BTC Holds $46K After Flash Crash
We’re all going to make it.
Last Friday, Satstreet reached an important milestone: $500 million in transaction volume! We’ve transacted over half a billion dollars since our first trade on June 22nd, 2020.
It is certainly not easy to be a new entrant in this space. I think what has allowed us to grow so quickly is a relentless focus on our customers. From a service level perspective, we strive to always make ourselves available and have rarely missed a trade or phone call, no matter the time (ask our girlfriends). Another area where I think we’ve done well is simply listening to our current and prospective clients. This helps us understand what services and features we need to build and has allowed us to position ourselves to win more business.
To our valued clients: thank you so much for your trust and support over the past 14 months ❤. It’s been an absolute pleasure working with you all and we’re looking forward to crossing the next $1B milestone with you!
What we saw at the desk
Feeling relaxed after the long-weekend, we came into this week feeling bullish. I mean, how could we not? For the first time in Bitcoin’s history, a country ushered in the best money in the world as legal tender! On the same day El Salvador passed the first Bitcoin Law the bull run came to a sudden halt as a flash crash liquidated over $2B in assets. During this large wick down we saw BTC drop -14% in the span of two hours from 50.6K -> 42.8K at its lowest. Although it knocked the wind out of the market, it was awesome to see El Salvadorian President Nayib Bukele announce that he bought the dip, adding a total of 550 BTC in its treasury.
September, historically, has been a bearish month for Bitcoin. In my last newsletter I showed Plan B’s S2F chart and its incredible accuracy on August’s close. The model shows a worst case scenario September close at $43K followed by a worst case scenario October close at $63K…Fasten your seatbelts!
Our clients had strong hands this week as we noticed the vast majority of our trading volume was on the buy side.
This time is different?
I was talking to one of my friends earlier this week about market cycles and what he was planning to do near the “top” of this cycle. I’ve actually had similar conversations with many others this year and a pretty consistent plan has stood out. Later in the cycle, sell riskier positions into blue chips (BTC, and ETH). Then, when they feel that the market is at peak exuberance, sell some of their BTC and ETH positions into stablecoins where they can earn attractive yields while waiting to get back into the market. This in and of itself is unique to every other cycle we’ve had.
In previous cycles, investors looked to cash out to their bank accounts once they felt the time was right. They used to trust the banking system and were more comfortable with the macro environment. Well, I do not think that is how it’s going to go this time around.
The response to COVID-19 was the proverbial “nail in the coffin” for a lot of folks when it came to faith in their governments. The “accommodative” monetary policy that followed drove down interest rates and drastically increased inflation. Unless you discount housing, the stock market, beef, pork, and poultry:
Cash in the bank is no longer a luxury but a liability. Not only is it a liability from an erosion due to inflation perspective, but headlines like the one below from The New York Times on Wednesday will continue to bolster distrust in the system. The notion that if “you don’t hold it, you don’t own it” might start to become a factor.
So what could this mean? Well, the way I think about it is that there will definitely be more money left in crypto than previous cycles. With services (DeFi, or CeFi) that provide very attractive yields on stablecoins like USDC, and other digital assets, there is less reason for capital to flow back into banks. In fact, if the Fed continues with their “accommodative” monetary policy and governments cannot regain trust, we should see even more capital flow into crypto over time.
After some back and forth in thinking this through, my friend and I came to the conclusion that the reasons above could lead to a prolonged bull market and pave the way for shorter bear markets in the future.
I think we’re going to make it.
In case you missed it…
- Ukraine legalizes Bitcoin!
https://www.cnbc.com/2021/09/08/ukraine-legalizes-bitcoin-and-cryptocurrencies.html - El Salvador goes on a $21M BTC buying spree https://www.forbes.com/sites/roberthart/2021/09/07/el-salvador-goes-on-a-21-million-crypto-buying-spree-as-bitcoin-becomes-legal-tender/
- $500B German Union Investment Fund to add BTC exposure https://www.nasdaq.com/articles/%24500-billion-german-union-investment-to-add-bitcoin-exposure-2021-09-08
- Coinbase fights back against the SEC https://ca.finance.yahoo.com/news/sec-wants-regulate-coinbase-crypto-171446351.html
- Could the US default on debt? https://www.nytimes.com/2021/09/08/business/economy/united-states-debt-default.htm
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Satstreet serves private Canadian clients including some of the largest Bitcoin mining operations, institutions, and high net worth individuals. Satstreet has raised initial funding from Round13 Capital and several prominent investors.
