the not too distant future , the author claims.
This November 18, as reported by CriptoNoticias, Bitcoin hit a new all-time high in market capitalization, which assigns it a value of 339,000 million dollars and places it in position 16 of the companies with the highest valuation in the world. Bitcoin thus surpasses flagship companies such as Verizon, Bank of America, Coca-Cola and Pfizer.