Obscure Indicator Shows Why $20K Matters For Bitcoin

Today we will look at a little-known indicator that clarifies a lot Bitcoin (BTC-USD), plus we check in with the “crypto banks” and venture capitalists. Here’s the latest and greatest from The new digital world:

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Obscure Bitcoin Indicator Shows Why $20K Is Actually An Important Price

Even as the bear market continues… Bitcoin just refuses to break $20,000 for too long. (Even touching $24,000 last week!) But Why?

A clue may lie in bitcoin’s “HODLer Supply Concentration” around $20,000, as Glassnode calls it in today’s Week On-Chain newsletter.

Glassnode broke down the BTC market into long-term versus short-term holders (and exchanges), measuring each group by their “unused realized price distribution.” The analysts found much more URPD at $20,000 than other bitcoin price levels. And this was mainly driven by the short holders – who also showed “increased demand” at $30,000 and $40,000.

Big picture: “Long-term supply dynamics continue to improve as redistribution takes place, gradually moving coins towards HODLers,” Glassnode concludes.

But $20,000 is particularly telling because it attracted such a “large cluster” of short-term owners, suggesting “a significant transfer of ownership from capitulating sellers to new and more optimistic buyers.”

My takeaway: It’s easy to dismiss these “big, round number” prices as an arbitrary way of analyzing the markets. But it’s all about investor psychology – and it’s all in a market that’s still so speculative (vs. driven by fundamentals).

Clearly, psychology has an impact. So when the media makes a big deal of the round numbers – I have to say it’s worth it.

Later in this issue: We’ll see how BTC $20,000 plays into Luke and Charlie’s latest forecast for theirs Crypto Investor Network.

Risk Factors: Let’s Check in with the “Crypto Banks”

On Thursday, we got some remarkable numbers from Sam Bankman-Fried’s “crypto bank” for his round of acquisitions: BlockFi.

In the Transparency Report, we learned about BlockFi’s liquidity and credit risk as of June 30. It was a handy infographic and everything.

The headlines: “BlockFi has $1.8 billion in outstanding loans, of which $600 million is unsecured,” which CryptoSlate formulated it. This was the angle most other journalists took on it…

But proportionally, $600 million doesn’t seem so bad. If 75% of BlockFi’s loans are more conservative, I don’t know if that’s a huge indictment of the company, in itself.

Bigger story: “Many, but not all” institutions are required to provide collateral to obtain loans from BlockFi.

It gets more interesting when you see how the different clientele break down:

• Institutions have borrowed $1.5 billion from BlockFi as of June 30.
• $600 million (of $1.5 billion) may be unsecured, as BlockFi said those loans represented “exposures to individual loan counterparties.”
• Private customers have borrowed 300 million dollars. And “we typically allow retail customers to borrow funds with a value of up to 50% of their collateral.”

So BlockFi says all the retail loans are secured – even abovesecurity … But it is only 16% of the loan business.

Red flag: If Terra and Celsius are any indication – $600 million is more than enough to start a “waterfall” of trouble in the crypto markets. Lenders in the crypto space might want to take a page from DeFi’s book instead. DeFis likes Aave (AAVE-USD) requires collateral, as with its new stablecoin, for example.

Fortunately for the crypto banks… FTX (FTT-USD) and Alameda Ventures (both founded by Sam Bankman-Fried) are ready to ride to the rescue.

The last: FTX and Alameda want to save Voyager Digital users affected by the bankruptcy. In return, these users would simply become FTX users. The total price tag on the deal isn’t entirely clear — but Voyager calls it a “low bid dressed up as a white knight rescue.”

However, I have to wonder if the dollar amount is the problem…or the fine print. After all, like Cointelegraph explains, “FTX proposes to buy out all Voyager Digital digital assets and digital asset loans, except for loans to Three Arrows Capital, which will remain Voyager Digital’s issue.”

The 3AC founders have been, shall we say, hard to pin down since they became the poster boys for the June crypto collapse… so good luck to Voyager and their other creditors.

JPMorgan counts 18 billion dollars Value of VC deals in Crypto this year

If you were with me in The new digital world last Monday, you will remember Crunchbase reported $9.3 billion in crypto VC deals in the first half of 2022.

Turns out: Crunchbase may have been low-balling it! At least according to JPMorgan. Per Bloomberg this morning: “As of July 14, annual venture capital investment in the crypto and blockchain industry was $17.9 billion, according to the investment bank.”

JPMorgan counted $9.8 billion in the first quarter alone! This then fell to $7.9 billion in the second quarter. But still: “That surpasses most previous full-year totals, and represents more than 60% of the $29.4 billion VCs have poured into crypto. [all of] 2021» Bloomberg notes.

Looking back at some of the big deals cited in Bloomberg’s glowing function:

• Trade Republic, a German crypto app, raised $1.2 billion in June.
• ConsenSys — which owns the leading crypto wallet MetaMask and plans to launch a crypto for it — raised a $450 million round in March.
• Circle, best known for the increasingly popular stablecoin USD coin (USDC-USD), raised $400 million in April.
• The NEAR protocol (CLOSE TO USD) blockchain raised $350 million in April.

Quote of the day:

“When bad news leads to positive price action, it usually means we’re in the middle of a bear-to-bull trend reversal.”
– Luke Lango and Charlie Shrem, Crypto Investor Network

The “bad news” they refer to? “This past week, Zipmex (a crypto exchange operating in Southeast Asia) halted withdrawals, and Quebec’s pension management fund (which invested $150 million in Celsius) said the losses associated with that investment will take “time to resolve.” The contagion continues to spread. Still, crypto prices are moving higher.”

The “positive price action” they refer to in Saturday’s Crypto Investor Network Update? When BTC traded above $23,000 late last week, there was “a rare break for BTC above the 50-day moving average, while the 200-day moving average continues to decline. Such short-term upside breakouts in a long-term downtrend often represent critical turning points for the crypto.” »

“To be clear: We do not expect current strength to last. We believe this breakout will end with BTC consolidating in the $20,000 range,” Luke and Charlie wrote on Saturday. discrete catalysts (like the ETH merger). But we expect most of the altcoin market to remain range-bound until early 2023, at which point we expect the new boom cycle to begin.”

So… Some cryptos will go higher while most of them consolidate. After the events of May and June, I’ll take a dull market any day (over a collapsing one!) Especially when certain cryptos have unique catalysts that many investors are “sleeping on”. Put it on your radar with this urgent briefing that walks you through the steps you should take today.

Afterwards, Luke and Charlie will have an investor report for you: The fuel coin with 10X potential. Click here to see the strategy and the new choice to take advantage of.

As of the date of publication, Ashley Cassell did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Guidelines for publication. To get more news from The New Digital World delivered to your inbox, click here to sign up for the newsletter.