Bitcoin Breaks Below $50K
HODL — Hold on for dear life.
Well…I’m not really used to writing articles after a sharp correction — it’s been nothing but up since I started posting! Not financial advice, but I bought the dip, bought the other dip, and plan on buying the dip again this morning as I feel that the market is still thinking in fiat terms. What I mean is that a lot of new entrants have come into the market over the past few months — especially ahead of the Coinbase listing — and are quick to sell on anything remotely negative.
Luckily for no one, the past 5 days or so were filled with scary headlines and the animal spirits had less horns and more giant bear paws. It all started on Sunday when an unsubstantiated tweet went out from FXHedge’s Twitter account to it’s nearly 160k followers reading:
“U.S. TREASURY TO CHARGE SEVERAL FINANCIAL INSTITUTIONS FOR MONEY LAUNDERING USING CRYPTOCURRENCIES -SOURCES”
The tweet has since been deleted.
It’s (not) funny what a baseless claim can do to the market when folks are levered long enough for small dips to wipe out degen positions, further exacerbating the downward pressure. It felt like we couldn’t quite break through to the upside as institutions were supposedly buying the dip. Institutional Bitcoin brokerage NYDIG commented on the sell-off saying:
“Our desk has been a net purchaser over the past 24–48 hours,”
Whether it’s through PayPal, CashApp, Coinbase, any of the trusts, closed-end funds, or the Canadian ETFs — Bitcoin has become increasingly easy for retail to buy. The relative ease of entering the market has made way for a frenzy of speculative participation creating an environment of weak hands. So, even though institutions might have been buying the dip, retail selling seems to have come out on top.
What we saw at the desk
Thankfully, as a trading desk we do well in times of volatility but we of course prefer it to the upside. Like NYDIG, our desk was also a net purchaser early in the week but our book switched over on Thursday as we had a handful of large sell orders that outpaced the buys.
Even though our desk saw sell pressure, it’s important to note that sales came from early Bitcoin holders (OGs) and not from new entrants.
It’s always nice to buy into a bull market and see immediate, meaningful gains. But, as a new entrant I think the real lessons are learned experiencing a pullback early on which will harden you for the bumpy ride to come. I say the same thing to my sales guys — I’d rather them have to experience the grind early on instead of making a big sale right off the bat and thinking it’s easy.
No, you do not have enough Bitcoin.
I thought I’d take some time this morning to give my thoughts on why you shouldn’t feel comfortable with your current stack. Sure, you get an A+ for your relentless accumulation on the way up during this run but it is no time to be complacent.
There’s not even a US Bitcoin ETF yet… Yet.
I sometimes wonder if a US ETF approval is baked into the price of BTC but I do not think that it is. Currently, Americans have little choice when it comes to Bitcoin exposure outside of purchasing the underlying asset which can be intimidating for most investors. Financial advisors who can have full discretion over their clients portfolios have been limited to the Grayscale Bitcoin Trust for exposure — not ideal when it can trade at a massive premium or discount to NAV which tracks the performance of the underlying asset. An ETF will allow them easy access to this burgeoning asset class that can no longer be ignored and I think we all have a rare opportunity to front-run Wall Street on the trade of a lifetime.
Since I started in this space there has been chatter about the SEC approving a Bitcoin ETF but I think this time is different. There are at least 9 different applications for a Bitcoin ETF being considered as we speak. The one that everyone is keeping a close eye on is from Fidelity which is by far the most high profile application ever submitted. Fidelity does not get into anything unless they know that they will be successful. With the appointment of Gary Gensler (who taught a Bitcoin course at MIT) to the Chair of the SEC, the future looks bright (and imminent) for a Bitcoin ETF approval.
For those who still have any gold left… watch this.
In case you missed it…
- Coinbase will list $50bn market cap Tether https://www.forbes.com/sites/jasonbrett/2021/04/22/coinbase-will-list-troubled-stablecoin-tether-now-almost-a-50-billion-market-cap/
- The CEO of Turkish crypto exchange Thodex has gone missing along with customer funds https://www.coindesk.com/turkish-state-news-crypto-exchange-ceo-disappeared
- Venmo’s 70M+ customers to buy, hold and sell BTC on Venmo app https://www.prnewswire.com/news-releases/introducing-crypto-on-venmo-301272010.html
- China softens tone on Bitcoin https://www.businessinsider.in/stock-market/news/china-softens-tone-on-bitcoin-calling-it-an-investment-alternative-after-years-of-cracking-down-on-crypto/articleshow/82149831.cms
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