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  • Bitcoin reaches new all-time high of above $106,000

    Bitcoin reaches new all-time high of above $106,000

    Eric Trump praises Bitcoin, predicts it will hit $1M at Bitcoin MENA 2024
    • Bitcoin hit $106,400 in the early hours of December 16
    • Crypto trader believes the next three to four weeks are going to be significant for Bitcoin if history repeats
    • Investors believe Bitcoin reaching $120,000 by the end of 2024 is achievable

    Bitcoin set a new all-time high above $106,000 following news that President-elect Donald Trump is considering plans to create a US Bitcoin strategic reserve.

    In the early hours of December 16, Bitcoin topped more than $106,400, according to data from CoinMarketCap.

    Bitcoin reaches over $106,000, setting a new all-time high. Source: CoinMarketCap

    At the time of publishing, Bitcoin has retraced slightly to $104,700. Over the past year, the world’s largest crypto asset has risen nearly 148% in value. Bitcoin’s previous high was set on December 5, hitting close to $104,000.

    News of Bitcoin’s rally comes as Trump announced he’s considering creating a US Bitcoin strategic reserve similar to its oil reserve. Speaking to CNBC last week, Trump said:

    “We’re gonna do something great with crypto because we don’t want China, or anybody else … but others are embracing it, and we want to be ahead.”

    In relation to a question about whether the US will create a Bitcoin strategic reserve, Trump said: “Yes, I think so.”

    In a post on X, Ash Crypto wrote: “Bitcoin is breaking out. If history repeats, the next 3-4 weeks are going to be massive.”

    Crypto-friendly administration

    The incoming Trump administration is seen as more crypto friendly compared to Biden’s team.

    During his campaign, Trump promised to make America the “crypto capital of the planet.” Since winning the US election, his team has already made significant appointments, many of whom are crypto-friendly.

    Last week, Trump appointed Paul Atkins as the next Chair of the US Securities and Exchange Commission (SEC). He will be replacing Gary Gensler who is stepping down on January 20, 2025.

    Trump also named David Sacks as the lead policy advisor on artificial intelligence and crypto, dubbing him the “White House AI and Crypto Czar.” In November, Trump announced that Elon Musk and Vivek Ramaswamy will lead the Department of Government Efficiency (DOGE) to “dismantle government bureaucracy.”

    Speaking to the BBC, Peter McGuire from trading platform XM.com, said:

    “The Bitcoin rally since the election has been parabolic and the FOMO – or fear of missing out – rally is gathering momentum. Many investors believe $120,000 is achievable by the end of the year and then in 2025 there’s talk of greater than $150,000 by mid-year.”

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  • Bitcoin hits a new all-time high at $69,170: Will altcoins follow suit?

    Bitcoin hits a new all-time high at $69,170: Will altcoins follow suit?

    Key takeaways

    • Bitcoin reached a new all-time high price of $69,170 on Tuesday and altcoins could follow soon.

    • AltSignals’ ASI token is up by 17% in the last 24 hours and could rally higher soon

    Bitcoin sets a new all-time high

    Bitcoin, the world’s leading cryptocurrency by market cap, has set a new all-time high following its rally on Tuesday. BTC traded at an all-time high price of $69,170, its highest level since November 2021. 

    BTC experienced a flash crash following the new record to the $62k region. However, it has recovered and is now closing in on its all-time high price again. At press time, the price of Bitcoin stands at $67,459 per coin. BTC continues to rally ahead of the upcoming Bitcoin halving event. 

    AltSignals’ adoption continues as it gets listed on CoinGecko

    AltSignals continues to gain more adoption in the market weeks after ending its presale. The project is already benefiting from the ongoing Bull Run and could soar higher in the medium to long term.

    A few hours ago, AltSignals was listed on CoinGecko, one of the leading cryptocurrency data websites in the world. This means it is now easy to track ASI’s price, allowing investors to make informed decisions. 

    Following the conclusion of its presale, AltSignals is using the funds raised to develop products for its users. AltSignals is leveraging AI and blockchain technology to ease crypto trading and, in the process, help onboard more traders to the market. 

    What is AltSignals?

