1. Market Wrap: Bitcoin Heads for Worst Week Since March as Prices Hold Around $46.5K
“Cash is king in times of distress, not bitcoin,” said one market watcher.
Bitcoin’s price turned choppy on Friday as the №1 cryptocurrency by market capitalization logged its worst weekly performance since March 2020 when the pandemic hit the global economy.
Bitcoin (BTC) trading around $46,244 as of 21:00 UTC (4 p.m. ET). Slipping 5.7% over the previous 24 hours.
Bitcoin’s 24-hour range: $44,180.99-$49,325.91
BTC trades below its 10-hour and 50-hour averages on the hourly chart, a bearish signal for market technicians.
A quick recap of bitcoin’s most tumultuous weekly performance since almost a year ago shows that this week’s high volatility was not caused by one simple factor. The correction earlier this week was largely triggered by an overheated derivatives market as traders rushed to exit leveraged bets (or got liquidated from positions) that had accumulated as bitcoin pushed to an all-time-high price above $58,000. A drop below $45,000 on Thursday coincided with a sell-off in the broader stock market due to rising concerns over surging bond yields, which might dim the allure of riskier assets like cryptocurrencies.
Bitcoin’s spot market looked quiet on Friday, with the daily trading volume on eight crypto exchanges tracked by CoinDesk largely flat compared with levels on Thursday. Volume spiked during the sell-off earlier this week after large bitcoin inflows to exchanges such as Gemini on Sunday, which signaled an intent by some traders to take profits as prices approached $60,000.
2. The Future of Bitcoin: 12 Scenarios From Bullish to Bearish
No one knows what will happen with Bitcoin. Not the skeptics, not the believers, not even Satoshi Nakamoto. There is no crystal ball. Many of the sharpest minds in crypto embrace that uncertainty, broadly agreeing that we just don’t know. And perhaps that’s part of the allure. “Most of the biggest use cases 10 years from now will be things that would sound insane to us today,” says Elizabeth Stark, who, as the head of Lightning Labs, is quite literally trying to build the Bitcoin network’s future. “Kind of like how an encyclopedia that anyone can edit would have sounded crazy to people in the pre-Wikipedia era.”
What will the bitcoin cryptocurrency be when it grows up? Andreas Antonopoulos, an undisputed Ambassador of Bitcoin, thinks it’s unlikely to be any one singular thing. “There is no unified use case,” he says. “The idea that bitcoin will be used as a store of value or that bitcoin will be used as a medium of exchange or that bitcoin will be used in a myriad of other ways — bitcoin is used in all of those ways, in different places.”
His point is that bitcoin is already working in the real world in a variety of actual scenarios, and it will continue to do so in ways we cannot predict. “The more broadly it’s deployed, the more fragmented and diffused its uses become,” he says, rightly challenging the very premise of this thought experiment.
3. Bitcoin Looks Indecisive After Sell-off in Bonds, Tech Stocks
The largest cryptocurrency has failed to hold above $50,000 amid a downdraft in traditional markets
Bitcoin (BTC) mostly traded sideways on Friday after a steep drop overnight to as low as $44,181, timed with a steep sell-off in bonds and technology stocks.
At press time, the largest cryptocurrency was changing hands at $47,921, down 6.2% in the past 24 hours. Since 12:00 a.m. UTC (7 p.m. ET), the price is up 1.6%.
On the hourly chart, bitcoin was trading between its 10-hour and 50-hour moving averages, a sideways signal for market technicians.
4. Grayscale Bitcoin Premium Flips Negative as BTC Stays Below $50,000
The gap between the GBTC share price and the implied price of the underlying bitcoin has collapsed to a 4% discount from a 35% premium late last year.
The largest public bitcoin trust is facing an unusual situation: Its share price is dropping faster than the underlying cryptocurrency.
Historically, the Grayscale Bitcoin Trust (GBTC) trades at a premium to bitcoin (BTC) itself. But that premium turned into a discount this week, with GBTC closing at a price nearly 4% lower than the market value of the underlying asset on Thursday.
In mid-December, GBTC shares traded at more than a 35% premium, according to data from YCharts, a reminder that price action for GBTC doesn’t perfectly match bitcoin’s own price action by any means.
NOTE: Grayscale is owned by Digital Currency Group.
Grayscale’s bitcoin trust isn’t the only one trading at a discount, however. 3iQ’s Canadian Bitcoin Fund (QBTC), although a smaller fund than Grayscale, was also trading at a roughly 4% discount to its underlying asset, according to market data from CryptoQuant.
GBTC and QBTC are trading at discounts as bitcoin itself is selling off, dropping to below $45,000 Friday afternoon before slightly recovering to above $48,000.
At last check, BTC was trading at $46,877, with a year-to-date gain just below 60%.
Analysts have speculated the shrinking premium might be due to reduced demand for bitcoin, or due to increasing competition among providers of bitcoin-focused exchange-traded products.
5. Coinbase: DeFi Could Hurt Us and US Regulations Make It Hard to Fight Back
Caught between megabanks and food-branded DEXs, how does Coinbase compete?
The top U.S.-based cryptocurrency exchange, Coinbase, is cautioning investors that U.S. regulators may inhibit its ability to compete with rivals in decentralized finance (DeFi).
“Economic freedom is a necessary, if not sufficient, condition for human progress,” CEO Brian Armstrong noted in a letter embedded within a new prospectus filed Thursday with the U.S. Securities and Exchange Commission (SEC).
One entity that could benefit from a little more freedom, the document implies, is Coinbase itself.
The company dropped its Form S-1 to much fanfare Thursday morning. The prospectus portion of the document is meant to give investors all the information they will need when Coinbase shares begin trading on Nasdaq, likely under the COIN ticker.
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February 27, 2021
