Welcome to the sixth issue of the Broker’s Beat. This may be one of the most exciting times in the crypto industry – at least in the last 2 years – so this news is more relevant (and useful) than ever.
This week, we discuss the trickle-down effects of Bitcoin testing the $12k level and how hash rate is tracking with that.
As you probably know by now, almost every week is exciting in the world of crypto. It’s our job to isolate the most interesting events as they unfold and give you our own analysis on it along the way. This should help you speak to colleagues like you’re in the know, and also assist in your trading activities.
“Buffett’s company Berkshire Hathaway revealed Friday that it had dumped bank stocks and took a position in a gold miner. The price of gold recently spiked to more than $2,000 an ounce. Berkshire Hathaway closed position in Goldman Sachs completely, reduced position in JP Morgan Chase by 61%, and sold holdings in Wells Fargo and PNC. Instead, the company bought a stake in Barrick Gold, one of the top gold mining firms, sending the miner’s shares soaring Monday along with shares of its competitors.”
“Assets don’t move up in a straight line forever, although Chainlink has done its best attempt to put that theory to rest. After recently breaking through its former all-time high in early July, Chainlink went into full price discovery mode, reaching as high as $20 per token at its peak.
The parabolic rally from July 1 to the local top, brought investors as much as 340% ROI. But with such substantial returns and a correction starting, profit-taking could pick up in severity with so many investors sitting in profit.”
“Both gold and Bitcoin are having a phenomenal year in terms of year-to-date returns. According to Skew Analytics, gold has a 27.93% YTD return, while Bitcoin has racked up a 71.68% YTD yield. Although Bitcoin sees much higher volatility than gold, it seems that in these uncertain, pandemic-stricken times, investors are gravitating toward store-of-value assets such as gold and Bitcoin.”
“U.S. central bankers were slow to warm to the idea of a digital currency, but their interest picked up after Facebook proposed its own unit of exchange for its users. Digital money could change the way monetary policy works in the economy, as well as speed up a payment system that remains slow and taxing for consumers and behind many other nations. The Fed is separately developing its own same-day settlement payment system called FedNow.”
Bitcoin seems to almost be ignoring the crisis right now and moving at a completely different pace. This week, it broke through the $12k resistance level before falling back to the $11.8k level. Ethereum mirrored this pump and has come back down to approximately the same levels it was at a week ago.
Investors are also taking profits from their gold investments and pushing it back below $2,000 to the $1,940 it’s currently at. This is notable, as Warren Buffett just announced this week that he would be investing a significant amount in gold, albeit through a gold miner, Barrick Gold (based out of Canada).
BTC and gold were heavily correlated last month, but this high correlation has since faded. Regardless, both assets are having a strong year as panicked investors rush their money in.
Things are moving so rapidly in Bitcoin that it is hard to keep up. Last week, we were bearish, now we are cautiously bullish. It really depends on how BTC navigates this pesky $12k level.
RSI showed BTC as overbought earlier in the week, but is now back in a more stable range. Bitcoin’s early week spike seems to have moderated out, but the frequency at which it is testing the $12k level makes us think it’s only a matter of time until it pushes through in a sustained way.
Comparing today’s pool distribution to the end of July, we’ve seen F2Pool gain a bit of ground as Poolin gave up a few percent. Last week’s post was largely focused on the fact there hadn’t been many changes, but now we can see that there’s actually a lot more going on here.
We’re still wondering why Poolin gave up part of its lead to come in around the same levels as BTC.com, AntPool, and Huobi.pool.
Seems like things were pretty balanced between F2Pool and Poolin up until that point, so we will need to do more research and maybe even schedule an interview to get deeper into that area.
Mining Distribution on August 19th
The other trend we’re looking at is around transaction fees as a percentage of block reward. Most miners get a ratio of approximately 15%. Any deviations in either direction seem largely to be the result of luck. The more blocks mined, the higher chance of experiencing a deviation to the upper end.
These deviations could easily lead to a swing towards the lower end, but if you’re mining enough these balance out. That’s why it’s notable to see that OKKONG, the miner with the lowest transactions fees as a percentage of block reward, only mined 2 blocks and just got unlucky with one of these being an empty block.
We’ll go more into empty blocks next week.
We thought things were looking calm on the hash rate front last week… and then this week happened!
Earlier this week, Bitcoin hit a new high of 129.075 TH/s. This coincides with the bull rush we mentioned above. Even though this new high has abated a bit, it is of note that we hit an all-time high.
As you can see in this 180-day chart, network difficulty has not increased yet, and will have to soon, but this is yet another “moment” that bulls can use to build their case.
We saw a massive trend shift in the distribution of volume between exchanges in July. According to CryptoCompare’s July Exchange Review top-tier exchanges increased their volume 42.1% in July, while lower-tier exchanges saw a decrease of 38.1% in their volumes.
Derivatives volumes continued to increase and hit new highs near the end of July, which is good news for liquidity in the market.
Two interesting things have happened this week. First, Grayscale Investments started advertising its services on mainstream television and in print. This could be seen as a catalyst for increased investment in crypto. Paired with Buffett’s interest in gold, the thesis for Bitcoin is being strengthened at the same time as it is becoming easier to invest in it. The spending use case is a long way off, but there’s plenty to celebrate right now.
The second thing we noticed is Bitcoin’s market dominance has fallen to 59.5%. This suggests that altcoins are gaining some steam. Whether this is open for a correction, we do not know, but it does reflect another trend to keep track of.
That concludes the sixth issue of the Broker’s Beat. Tomorrow we’re publishing our AI market overview research report. Watch out for this high-value report in your inbox, as we go through all the synergies between blockchain technology and AI. You won’t want to miss it!