    AltSignals is a Web3 project that aims to gain adoption beyond the crypto space. The project provides services to traders in the crypto market and beyond. According to their whitepaper, AltSignals intends to make it easier for traders to have access to trading signals and other resources that would boost their trading strategies. 

    The project raised $1.8 million in its presale and is channelling most of the funds towards developing ActualizeAI, an AI solution that will make it easier for people to trade cryptocurrencies and other financial assets. 

    ActualizeAI will work 24/7, generating trading signals and helping traders to boost their strategies. Furthermore, ActualizeAI helps eliminate some of the obstacles traders face in the market. 

    AltSignals will be leveraging several technologies including blockchain, AI, natural language processing, machine learning, regression, and predictive modelling, to enhance its services. 

    AltSignal’s ASI surges by 17% 

    The cryptocurrency market has been bullish over the last few weeks and ASI has also been rallying. In the last 24 hours, ASI is up by 17% and is currently trading at $0.00493 per coin. 

    With the right level of adoption, AltSignals’ ASI token could be one of the gems of this bullish cycle. ASI is already live on the Uniswap platform and will become available on other decentralised and centralised crypto exchanges in the coming months. 

    Should I buy ASI now?

    AltSignals’ ASI token is up by more than 20% over the last seven days but still has room for growth.  Its token is already live on Uniswap and will also launch on a few other DEX and CEX in the coming weeks and months. 

    Those who missed out on the presale can still purchase ASI at a discount as the coin’s value remains low. However, with the right level of adoption and listing on multiple exchanges, ASI’s value could soar higher in the coming months and years. 

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  • $115M Liquidated in 1 Hour as Crypto Market Plunges; $GFOX Presale Hits New All-Time High

    $115M Liquidated in 1 Hour as Crypto Market Plunges; $GFOX Presale Hits New All-Time High

    The crypto market hasn’t had the best start to 2024. This has affected many altcoins, and investors are confused about the best cryptos to invest in. Reports show that the market experienced $115m liquidation in an hour, further decreasing the market’s total value. However, some altcoins still show positive prospects amidst this challenging period. 

    Experts believe they may improve holders’ portfolios in the long run. Galaxy Fox is one of these altcoins. The new meme coin presale keeps progressing regardless of the market state. $GFOX recently hit a new high, sending optimism to existing adopters. New investors now scramble to join the meme coin’s presale. 

    Galaxy Fox: Profit-yielding ICO Amidst Crypto Market Plunge 

    Galaxy Fox is a trending presale meme coin with excellent prospects. The new token is gradually becoming prominent, with investors seeing it as one of the best cryptos to invest in currently. 

    $GFOX aims to be a market success. It will achieve this by entering the crypto landscape with features and functionalities that position it for top performance. The fox-themed meme coin will have P2E functionality while maintaining its meme culture. 

    Galaxy Fox could be amongst the few successful crypto projects to combine meme and P2E functionalities. The meme coin’s own will be different because of strong community backing, developers’ dedication, and utility beyond its ecosystem. $GFOX thrive won’t be localized. Instead, it will spread across web3 space, making it a significant token to every stakeholder in the space. 

    The Galaxy Fox’s ecosystem P2E mechanics will see $GFOX rival top gaming tokens like MANA, AXS, SAND, and GALA. $GFOX aims for a better performance than these tokens had in the previous year, and it looks set to achieve it. Despite the crypto market plunge, analysts believe the GameFi sector will improve drastically this year. Hence, the prediction that $GFOX could be the next P2E sensation is seemingly likely. 

    $GFOX facilitates the P2E game in its ecosystem. It’s used to purchase boosters and NFTs to improve gameplay and serve as a reward for top performers. Ecosystem members can also earn passive income by staking $GFOX token. Outside of its ecosystem, $GFOX is expected to be a payment option, a reward, and a token of value. The booming meme coin is deflationary, meaning that it will experience periodic token reduction. This will contribute to $GFOX value appreciation. 

    $GFOX initial coin offering (ICO) is among the best currently, yielding over $2.7 million. It is set to hit a $3 million high soon and could end above $7 million. The exciting thing about the ICO is the value of the $GFOX presale token. 

