To our respected partners,
Welcome to the 46th issue of the Broker’s Beat. This week, El Salvador becomes the first country to approve Bitcoin as a legal currency, and Solana Labs creates an incubation studio to accelerate project creation.
BY THE NUMBERS
“The country adopted Bitcoin as legal tender yesterday and wants to do something about its energy concerns.”
“New York senators have amended a proposal to ban all crypto mining for three years, and are now seeking to only stop mining firms backed by carbon-based fuel sources. ”
Source: The Daily Hodl
“Jack Dorsey’s Square is partnering with prominent Bitcoin development company Blockstream to create a new solar-powered BTC mining facility.“
“Canaan, a Bitcoin mining machine manufacturer based in China, has set up its first overseas center in Kazakhstan.”
“Luxor Technology Corporation (“Luxor”) announced today the closing of a $5.0 million Series A led by institutional Bitcoin technology and financial services firm NYDIG.”
THE BITCOIN BEAT
As of this writing Bitcoin spot price is $37,091.81 USD, with a 24-hour trading volume of $50.2 BN USD, 322 bps increase in trading volume since Wednesday June 9th at 11:15am. Bitcoin is +2. 72% within the last 24 hours and – 3.86% within the last 7 days. The current market cap represents 43. 64% of total cryptocurrency traded. Bitcoin remains as the top cryptocurrency traded with a circulating supply of 18,731,650, which increased by 1,407 BTC since Tuesday, June 8th.
The spot price of ETH as of this writing is $2521.96, which represents a 7-day change of +9.62% and a 24-hour change of -1.29%. As of this writing, ETH Market dominance is 18.30%, which makes ETH the second-largest cryptocurrency traded andhas a circulating supply of 116,234,563 coins, an increase of 24,584 since Tuesday, June 8th.
This narrative is one we’ve been watching for a while, but it became twice as important when May’s crash happened. Everyone is sitting with baited breath, trying to figure out which way the market will go.
In the last few days, we had significant BTC inflows to exchanges. $40,851,802 to Binance this morning and $307,749,749 to Bitfinex, Binance, and Huobi Global yesterday.
We’re seeing 3 big trends taking place right now:
- Short-term holders are continuing to trade
- Long-term holdings are accumulating (and not selling)
- Miners are accumulating (we’ll address this in the next segment)
The below chart reflects the second point better than the first point, as traders can continue to trade without affecting inflows or outflows (if the crypto never leaves the exchange, that capital is neutral by this measure.
As you can see, the trend is now towards a significant outflow of BTC from exchanges, despite the high inflows we reported above. The points of high inflow almost directly correlate with sharp drops in the price of Bitcoin.
One thing is for sure right now: miners are accumulating Bitcoin.
Bitcoin remains a battleground, but one bullish indicator is the amount of coins being accumulated by long-term holders and miners.
When the Bitcoin hash rate rebounded, it started to look like miners would be holding their Bitcoin for a while. Our guess is that with rewards decreasing and mining going on as usual, it makes sense for them to hold for the time being.
On their own, miners are capable of causing a small supply crunch, and they may as well benefit from the lower transaction fees themselves.
Although not directly trading related, two things I want to highlight are that even though it feels like a bear market right now, we’re seeing some big fundraising news.
Solana Labs, the creator of the Solana blockchain, raised $314.15 million in a private token sale. Andreessen Horowitz (a16z) and Polychain Capital led the round, and Alameda Research, CMS Holdings, CoinShares, Jump Trading, Multicoin Capital, Sino Global Capital also took part.
Solana Labs intends to establish an incubation studio to accelerate the creation of projects based on the Solana blockchain, as well as a venture investing arm for the Solana ecosystem, with the new funds.
The other big news is around El Salvador’s decision to approve Bitcoin as legal currency. There are a ton of insights to be gleaned from this. First of all, the range of applications is quite large. Prices can now be shown in Bitcoin, but more importantly, taxes may be paid in BTC and capital gains taxes won’t be applied to, and exchanges in bitcoin will not be subject to capital gains tax.
With a 6.5M population that already uses USD as their de facto currency, there will be far-reaching implications from this. First of all, it’s looking like El Salvador plans to mine Bitcoin using the energy from a volcano. That is interesting enough in itself, but analysts are mulling over the idea that if Bitcoin is confiscated by the government and then put into recirculation, it will be “clean”. That on it’s own could have a big impact on how “dirty” Bitcoin is handled worldwide.
That’s all for this week! If you have any questions about what we talked about here or would like to explore trading with us, please reach out here.
The Secure Digital Markets Team