The unbearable stability of Bitcoin

Bitcoin it is fine, thanks for demand.

In the middle of some shaky months for the markets, the most popular cryptocurrency in the world was remarkably stable and has been traded in the closest span of the end of 2020:

You can see this differently depending on the history, e.g. B. whether you bought, when and at what height. Perspectives can be:

It is also possible that you have not followed the daily fluctuations of Bitcoin exactly because you are an adult who invests in solid assets such as British government bonds.

Anyway, for a currency that did this during pandemic -

- The flatness of the past few months is a little ... scary .

The volatility is also steamed:

What's going on? The Morgan Stanley strategists Sheena Shah and Kinji Steinmetz took a look at a note published on Thursday.

Their most important realization is that most of those who have had to do with Bitcoin since the beginning of 2021 are currently holding their bags (or Hodlern) - and that the tokens do not move much:

Almost a year after the beginning of the Bitcoin Bärenmarkt, most Bitcoin buyers are faced with severe losses in 2021 and seem to wait for rally to close their position. A record number of Bitcoin units has been used for no transaction in the past 6 months, currently 78 % of the total number, and this number continues to increase (Figure 1).

If we simplify it a little too much, this means that those who bought/receive Bitcoin more than 6 months ago hold on to their positions and probably wait for some for a price recovery. For the remaining 22 % of the Bitcoin units that have been held by the short-term investors who have acted with Bitcoin in the past 6 months, the average Breakeven Prize is estimated to be just over $ 22.3,000 (+7 % compared to the current value, but in a few up to 20 %). days ago, see Appendix 2)

(Shah and stonemasons find that there are some important reservations: The first is that it is assumed that every wallet belongs to another entity, the second is that transactions outside the blockchain cannot be taken into account.)

As was to be expected, this lack of movement fell together with a decline in activity on most exchanges, with the exception of the market leader Binance, who reduced the fees to boost more business, and now houses a fifth of the entire volume:

The elephant in the room is of course Ethereum, which had a advertising base last month when his blockchain survived an update. Nice! ETH now follows the stock markets more precisely than Bitcoin, a dynamic that indicates that it could be the more normalized risk system of the two. Some on the market "Could start now ... to question the trade dynamics" for Bitcoin, as a result of the changeover of the ETH to a proof-of-stake model, says Morgan Stanley.

The analysts find that Bitcoin tends to find strong support at just over $ 18,100, which indicates that dealers buy burglars under this level:

The reporting on the summer identified $ 20,000 as an important level of support, below which forced liquidations of lit positions were required. We would speculate that the latest dynamic indicates that $ 18,000 could be a similar pain point. (If you are a heavily lifted Bitcoin whale, please contact us.)

public Bitcoin miner now no longer dig as much that should also offer a certain support. In fact, you have a particularly hot year (even after crypto standards) in the middle of rising energy prices. The share prices of some of the largest listed - Marathon Digital, Riot Blockchain and Core Scientific - were terrible:

(Core Scientific announced that it would register bankruptcy while this article was written!)

There are circumstances under which owners with high debt may want to keep this type of stability through serious, long -term investors that keep the BTC. Shah and Steinmetz:

With falling trade volumes and fewer market participants, intraday dealers and market markets have an increasing impact on prices. Your activities are probably more influenced by technical prices and momentum than, for example, by long -term asset managers.

The company -driven efforts to introduce Bitcoin continue, possibly encouraged by the United Kingdom, which uses its first prime minister with glazing eyes. The MS team is a little skeptical about how important it is:

In the past few months, traditional financial companies have increasingly announced new crypto products to offer their customers access to the markets and opportunities to buy, sell and keep the underlying cryptos ...

The companies say that they have introduced the products on the basis of customer demand, but in view of the recent additions and outflows of stock markets-traded products and the trends described above for the commercial volume, we continue to believe that this could be the case, unless there is a significant price volatility to recognize that real demand attracts considerably.

The stability looks good, at least compared to what happens elsewhere. But the thinning of volumes in a market that has no benefit beyond value storage, where the actions of its few active daily participants are determined by technical resistance and support levels, is not a symptom for robust health. Although we are too dull to say that the best for the mother of all cryptos has passed, her flattening could mean nothing other than that it is now a life -resistant asset class.