    The value is currently at a considerably low point, but has a high possibility of skyrocketing when it enters the retail phase. However, the periodic increase in this value indicates that the profit margin may keep reducing with every delay. Investors are urged to be proactive. 

    Celestia ($TIA): Another Altcoin Weathering Current Market Storm

    $TIA is another cryptocurrency that can help investors escape the effect of this liquidation. The altcoin has been impressive, with over 20% return in the past week. While its recent run has been on a downtrend, analysts believe it’s still one of the best cryptos to invest in at the moment. 

    The price of $TIA set a $20.26 all-time high a few days ago and hopes to return to the price level and beyond soon. The cryptocurrency is hovering around $19.00-$20.00 price point, with current support around $18.20. 

    Experts believe that $TIA is another option that can help investors get through this plunge. The crypto displays high profitability and strong resistance to the bear pressure. $TIA is expected to gain momentum again, and investors can have something to cheer about when it does. A finish above $50 by year-end looks possible, according to analysis by keen observers. 

    Conclusion 

    The crypto market liquidation is clearly having negative effects on the market. With many altcoins declining over the past few days, the buzzing $GFOX presale and $TIA look like the best cryptos to invest in now. Galaxy Fox presale presents an excellent profit-making opportunity amidst this market uncertainty, and smart investors are well-positioned to take full advantage.

    Learn more about $GFOX here:

    Visit Galaxy Fox Presale | Join the Community

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  • Bitcoin mining difficulty hits all-time high, above 50 trillion hashes

    Bitcoin mining difficulty hits all-time high, above 50 trillion hashes

    Key Takeaways

    • Bitcoin mining difficulty has surpassed 50 trillion hashes for the first time ever
    • Higher difficulty means more competition and less profit for miners, but also more security for the Bitcoin network
    • Higher mining difficulty means greater energy input required to mine Bitcoin, meaning greater cost for miners
    • Mining stocks have underperformed Bitcoin significantly over the last year

    It has never been so difficult to mine Bitcoin. Literally. Bitcoin mining difficulty continues to rise incessantly, surpassing the 50 trillion hash mark for the first time ever last week.

    What is Bitcoin mining difficulty?

    If it were not for the Bitcoin mining difficulty adjustment, blocks would be appended to the blockchain at an increasing speed as more miners joined the Bitcoin network. In such a way, the Bitcoin mining difficulty adjusts via an automatic algorithm to ensure blocks are appended to the ever-growing blockchain at consistent 10 minute intervals.

    As more miners join the network, difficulty rises. In such a way, blocks do not get discovered quicker as more miners join the network. This difficulty adjustment is thus vital to ensure the supply of Bitcoin is released at a pre-programmed pace, as outlined by the anonymous Satoshi Nakamoto in the Bitcoin whitepaper. 

    This explains how, in the early days, mining could be carried out on a personal laptop, because Bitcoin was so niche and miners were so few and far between – hence the mining difficulty was far lower. This is why you hear stories of miners who find (or lose) stashes of Bitcoin on old hard drives which were close to worthless when they were mined. 

    Today, however, Bitcoin is well and truly in the mainstream, and mining difficulty has risen accordingly. Most mining is carried out by supercomputers, while there are many public companies carrying out the task.  

    What does increasing mining difficulty mean?

    Mining difficulty is increasing because more computational power is being put towards Bitcoin mining. The hash rate is what we refer to as the computational power of the Bitcoin network. Looking at the chart, this is at an all-time high – which makes intuitive sense, given mining difficulty is also at an all-time high. 

    For the Bitcoin network as a whole, this is a good thing. Bitcoin’s hash rate is a crucial indicator of the security of the network. A higher hash rate means Bitcoin is more resistant to an attack by a malevolent actor. This is because the higher the hash rate, the more expensive and implausible it is for an actor (or a group of actors) to seize control of 51% of the network, when Bitcoin could be exposed to what is known as a 51% attack (coins could be double spent and the veracity of the blockchain would be in doubt). 

