With DeFi Dominating The Headlines, Whats Going On With Bitcoin?

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Welcome to the 10th issue of the Broker’s Beat. We’re changing a few things up, and we think you’ll enjoy them. This week, we talk about a few big developments in the trading and custody world that will affect the crypto world as we know it. 

Read on for more price analysis, mining insight, and news about liquidity in the markets.

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Bitcoin (BTC) Wealth has Become More Evenly Distributed with Smaller Accounts Holding Greater Proportion of Supply: Report

Source: CrowdFund Insider

“The report further notes that the presence of whales, or crypto investors with very large amounts of digital assets held in their wallets, remain a concern for “the viability of many cryptocurrencies.” According to Coin Metrics, an “unequal distribution of funds” may lead to a relatively small number of users exercising too much influence over a crypto-asset’s markets and its ongoing protocol development. This would “call into question the asset’s viability as a store of value or medium of exchange,” the report states.”

Nasdaq-Listed MicroStrategy May Soon Buy More Bitcoin After Forking Out $250m

Source: BarChart

“The executive added that “the economic and public health crisis precipitated by COVID-19, unprecedented government financial stimulus measures including quantitative easing adopted around the world, and global political and economic uncertainty” are making BTC logical to own.

Some thought that MicroStrategy jumped the gun by putting so much of its capital in one investment, especially since that investment was Bitcoin.

But, the company seems to be doubling down.”

Fed, oil and record hash rate: 5 things to know in Bitcoin this week

Source: CoinTelegraph

“In what will likely become a frequently-quoted announcement, oil giant BP said this weekend that the world has hit peak demand for the black gold. 

In a report quoted by Bloomberg, BP said that demand for oil would stay “broadly flat” for the next twenty years, with pressure coming from alternative fuels and coronavirus.

“It subsequently recovers but never back to pre-Covid levels,” Spencer Dale, the firm’s chief economist said.”

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Every week, we try to take a stab at where we think the market is going to go. The truth is, this is one of the craziest times in the world, and Bitcoin is one of the most volatile assets.

That’s what makes the recent performance so strange. Bitcoin almost seems to be calming down. If you look at where the price is and how it’s performing, it has been relatively level. 

The pattern has been to see consolidation in an area, then a swing, then consolidation, and so on. So right now, if you look at the 5-day chart below, it seems like Bitcoin is building up for a swing. 

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In what direction, we don’t know. The RSI is showing both bearish and bullish divergences, so it truly could go in any direction. 

That means that our prediction this week is less than Bitcoin will go bearish or bullish (we are long-term bullish), but that a swing will happen soon. 

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Another week where not much has changed around the distribution of mining dominance. This has been the norm lately, and to make this part of the Broker’s Beat more interesting, we’re going to change things up in the future. 

Each week will have a breakdown of a different country’s mining industry or a specific pool. We’ll still talk about the overall distribution, but barring something big happening, this will be far more educational and informative. 

In the meantime, below is the current distribution of hash rate for Bitcoin:

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It happened! Bitcoin’s hash rate has hit a new all-time high of 136.6 TH/s. 

It seems like we’re reporting on a new all-time high for the hash rate every few weeks. The 1-year chart below shows exactly how much change has occurred in the last year.

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The Bitcoin network has been slowly growing stronger. The network difficulty is set to increase 5.4% based on this new hash rate, which will also be a new high for it. 

What’s notable about this new high, and all the most recent ones, is that they haven’t been accompanied by any sort of increase in miner revenues. The chart below illustrates the last year of revenues, and since the spike followed by a drop that occurred in May, revenue has remained in the same range. 

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The craziest part of the new highs in the Bitcoin hash rate, and soon-to-be high of the network difficulty, is that occurred within a week of Bitcoin suffering a $2k market correction.

The price of Bitcoin seems to be untethering from the performance of the network, which is all-in-all, a good thing. Price is the least interesting things about Bitcoin, and although we are looking for great returns, the short-term aspects have the potential to cloud the long-term viability of the protocol. 

Related to the long-term viability, we just saw a momentous event manifest itself. Kraken announced on September 15th, 2020 that they had been approved by the Wyoming Banking Board for a special purpose depository institution (SPDI) charter. 

That makes Kraken the first SPDI bank in Wyoming. SPDI chartered institutions can hold digital assets for their customers but don’t retain legal ownership of those assets. Additionally, regulations for SPDIs require Kraken Financial to maintain 100% reserves of its fiat deposits. Therefore, no FDIC insurance is required.

This is a big step for the crypto space and we’re beyond excited for what it could mean in the future. 

That concludes this week’s Broker’s Beat. Tomorrow we’ll be unveiling a brand new piece of research that we did in conjunction with Alpha Sigma Capital. Look out for that in your inbox and you’ll hear more from us soon. 

Happy trading!

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