Record high prices
On November 9, Bitcoin hits a high record above $68,000, and its market value reached US$1.27 trillion, surpassing Tesla and Meta (Facebook), approaching the market value of silver (US$1.37 trillion). Ethereum’s market value ranking has also risen to 15th place, closely behind Tencent.
As the price rises, the trend of investors accumulating Bitcoin does not seem to slow down. More and more BTC is transferred to cold wallets, and the proportion of BTC balance on the centralized trading platform to the total circulation has dropped 12.9% historical low point.
Data shows that more than 5,000 BTC (about 350 million U.S. dollars) were withdrawn from the centralized trading platform such as Swyftx in early November.
It is worth noting that wallet addresses with balances between 10,000 and 100,000 BTC, the so-called “Bitcoin Whale,” have been accelerating purchases. These entities have accumulated 43,000 BTC in the past five days and approximately 92,000 BTC in the past 25 days.
In August 2020, the percentage of chips held by long-term holders to the liquidity reached a high of 80.6%, and then the percentage gradually decreased to 68% (distribution of chips) until it rose to the top of the stage of $66,000 in April 2021. Recently, the percentage of long-term holders’ chips in circulation has reached a new high of 81.5%, and currently, only 0.73% of chips have been spent (they have not yet begun to cash out in large quantities).
Bitcoin miners also continued to hold firmly and did not sell large amounts of BTC. According to data analysis, the outflow of miners’ wallets has remained stable in recent weeks and months (much lower than the outflow in the first quarter of this year).
In May of this year, Bitcoin’s hash rate was cut in half due to China’s mining ban. However, after the migration of miners, in just a few months, the Bitcoin hash rate almost recovered to the level of May, which once again illustrates the resilience, robustness, and decentralization nature of the Bitcoin network.
Stable macro environment
With the release of US Consumer Price Index (CPI) data, the “disconnection” between expectations and reality will expand in terms of the macro environment. Although the Fed recently hinted that it would reduce the scale of asset purchases, Citigroup senior investment expert Mahjabeen Zaman pointed out that due to the upside risks in CPI data, the Fed may accelerate the pace of asset purchases. Some analysts also believe that the CPI itself is not a good measure of inflation because it excludes many assets with the most significant increase in value and price, which is also the biggest reason why the price of Bitcoin is so far ahead.
It is expected that more and more countries will follow the policies of El Salvador and support the use and supervision of Bitcoin in the future. Despite the flood of criticism from the public, the Salvadoran government still firmly supports Bitcoin legislation. El Salvador’s President Nayib Bukele also recently stated that the country’s bitcoin proceeds would build 20 schools and a hospital.
In fact, Africa is an excellent testing ground for cryptocurrencies. Many companies are now launching products and services suitable for different countries on the African continent to fill the gap in cross-border payments between African countries and other countries. According to statistics, between July 2020 and June 2021, the size of the cryptocurrency market in Africa has increased by more than 1,200%, with high penetration rates in Kenya, South Africa, Nigeria, and Tanzania.
Short-term emotional overheating
On November 9, Apple CEO Cook stated in an interview that “I hold some cryptocurrencies and have been interested in cryptocurrencies for some time.” Cook said, “I think it is reasonable to use it as part of a diversified investment portfolio.” Still, Apple’s products do not support the purchase of cryptocurrencies and will not use Apple’s funds to invest in cryptocurrencies. He also said that Apple is currently studying cryptocurrency technology, but we do not plan to do it right away. When asked about NFTs, Cook said, “They are interesting, but it will take a while to function in a way that suits mainstream people.”
Although the overall environment and long-term trends are relatively optimistic, on November 9, the cryptocurrency market’s short-term fear and greed index reached a high of 84, the market sentiment was “extremely greedy,” and the market immediately began a correction. At present, the fear and greed index has dropped to 75, which is a slight drop. Nevertheless, it is still necessary to pay attention to short-term risks.