    However, there are downsides to this, too. I detailed this in depth last week in a report on Bitcoin mining stocks. In summary, more hash power means greater cost for miners, as the increased difficulty means a greater amount of energy is required to power the computers working to validate the transactions on the blockchain. This is why miners margins are getting cut into as more miners join the network (rising electricity costs also do not help). 

    “The rapid decline in the Bitcoin price, down from $68,000 at the peak of the bull market in late 2021, has obviously hurt the mining industry”, says Max Coupland, director of CoinJournal. “However, that is far from the only problem facing miners. The mining difficulty hitting an all-time high means greater amounts of energy are required to mine, at a time when inflation and the Russian war have pushed the price of energy up immensely”. 

    The mining industry is hence extremely volatile, as not only is it sensitive to the volatility of Bitcoin itself, but it also suffers from rising energy costs. The below chart demonstrates how mining stocks have underperformed Bitcoin in recent times. It looks at the Valkyrie Bitcoin Miners ETF, which tracks mining companies and was launched in February 2022. 

    With Bitcoin mining difficulty hitting an all-time high, racing past the 50 trillion hash mark for the first time ever, things won’t get any easier for miners. However, like always, it will ultimately come down to the Bitcoin price. With block rewards and transaction fees recouped in the form of Bitcoin, and the entire industry built upon this asset, mining companies will go as far as the Bitcoin price takes them.

    If you use our data, then we would appreciate a link back to https://coinjournal.net. Crediting our work with a link helps us to keep providing you with data analysis research.

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  • Long-term Bitcoin holders at all-time high, but price not cooperating

    Long-term Bitcoin holders at all-time high, but price not cooperating

    Key Takeaways

    • Two-thirds of the Bitcoin supply has not moved in over a year
    • Metrics for percent of supply unmoved in 2+, 3+ and 5+ years also at all-time highs
    • The average hold period for Bitcoin on-chain is 3.8 years
    • Despite thesis that dwindling supply will boost price, this has not proved the case thus far

    The capped supply of Bitcoin has always offered an intriguing layer to analysis of the enigmatic asset. 

    Simply put, there are not many assets worldwide that offer an inelastic supply. Truthers argue that this cap will inevitably squeeze the price upwards through the simple economic theory of supply and demand. That is, assuming the demand continues to grow, of course. 

    Here, we look at this supply, and how many of the total supply of 21 million bitcoins (of which 19.3 million are currently in circulation) have not moved in quite some time.

    Percentage of Bitcoin supply unmoved in over a year at all-time high

    If one takes the 1+ year mark as a benchmark for long-term holders, that means a growing amount of Bitcoin supply is held by what constitutes long-term investors. 

    Two-thirds of the Bitcoin supply has not moved in over a year, an all-time high. That means no purchases or sales. 

    In expanding the timeframe out, we can look at what portion of this 67% has been held for even greater amounts of time. On the below chart, I have plotted the portion of supply that has been stagnant for 1+ years, 2+ years, 3+ years and 5+ years. 

    The results are interesting. Nearly half the supply – 49.3% – has not moved in over 2 years. Pushing out to 3+ years, the number is 39%. And 28.1% of the supply has not moved in 5+ years. The marks are all all-time highs.

    So, diamond hands? Well, sort of. The numbers are certainly large, but there are other variables at play. Most notably lost coins, for which it is impossible to know how many there are. Satoshi Nakamoto is estimated to own over one million coins, which is circa. 5% of the supply alone. 

    Long-term holders growing despite market carnage

    Nonetheless, to see such stout numbers following the year that crypto has had is notable. The average hold time of Bitcoin on-chain right now is 3.8 years.

    This comes less than a year after the collapse of LUNA (May-22) which sparked a meltdown crisis that ultimately bankrupted hedge fund Three Arrows Capital and sent a wave of contagion across the industry. 

    Things shook further when this contagion claimed crypto lender Celsius in June. The fallen crypto lender disclosed two months before, at the Bitcoin 2022 conference, that it held 150,000 Bitcoin, which would constitute 0.8% of the supply. 

    Unfortunately for investors, court filings by Kirkland & Ellis indicate that the firm has lost roughly 62,000 Bitcoin, and right now it is unclear how many they really held, nor how many the bankrupt firm now holds. 

