Bitcoin Jumps Over $30,000, Hitting 10-Month High
MIM #10: Ethereum Shanghai Upgrade, Crypto ETFs, Twitter-eToro partnership, and Bitcoin Halving
Okay, I know. Ethereum’s Shanghai Upgrade took place last week, and it was a massive move for the industry’s second-biggest crypto. Yet, we don’t talk about the prince when the king’s in town making big moves. So I’m starting this week talking about the monumental resurgence of Bitcoin. Then we will move on to Ethereum.
The Bitcoin bull was rattling the cage last week, surpassing $30,000 for the first time since June 2022. 2023’s rally has seen Big Papa Bitcoin gain over 80% in value, causing Speedsters to jam out to Here Comes the Money on repeat (follow the link for the best pump jam of all time). As of writing, Bitcoin sits at $30,000, up 6.0% in the last two weeks.
Bitcoin 14-day price movement (Source: CoinGecko)
This surge comes as the turbulence in the banking sector in March fades into the background, and investors become more optimistic about the monetary policy of the U.S. central bank. The chief legal officer of Banxa, Richard Mico, suggests an injection of liquidity into the market is coming due to expected monetary policy changes. Bitcoin, the best-performing asset of 2023 (it had to be said), is historically responsive to such shifts.
Bitcoin has been hovering around $28,000 for the last month as investors cautiously assessed the impact of recent banking issues, inflationary pressures, and other macroeconomic uncertainties. However, BTC has gained momentum as investors seek assets that can hold their value amidst concerns about the stability of the current monetary system.
Mico also notes that a narrative shift is happening around Bitcoin. There is an increasing perception of it as a reliable store of value not subject to issues associated with third-party intermediaries or banks. Bitcoin is now seen as a risk-off asset, and the concept of de-dollarization is gaining traction, further driving the adoption of Bitcoin.
With $BTC, individuals have control over their funds and they are not reliant on traditional financial intermediaries. Mico concludes that he wouldn’t be surprised if this positive momentum for Bitcoin continues.
Now that I’ve got that out of my system, we can shift focus. Here are last week’s biggest stories, and of course, the Ethereum upgrade tops the list.
Last week’s biggest crypto stories
- The Ethereum Shanghai upgrade has gone live, allowing for the withdrawal of staked $ETH and completing the network’s transition to proof of stake. Over $34 billion worth of $ETH had been deposited with the network since ETH staking debuted in 2020, but those funds were not accessible until now. Despite some initial hiccups with missed slots during the upgrade, staked ETH withdrawals have begun processing smoothly. Stakers who directly deposited at least 32 $ETH can now withdraw their profits, but those who used intermediary staking pools or exchanges may have to wait longer. Ether surged to nearly $2,000, its highest level since August following the upgrade. Overall, the market has realized that concerns about the upgrade were overblown, allowing Ether to test the $2,000 level again.
(Source: CoinDesk)
2. Glassnode estimates that at least $300 million worth of Ether ($ETH) may be sold as a result of the Shanghai upgrade. This estimate is based on on-chain data and factors such as withdrawal behavior, staking period, and liquid staking derivative products. However, Glassnode believes that even in the most extreme case, the selling pressure will likely be absorbed quickly and have an acceptable impact on the price of $ETH. Some traditional banks, such as JPMorgan, expect $ETH to face selling pressure from the upgrade, but Glassnode’s analysis suggests that the impact may be manageable. As of now, 1,229 validators have already signaled their intention to unstake tokens.
3. Crypto ETFs have been among the best-performing funds this year, with 13 out of the top 20 performing ETFs crypto-related. Valkyrie’s Bitcoin Miners and GraniteShares’ 1.5x Long Coinbase Daily are among the big winners, returning around 135% this year.
(Source: Blockworks.com)
Institutional investors have shown interest in allocating a portion of their portfolios to crypto funds, despite the uncertainties in the market. However, it’s important to note that ETFs come with additional costs and risks compared to directly investing in the underlying assets.
4. China’s credit impulse has been picking up, indicating a renewed credit expansion relative to the growth rate, according to data source MacroMicro. Credit impulse is a measure of new credit issued as a percentage of gross domestic product. Its rise is a positive sign for risk assets, including cryptocurrencies, and could contribute to the global financial cycle and support global risk sentiment. In turn, increased sentiment for risky assets can lead to expansion in global asset prices and credit, as suggested in a paper published by the Federal Reserve. In the past, there has been a strong correlation between China’s credit impulse and Asian equity markets. According to Credit Suisse, renewed credit expansion in China has coincided with trend changes in Bitcoin from bearish to bullish.
5. Twitter announced a partnership with eToro, a social trading company, to allow users to buy and sell stocks, cryptocurrencies, and other financial assets directly from the Twitter app. This move comes as part of Twitter’s CEO Elon Musk’s push to turn the platform into a super app that offers users not only social media services but also financial services. eToro has over 32 million registered users across Europe, Asia, and the United States and is known for allowing users to mimic the trading strategies of other users. This is a monumental move and may bring a new meaning to the term Crypto Twitter.
6. Web3 gaming platform Nakamoto Games launched a brand new website, NAKA 2.0. After two years of extensive research and incorporating user feedback, the new website boasts a sleek user interface and offerings users more opportunities to earn rewards and connect with the community than ever before. The upgraded interface is accessible and intuitive, ensuring beginners can easily navigate the platform and enjoy a seamless gaming experience. With almost 180 unique and diverse blockchain games available, Nakamoto Games continues to build a promising gaming ecosystem. The meteoric rise of their native token, $NAKA, is a testament to this, spiking 250% since the turn of the year.
$NAKA Price movement Jan 1 — Apr 12, 2023 (Source: Coinmarketcap)
Magics’s parting thoughts
So Bitcoin has defied all expectations this year and made a huge recovery. Now the question remains, how high can it go? One essential event to consider is Bitcoin Halving, set to take place around this time next year.
Bitcoin halving is an important event that occurs approximately every four years, where the rewards for miners who successfully mine new Bitcoins are reduced by 50%. This reduction in rewards limits the supply of Bitcoin over time. Halving will continue until the maximum number of Bitcoins that will ever exist is mined, which is capped at 21 million.
Historically, the period leading up to the Bitcoin halving has often seen an accumulation by investors, as they anticipate the impact of the halving on the price. This accumulation period from the market bottom after a breakout to the halving date has historically spanned at least 500 days.
Before the most recent halving on May 11, 2020, Bitcoin price spiked 119% in 12 months. Similarly, during the halving before that, which took place on July 9, 2016, bitcoin rallied by 142% compared to the 12 months prior. The first-ever halving of Bitcoin occurred on November 28, 2012, and saw the price of Bitcoin balloon by 384%.
(Source: CNBC.com)
It’s important to note that the halving is not the only factor influencing the price of Bitcoin, and cryptocurrency markets can be highly volatile and subject to various external factors. Past performance is also not indicative of future results.
However, Bitcoin’s pattern of performing well in the run-up to halving events is observed in all cases. I, for one, view it as a critical event in the investment case for Bitcoin as a store of value with limited supply and will be accumulating right up until the halving happens. That’s all for this week, Speedsters. Happy pumping!
