First slowly, and then suddenly. There’s something in the air and it may well be the faint waft of rocket fuel. Sorry for the lateness, Bitcoin did a thing.
This last fortnight was an incredible time so long as you weren’t glued to traditional markets. We saw perhaps one of the most significant digital security breaches in the last 10 years and some truly incredible capital flight, as well as more legacy giants easing into Bitcoin adoption. On top of this, your Sats got bored and anticipation continues to rise to a fever pitch.
We’re re-entering volatility on all fronts and a good scan of the battlegrounds is in order, so sit back with this edition of Analysed.
Bitcoin Market Summary
This fortnight (and a bit more)’s Bitcoin market summary is a tale of two stages. Firstly, we saw a continuance of our well-worn crab pattern coupled with the occasional flirt with $8,900. If you’ve been reading Analysed for the last few issues you would be well aware of how anti-climatic it has become, but there’s a reason we held off releasing.
The second stage started on July 21st with a price of $9,200 ($12,850 AUD), $9,975 ($13,900 AUD) on July 26th and shooting to $11,000 ($15,350 AUD) for July 28th. Congratulations, that’s nearly +20% in a single week.
It’s at this stage that I’d like to lay out some of our previously identified factors for use going forwards.
There was a market crash and a full-speed recovery fueled by printing exceeding that in 1929; bankrupt companies gained value and profits were decimated across the board. We’ve seen the inverse trend between M2 Money Velocity vs Money Supply (and some extremely grim GDP predictions), a failure to contain COVID-19 in line with US, Australian and global expectations, a rise in tracing programs and digital payment emphasis. This all combined with Bitcoin’s third halving and a massive influx of strong institutional investor support. There are a number of other factors, but I believe this is almost a perfect storm, albeit not a pretty one for the world.
This opens up the potential for a second dip (sub-2k S&P 500 with Bitcoin tracking alongside) followed by, or a moon-shoot on account of asset flight from traditional markets. For those pointing to gold and silver as simpler safe-haven options, I’d posit that the recent spike in prices has made it a much harder pill to swallow – “record high” has a certain flavour to it. We’ve re-entered volatility, perhaps sooner than anticipated.
In contrast to Bitcoin and rare mineral markets, a majority of global indices stayed lackluster. The S&P 500 gained +2%, however, this lack of continued momentum despite anticipated stimulus has led to a stockpiling of defensive assets. One could posit that the traditional smart money in the market have seen a top and are getting out or consolidating. This is supported by gold prices reaching near record levels of $2,000 USD per ounce.
The European Union recently announced a new batch of COVID stimulus to the tune of 750 billion Euros (upwards of $1.2 trillion AUD), prompting markets to make small gains across the board.
Australia has begun to truly feel the weight of a second COVID wave, with record infection and death rates increasing day on day in Victoria, and hotspots emerging in New South Wales prompting the re-establishment of lockdown regulations causing a further stagnation in markets (ASX 200 +0.08% growth for the fortnight). This is despite strong federal and state stimulus including extension of the JobKeeper program.
Perhaps the biggest saving grace of this fortnight for traditional market watchers has been the slight strengthening of the AUD versus the USD, rising to $0.71 USD; though this pales in comparison to the bull run that appears to be beginning for other asset classes.
MasterCard Expands Bitcoin Support
Payment giants MasterCard have begun to flex their market muscles by allowing crypto company Wirex to issue payment cards. Wirex have been granted principal membership status, with MasterCard Executive Vice President on Digital Assets and Blockchain Raj Dhamodaran noting their desire to explicitly work within a maturing cryptocurrency industry. Wirex’s product allows cryptocurrency (including Bitcoin) to be converted into fiat currency.
This is a major change in the digital currency landscape, with Wirex previously partnering exclusively with Visa for their offering (Visa also partner with a number of other Wirex competitors). Thus, we now have two enormous market players willing to poach assets and directly compete in this digital sphere. Akin to the political battle surrounding Bitcoin, it appears the opportunity cost of being left out is now far greater than being in.
One can chalk this up as another point of legitimisation for the industry, with Simon Taylor, head of ventures at fintech consultancy firm 11:FS commenting “This is less a watershed moment and more part of a broader, slow and steady legitimization of crypto as the global regulators increasingly put systems and controls in place”.
Bitcoin Twitter Hack
Another day, another massive online hack. This time it came in the form of a mass Twitter hack encompassing everyone from Joe Biden and Elon Musk, to Bill Gates and Twitter Support itself. To say it was a slight event would be downplaying it – there’s already a dedicated Wikipedia page.
Following a simple method that has been growing in infamy, the hacked accounts prompted viewers to donate Bitcoin to a wallet in order to effectively receive double in return. This scam is as old as time and not even something new to the internet – YouTube live streams purporting to be hosted by famous influencers have been using this method for upwards of a year, while doubling scams were already a common joke in online games such as Runescape.
Several commentators noted that such a hack could have been used to extract a much quicker and more efficient profit – with manipulation of Elon Musk’s Twitter account alone holding potentially massive ramifications for Tesla’s stock price (see Elon’s own prior tweets and their effect).
Not only does this hack raise numerous questions regarding its actual purpose and Twitter’s security, but it also provides a rather strong counter to the centralisation of information online. Watch this space going forwards.
We’re running a touch late with this edition of Analysed, however, that may be for the best. Since the close of the weekend we’ve begun to see an incredible amount of capital flight from fiat currencies, with gold reaching record levels and Bitcoin gaining nearly 20% over a few short days. Some are suggesting we rocket onwards and upwards, others still see a coming crash. We’re building to a crescendo and we don’t get to opt out.
If that’s not incentive to check in on our next edition, I don’t know what is.
Stack Sats and take care,
Jamie Grohman for Analysed by Amber.