    Then there was the staggering collapse of FTX in November.

    But despite this,  long-term holders do continue to grow, at least if on-chain metrics are to be trusted. 

    Dwindling supply not supporting price

    But as for the thesis that a dwindling supply will push price up, it has not worked to date. Bitcoin has collapsed while these metrics have all jumped to all-time highs. 

    What happens in the long-term remains to be seen. The advocates aren’t wrong when they reference simple supply and demand. This will undoubtedly help the price, and if long-term holders continue to hold, the liquidity drying up further can only squeeze the price upward. 

    On the other hand, every sale needs a bid order, and these have not been coming in quickly enough over the last two years. As I have written about repeatedly, Bitcoin continues to follow the macro cycle, trading like an extreme-risk asset making a mockery of those who claim it is any sort of inflation hedge. Look no further than its reaction to recent inflation readings and Federal Reserve meetings on interest rate policy for evidence of this. 

    Supply drying up is a good thing. But until Bitcoin sheds its high-risk image, it will continue to trade like a levered bet on the Nasdaq. Every asset needs a bid, people, and in times of uncertainty, the market has shown that Bitcoin is the last thing that investors want to hold. 

    Time will tell if this all changes. 

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  • Bitcoin’s Lightning Network capacity surges to all-time

    Bitcoin’s Lightning Network capacity surges to all-time

    • Lightning Network has reached over 5,490 in Bitcoin payments capacity, an all-time high.
    • Transactions in BTC on the layer-2 payments network have increased roughly 63% since January 2022.
    • The increased Bitcoin micropayments via Lightning Network comes as BTC price retreats below $23k after a great rally to start 2023.

    Lightning Network’s capacity in terms of Bitcoin across payment channels has hit a new all-time high, according to the latest data on usage for this major payment network.

    The Block Research shows the critical layer-2 network, which is built on Bitcoin, has seen its capacity grow to over 5,490 BTC. That’s nearly 160 BTC more than what was observed on 4 February 2023, according to details shared by Lightning Network statistics.

    Lightning Network capacity up 63% since January 2022

    The benefits of the Lightning Network technology, mainly around fast and low-cost micropayments, has increasingly attracted more people. According to the data, Lightning Network’s capacity in BTC terms is up approximately 63% since January 2022.

    Approximately 3,350 bitcoin was recorded in payment channels on the protocol on 1 January last year. From the figures, it’s clear that total network value has declined compared to when Bitcoin price hit an all-time high in November 2021. The value of current Lightning Network capacity in USD is around $128 million – down from more than $216 million when BTC raced to highs of $69,000.

    But as the on-chain metrics for the payment network’s daily usage shows, there has been continuous adoption even as the crypto winter saw crypto prices crash. Bitcoin is currently trading above $22,700 after a brief rally last week ended with bears mounting a wall near $24,000.

    According to data from CoinGecko, BTC price remains roughly 67% off the ATH of $69.044 reached on 10 November 2021. In comparison, (as noted above) LN capacity has increased 63% since January 2022. 

    Find out more about Lightning Network here.

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  • Optimism token OP hits all-time high Bedrock upgrade news

    Optimism token OP hits all-time high Bedrock upgrade news

    • OP has rallied over 30% in the past 24 hours, reaching a new all-time high of $2.97 on Coinbase
    • Optimism is outperforming major coins even as cryptocurrencies rally on Thursday.
    • Gains for Optimism comes amid buying pressure after news of an upgrade proposal planned for activation on 15 March.

    Optimism is rallying again as excitement around the Ethereum layer 2 scaling solution increased following a major news announcement.

    As shown on the 4-hour chart below, OP reached a new all-time high of $2.97 on Coinbase. As of 11:20 am ET on 2 February, the platform’s native token OP was trading at $2.91, still up by more than 32% in the past 24 hours.

    Chart showing Optimism price rally to new all-time high on Coinbase. Source: TradingView.According to data from CoinGecko, the OP token price is up 205% in the past 30 days, outshing major coins. About 75% of the gains have come in the past two weeks as platform’s market capitalization steadily rose to currently stand around $625 million.

