Bitcoin reached an all-time high above $19,892 (Coinbase) for the first time in almost 3 years, but the price was quickly rejected, falling to $19,000 in under 10 minutes. Since then, Bitcoin took the week to consolidate in the $18,100–19,700 range, with each dip in the $18,500 range being quickly bought. News flows surrounding digital assets continues to be positive, with Guggenheim being the latest institutional investor in the cryptocurrency space, CEO of Blackrock confirming Bitcoin is on his radar, and S&P Dow Jones announcing plans to launch customizable cryptocurrency indexing service in 2021. Further on Guggenheim, the company disclosed in a SEC filing that its Macro Opportunities Fund (AUM ~US$ 5.3bn) holds the right to invest up to 10% of its net asset value in Grayscale Bitcoin Trust (GBTC). The instrument of choice to gain exposure by institutional investor continues to be regulated products, such as exchange-traded products (GBTC) and futures (CME Futures), in which they do no have to worry about regulatory and custody issues. On the alts-space, Defi also hit new ATH, recording $14.7bn Total Value Locked on Tuesday, approximately $300m above previous week’s high.
Ethereum 2.0 finally launched its Eth2 beacon chain. Since then, over 1 million ETH has been locked up to be staked on. Ethereum community is hoping the Beacon chain and increased transaction throughput for the network will play a significant role in the network’s ability to compete with giants like Visa and Paypal.
On the macro side, jobs for November came out weaker than expected, but the number was not soft enough to substantially change economic outlook; together with solid hard data last week, expansionary PMI and ISM, and more positive news on vaccine, markets continued its risk-on tone. If anything, the NFP miss heightened expectations of fiscal now and WAM later. Equities hit new record highs (S&P 500 +1.7%, Nasdaq +2.2%, Russell 2000 +2.0%), Dollar continued to perform poorly, especially after 92 support on DXY (-1.1%) fell through, and big moves were seen in the Treasury market, with 10s and 30s yields each moving to the cusp of post-March highs at 97bp and 174bp. On the COVID front, US cases continue to be elevated, with record 101,487 COVID-19 hospitalization on Sunday and more than 1 million new cases in the first 5 days of December, but the number has yet to dampen vaccine hopium. The FDA’s independent vaccine advisory committee is set to meet this week to review Pfizer’s vaccine and consider its application for emergency use authorization.
What is Happening?
This week, Libra rebranded to Diem in an attempt to show organizational independence from Facebook as it aims to get regulatory approval for scheduled launch in January. The cryptocurrency is expected to debut as a USD-stablecoin as opposed to initial goal of a coin pegged to multiple currencies. Visa continued to get involved in the digital assets space, as it announced partnership with BlockFi to release new credit card that would offer Bitcoin cashback rewards in early 2021, and that the company would support USDC in its payment network.
Bitcoin continues to benefit from trifecta of supportive fundamental, narrative, and technical factors. Each dip in the past 2 weeks was quickly bought, with awareness that once Bitcoin breaks through key psychological level of $20,000, the anchor would change and stacking opportunity below $20k may not reappear. Good Luck!