1. Market Wrap: Bitcoin Under Pressure Despite Improving Sentiment
Bitcoin sentiment is improving despite profit taking into July.
Bitcoin dipped below $34,000 on Thursday as selling pressure increased into July. However, traders expect buyers to remain active above $30,000 support as sentiment improves.
Positive news could limit downside moves after a volatile first half of the year. Concerns about regulatory crackdowns appear to have eased, especially as the bitcoin hashrate stabilized after falling for 10 straight days. The hashrate decline was mostly due to China’s shutdown of several cryptocurrency mining operations in the country.
“As miners spread to other locations, they will likely choose places with secure access to cheap energy sources,” wrote Ulrik Lykke, executive director at digital asset fund ARK36. “As a result, hashrate will start recovering, and the network will become even more stable.”
Bitcoin is up about 13% year to date compared to a roughly 16% gain in the S&P 500.
Bitcoin (BTC) $33,238, -4.74%
Ether (ETH) $2,106.9, -6.47%
S&P 500: 4317, +0.5%
Gold: $1,775.9, +0.31%
10-year Treasury yield closed at 1.461%, compared with 1.466% on Wednesday
Bearish sentiment wanes
Bitcoin’s put-call open interest ratio has slipped to a six-month low, indicating an ebbing of bearish sentiment.
According to data tracked by options analytics platform Skew, the ratio measuring the number of open positions, or open interest in put options relative to open interest in call options, fell to 0.60 on Wednesday, a level last seen in early January.
The recent decline in the put-call open interest ratio may have been fueled at least partly by a pickup in demand for calls or unwinding of long put positions, meaning an unwinding of bearish bets.
2. Bitcoin Active Addresses at Lowest Number Since April 2020
The decline shows decreasing active user participation on the blockchain network, possibly a sign of weak demand.
As cryptocurrency markets struggle to gather upside traction, new data shows a declining number of bitcoin active addresses on the blockchain network.
The seven-day moving average of bitcoin active addresses — ones active on the network as sender or receiver — fell to 758,165 on Wednesday, the lowest since April 2020, per data provided by blockchain analytics firm Glassnode.
“The decline in active user participation is a sign of weak demand,” Charlie Morris, chief investment officer at ByteTree Asset Management, said. “The hype cycle is over for now, and the market is unable to attract new entrants at the same pace.”
The seven-day average of the daily transaction count tracked by Glassnode has also dipped below 300,000 for the first time since March 2020.
Network usage affects the demand for cryptocurrency and can influence its price.
“When there’s greater usage, there’s more demand for the cryptocurrency, and that drives the price up,” Philip Gradwell, chief economist at the blockchain intelligence firm Chainalysis, told us last year.
The count of bitcoin active addresses led the cryptocurrency higher in the final quarter of 2020.
The cryptocurrency is trading 5% lower on the day at $33,200 at press time, having failed to keep gains above $36,000 earlier this week.
3. Robinhood IPO Filing Shows Dogecoin Trading Drove Big Gains
Some 34% of the trading app’s cryptocurrency revenue in the first quarter was attributable to DOGE.
Robinhood, the popular trading app for stock, options, gold and cryptocurrencies, filed for a public offering that could be worth up to $100 million, according to a Securities and Exchange Commission (SEC) document submitted on Thursday.
Along with the company’s financials, the SEC document shows the reach of Robinhood as a popular destination for crypto trading.
“For the three months ended March 31, 2021, 17% of our total revenue was derived from transaction-based revenues earned from cryptocurrency transactions, compared to 4% for the three months year ended December 31, 2020,” the firm wrote.
4. Portland Trail Blazers to Wear NBA’s First Crypto Ad Patch (Sorry, PayPal)
The StormX deal is just the latest example of crypto companies going all-in on sports sponsorships.
The Portland Trail Blazers will sport StormX advertising patches on their jerseys thanks to a sponsorship deal between the crypto cashback provider and Oregon’s National Basketball Association team.
The partnership is both StormX’s first with a sports organization and the Trail Blazers’ first with a crypto company, according to an emailed announcement Thursday.
Notwithstanding PayPal, which is the current patch partner of the Phoenix Suns, StormX will be the first pure crypto firm to have its brand displayed on NBA jerseys.
StormX provides an app and Google Chrome extension that earns consumers cash back in crypto on purchases from selected retailers, including Uber, eBay and Microsoft. It also has its own token, STMX.
The partnership extends the ongoing crossover between NBA and crypto, following the success of non-fungible token platform NBA Top Shot and FTX’s sponsorship of the Miami Heat’s home arena.
StormX CEO Simon Yu, a longtime Blazers fan, sees NBA exposure as a means of driving mainstream adoption.
“The world will start to understand that there’s more to crypto and blockchain products outside of trading,” he told us.
5. Jack Mallers’ Strike Rolls Out Bitcoin Buys, Going Head-to-Head With Coinbase
“Your move, Brian Armstrong, come play basketball in my court,” says Strike’s CEO.
Strike is letting its U.S. customers buy and sell bitcoin for almost zero in fees, sending shots across the bows of Coinbase, Square’s Cash App, PayPal and other incumbents.
The Chicago-based startup, best known for helping El Salvador adopt bitcoin (BTC, -4.36%), said Thursday it would charge only around 0.3% for brokering BTC trades in the 48 states and other U.S. jurisdictions where Strike operates. By comparison, Coinbase, which went public on the Nasdaq this year, collects as much as 3.99%, depending on the payment method and transaction size.
Jack Mallers, founder and CEO of Strike and its parent company Zap Technologies, likened the move to throwing “a grenade in Coinbase’s HQ.” In a blog post, he called Coinbase’s fees “asinine.”
If widely adopted, Strike’s new service stands to drive down the price of bitcoin trades for retail investors in the U.S. market, a development anticipated by many a Wall Street analyst in the lead-up to Coinbase’s stock listing in April. Traditional stock brokerage apps saw a race to zero on fees; wouldn’t crypto incumbents see the same?
Cash App, offered by Twitter CEO Jack Dorsey’s payments company Square, takes about 2.2% in fees for bitcoin purchases, based on quotes the app gave a CoinDesk staffer Monday. Swan Bitcoin, which caters to long-term bitcoin holders, charges 0.99% to 2.29% depending on the membership plan and amount socked away in BTC weekly. PayPal and its Venmo subsidiary charge a flat fee for bitcoin purchases of less than $25 and 1.5% to 2.3% for amounts above that.
Strike does not expect to make money on the new service, Mallers said. The 0.3% fee will only cover the spread charged by the market-making firms supplying the bitcoin, he said, without identifying those liquidity providers. The service will start with a wait list, and open to the public in the coming weeks, he wrote in the blog.
In the next few months, Strike expects the fee to drop to as low as 0.1% as its volume grows, Mallers said. “The more our volume grows, the less our partners charge,” he wrote.
The aim is to drive prices in the market as close to nothing as possible, which Mallers said would be in keeping with Bitcoin’s ethos.
“Acquiring open-source money should be free,” he told us. “It is a race to zero.”
Throwing down a challenge to Coinbase’s CEO, Mallers added, with characteristic aplomb:”Your move, Brian Armstrong. Come play basketball in my court.”
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July 2nd, 2021