    Why OP token price is surging

    Optimism’s gains in the past few hours have come as buying pressure ramped up ahead of what promises to be groundbreaking network upgrade.

    On Wednesday, the Optimism Foundation released a proposal seeking to deploy an upgrade to the protocol’s mainnet. According to the proposal, the upgrade targets improving network performance via the Optimism Collective: Bedrock.

    It is the first major upgrade to the Optimism protocol and brings a rollups architecture to the protocol, with  transaction batching one of the main features highlighting the huge impact the upgrade could have for the blockchain’s performance.

    “This upgrade offers a new level of modularity, simplicity, and Ethereum equivalence for Layer 2 solutions, providing unprecedented performance and functionality,” the Optimism Foundation wrote.

    Improvements set to be added via the Bedrock release include reduced transaction fees, high throughput and improved sync speeds.

    According to the team, the upgrade will not impact most users as the Optimism mainnet is “already EVM-equivalent.” However, some users including those running full and archive nodes have to take action in preparation for the upgrade.

    The Bedrock proposal is expected to go through a two-week voting period, with deployment to the mainnet scheduled for 15 March if it passes.

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  • What is the Bitcoin hash rate? And why is at all-time highs?

    What is the Bitcoin hash rate? And why is at all-time highs?

    Key Takeaways

    • The Bitcoin hash rate is the amount of computing power contributed towards mining
    • It has continued to take new all-time highs
    • This squeezes miners’ profitability, at a time when electricity costs have risen and the Bitcoin price has fallen
    • Overall, a high hash rate implies a healthy and more secure Bitcoin network

     

    “All-time high” is a phrase I haven’t used in a while when covering the cryptocurrency space. But if you look, there is something that continues to hit higher highs, and that is the Bitcoin hash rate.

    Bitcoin’s hash rate refers to the amount of computing power that is being contributed to the network through mining. And as the chart below shows, its inexorable rise during the pandemic does not seem to be slowing down. But what does this mean, and why is it rising?

    What is the Bitcoin hash rate?

    Gone are the days when anyone could mine on their personal computer. Today, mining is dominated by large mining pools, using specialised computers specifically designed for this purpose.

    The practice of mining actually involves these computers solving complex mathematical puzzles. Once this puzzle is solved, the latest block of transactions can be validated and attached to the blockchain, before the process repeats regarding the next block and the next mathematical puzzle. Once a puzzle is solved and a block validated, the miner responsible for this work gets paid in newly created bitcoins.

    This is all very complicated, but what is important to understand is that Bitcoin is programmed to release a specific number of Bitcoin over time, with the blockchain coded such that a new block is added (validated) every ten minutes.

    But as more computers join the network and the hash rate increases, these puzzles should get solved quicker, meaning quicker block time and more bitcoins released. Right? Well, here is the thing. A difficulty adjustment is coded into Bitcoin – that means that the more computing power that joins the network, the harder it is to solve those puzzles.

    Don’t ask me how this works, because I don’t even come close to understanding what is under the hood of the mythical beast that is the Bitcoin blockchain, but the main point is that as more miners join, the difficulty goes up.

    And as Bitcoin has become more popular (and risen in price), that is exactly what has happened. More miners have joined the network, and today it is a highly advanced process. Ten years ago, when only few miners existed, you and I could have pulled out our laptops and mined to a reasonable degree.

    Why is at all-time highs?

    There are a number of reasons why hash rate continues to surge to new highs. But the bottom line is that the increase in miners causes the hash rate to climb.

    Thus the question really asks why miners are continuing to join, when the price of Bitcoin has been plummeting. There are a couple of potential answers here.

    The first is that during the pandemic bull run, mining equipment was scarce and prices for items such as chips were sky-high. Many miners ordered new mining rigs during the bull run, but only received the equipment recently (or some, not even yet).

    Additionally, as the price of Bitcoin fell, the profitability of mining also decreased, given miners’ revenue is denominated in Bitcoin. New mining equipment has been developed and is selling for a lower price than previously, helping to push the number of miners higher.

