Updated: May 13, 2019
Digital Asset Space
October began with BTC at $6600 and closed $6250. Hyperinflation can create demand and drive digital asset prices up. An example is Venezuela, where hyperinflation there is causing local demand for bitcoins and others to dramatically increase. If this happens in a larger country like the US, it could have a much more dramatic effect on the price of Bitcoin.
Bitmex came out with a study saying that ICO's have sold as much ETH as they have raised, which should relieve some selling pressure. Fundstrat surveyed institutions and found 54% of them say Bitcoin is bottoming. A $30 million Manhattan Condo was tokenized on the Ethereum blockchain. Yale is revealed to have investments in two blockchain hedge funds. The IMF suggested that "continued rapid growth of crypto assets could create new vulnerabilities in the international financial system." Fidelity announced it will offer Bitcoin and Ether investment services to managers, family offices, and institutions (not retail). Bloomberg, "Bitcoin may be migrating away from its original intention - a "peer-to-peer electronic cash system" - to more of a digital gold, primarily used for storing value, not actual transactions." HTC launched a blockchain enabled phone that can only be bought with Bitcoin or Ether. Institutional investors showed that they believe in the space by funding Coinbase with an additional $300m, giving it a massive valuation of $8b.
53% of Bitcoin transactions are using SegWit (swaps out block size for block weight allowing roughly 4x as many transactions) reflecting a maximum number of transactions capable at 693K. Because the number of daily transactions and the price in log scale are highly correlated, if 693k transactions were to take place it would imply a max price of Bitcoin of $100k. In September about 230k transactions took place per day. In October BTC volume dipped below 140k, the first time since July '17. This reduction is a direct reflection of the drop in interest in the arena and we think it can go lower in the near term. We believe large sellers are being easy on the market and we anticipate they have a few more blocks to sell. When their inventories lighten it will signal to us that a rise in price could be on the horizon.
Stable coins have been the rage the last two months. Here is my simple explanation as to why more companies are offering them. In return for lending out something that basically has no value that was just created, they get to hold fiat or coins with value like Bitcoin. When they hold Bitcoin they can make money by lending it out or trading it for their own account. 3000 BTC moved out of Bitfinex's wallet reflecting a reduction in Tether demand. Oct 14-15 Bitfinex spiked in volume as investors traded in their Tether for Bitcoin, which resulted in BTC going up 6%. This is good for the space and in-line with the call I made at the beginning of September in the article “Why Wait For Tether.” Another step in the right direction away from Tether was made by Coinbase, they are now going to offer a stable coin for the first time and it will be Circle's USDC. (Goldman Sachs is an investor in Circle). Our measure of success is how many people tell their friends about us. Thank you to our valued clients for helping us to grow.
*This is not investment advice. Please contact us before investing [email protected]
Digital Asset Investment Management is a licensed Registered Investment Adviser specializing in Bitcoin for 401k's, IRA's and Traditional Brokerage accounts. Learn more at www.daim.io