    One other theory is the Ethereum Merge. This took place in September, when Ethereum transitioned from Proof-of-Work to Proof-of-Stake, meaning mining on the network ceased. Hence, some of these out-of-work Ethereum miners transitioned across to Bitcoin mining.

    What does a higher hash rate mean?

    The first consequence of an increasing hash rate is obviously greater pressure on miners. More competition and a higher required hash rate squeeze their profitability, especially at a time when electricity costs have risen and revenue (Bitcoin) has fallen.

    The best way to see this is to glance at the share price action throughout 2022 of some of the public mining companies.

    On the positive side, the Bitcoin hash rate is considered a security metric for the network. The higher the hash rate, the more secure the network, so in that context, the all-time high represents a good thing.

    This is why a high hash rate is generally looked upon favourably, as it implies a healthy network. Only problem is, miners are feeling the squeeze.

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  • Nearly 13 million bitcoins have not moved in over a year, an all-time high

    Nearly 13 million bitcoins have not moved in over a year, an all-time high

    Key Takeaways

    • An all-time high of 12.7 million bitcoins have not moved in over a year
    • That translates to two-thirds of the circulating supply
    • Only 7% of bitcoins have moved in the last month
    • History shows that long-term holders tend to rise as price falls, which may seem counter-intuitive
    • The real story is a little more nuanced, as falling trade volumes in bear markets provide a lurking variable which affects the data

     

    One of the intriguing things about blockchain is the public availability of all sorts of stats about the network.

    A lot is made of the fixed supply cap of Bitcoin, with the final supply of 21 million bitcoins slated to be hit by 2140. Bulls use this as a case in point as to why the asset is programmed to expand in price, as its scarcity will inevitably squeeze the asset upwards.

    By looking on-chain here at https://coinjournal.net/, we noticed a quirk in this data.

    Long-term holders continue to grow

    Despite the bloodbath that was cryptocurrency in the year 2022, long-term holders have continued to accumulate. Out of the 19.27 million bitcoins currently in circulation, 12.77 million bitcoins have not moved in over a year – an all-time high.

    It’s a pretty significant number. In the following chart, I have plotted these bitcoins against two other categories: firstly, bitcoins that have moved in the last month (traders), and secondly, bitcoins that have not moved in over a month but have moved within the last year (medium-term holders).

    Currently, we have 66% of bitcoins unmoved in over a year – again, an all-time high. The previous high was in September 2020 when the mark hit 63%. Prior to that, the previous high was April 2016 at 60%. 

    A further 27% of bitcoins have not moved in the last month, while the remaining 7% can be seen as traded bitcoins, moving around the blockchain in the last month.

    Why are long term holders growing?

    The obvious question is, why? Why are we seeing long-term holders growing so substantially when the market has been getting pummelled?

    Well, I decided to chart the percentage of long term holders against the bitcoin price. And the result is quite interesting – there definitely seems to be at least a moderate inverse relationship between price and long-term holders. That is, when price falls, long-term holders rise. Hmm.

    But in truth, this makes sense. As the price falls, volumes and interest in the market tend to dry up. With that, comes less trading, and by definition less holders under the one-month threshold.

    While the narrative of long-term holders soaking up increasing amounts of the Bitcoin supply is often painted in a bullish light, I’m not sure that tells the whole story when considering this historical pattern.

    Sure, it is a positive thing that the number of bitcoins that have not moved in more than one year are climbing, as it does show that these long-term holders have tended not to capitulate during the drawdowns.

    But a healthy trading market and high liquidity is associated with a bull market, which is part of the reason we are seeing an inverse relationship here. Look no further than trading volume in 2022, which fell 46% on centralised exchanges compared to the previous year – that’s trillions of dollars of activity no longer present.

    “Trading volumes have cratered across the crypto space. This has pulled down activity and it’s not surprising that the portion of bitcoins traded recently is therefore falling. The analysis of long-term holders is a more nuanced issue than the crude assumption that ‘more bitcoins in long-term wallets is bullish and therefore price will go up’. That is simply not what we have seen historically” said Max Coupland, Director of CoinJournal.

    I’ll continue to monitor all on-chain activity, as the market is certainly showing more life in these early stages of 2023, with softer inflation data giving impetus to the market that we may pivot off high interest rates sooner than previously expected. It will be interesting to keep tabs on the dynamics on-chain, therefore.

    But next time somebody declares it obviously bullish that there are less bitcoins being flung around the markets, perhaps remember that the situation is a little more complex than that.

    If you use our data, then we would appreciate a link back to https://coinjournal.net. Crediting our work with a link helps us to keep providing you with data analysis research.

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  • Why has the Grayscale Bitcoin Trust discount hit an all-time high?

    Why has the Grayscale Bitcoin Trust discount hit an all-time high?

    Key Takeaways

    • Grayscale is the largest Bitcoin fund in the world
    • Discount to underlying asset (Bitcoin) has reached record levels, breaching 50%
    • Concern about reserves, higher fees and other hurdles explain the discount, which likely won’t close anytime soon

     

    The discount to net asset value of the Grayscale Bitcoin trust is at all-time highs. The discount briefly pushed past 50%, before pulling back slightly to where it currently sits at 48.8%.  

    This comes off the back of the SEC reaffirming its reasons for denying Grayscale’s application to convert the trust into an exchange-traded fund.

     The Grayscale Bitcoin Trust is the largest Bitcoin fund in the world, but it has rarely traded at the same level as its underlying asset, Bitcoin. The above chart shows that it had, until this year, traded at a premium since its launch compared to Bitcoin.

    This fund allows accredited investors to gain exposure to Bitcoin without worrying about storing or managing their holdings. It previously traded at a premium as demand for shares surged, with institutions wanting Bitcoin exposure. This convenience does come at a fee, however – and a rather hefty one at 2%.

    Demand falls for Grayscale in 2022

    Since March, the Grayscale shares have been trading at a discount to Bitcoin. The fund has $10.7 billion in assets under management, a stark 65% fall in the last year, reflecting the bloodbath in the crypto markets.

    But the discount to Bitcoin means shareholders are getting hit twice as hard.

    “The fact that Grayscale’s Bitcoin Trust is now trading at nearly 50% discount is just awful for holders of GBTC. It really highlights the vast differences in structure quality between different investment vehicles,” Bradley Duke, co-CEO at ETC Group, told CoinDesk last week.  

    A decline in inflows has been borne out of greater competition as many competitive funds have launched, especially in Europe, as well as multiple filings for Bitcoin ETFs in the US. The discount is also because investors have no way to redeem their holdings for Bitcoin in the trust, but all the while are being charged a 2% fee.

    However, these factors have typically been dulled by arbitrage traders taking advantage of the dichotomy in prices. But happenings this year have reduced that, too.

    Concern about Grayscale’s reserves

    Over the last month, concern has swelled in the market that Grayscale’s parent company, Digital Currency Group (DCG) may file for bankruptcy. This is due to the issues surrounding crypto broker Genesis, whose parent company is also DCG.

    Genesis have denied they will imminently file for bankruptcy, but the firm was caught up in the FTX collapse and is currently undergoing restructuring. Genesis halted withdrawals on November 15th.

    This concern has been elevated by questions around Grayscale’s reserves. Namely, whether they are true to their word and are holding all the underlying Bitcoin securely. With many major crypto companies publishing proof of reserves in the aftermath of the FTX crisis in order to assuage customer fear, Gray scale refused.

    “Due to security concerns, we do not make such on-chain wallet information and confirmation data publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure,” Grayscale wrote in a statement.

    As I wrote at the time, I really can’t fathom how security concerns are a factor here. The blockchain is built so that this kind of information is available to the public.

    Final thoughts

    All in all, the discount sums up investors’ concern around Grayscale, as well as the extra fees and other hurdles which exist compared to owning the underlying. Arbitrage trades are self-destructive by nature, and hence it is notable that the discount is so large and has persisted for so long.

    Then again, there is risk here, as the same thing which I have been writing about for a while now – a lack of transparency – means that it cannot be known for 100% certainty what is going on behind the scenes. And that is why we are seeing a 50% discount.

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