The chairman of a British investment firm says Bitcoin (BTC) is a seemingly “non-sensical” asset — but one that still makes sense after the coin’s winter price movement proved profitable. His firm, Ruffer Investment company, converted a portion of its gold holdings into Bitcoin in November.
Ruffer Investment Company Limited reallocated 2.5% of its Multi-Strategies Fund from gold to Bitcoin in November as a hedge against the “continued devaluation” of fiat. Since then, the value of gold appreciated by 4%, while the value of Bitcoin grew by 92% — a figure which briefly rose to 123% during BTC’s short stay above $40,000 on Jan. 10.
Writing in an investment review for the final quarter of 2020, Ruffer chairman Jonathan Ruffer said that after much internal deliberation, his firm had added exposure to Bitcoin because it thought BTC could challenge gold’s status as the one “supra-currency”. He wrote:
“Our underlying reasoning is that bitcoin is becoming a challenger to gold’s standing as the one supra-currency, the thing to own when fiat currencies are kerplunked.”
Ruffer said Bitcoin was a “unique beast” which was subject to a “longish” assessment before being introduced to the multi-strat fund:
“We have done much work on assessing the danger that bitcoin is a wrong’un. We have been watching it for a longish time, and our judgement is that it is a unique beast as an emerging store of value, blending some of the benefits of technology and gold.”
The Ruffer firm had 20.3 billion pounds ($27.5 billion) in assets under management as of Nov. 30. The company was founded in 1994 and employs 330 people, serving around 6,600 clients comprised of pension funds, families, charities and individuals worldwide.
Jonathan Ruffer told readers on the company website that even though Bitcoin seemed like a “non-sensical” asset, it was one that aligned with the firm’s perspective on the world:
“Yes, it is a seemingly non-sensical asset — but one that makes absolute sense for how we see the world.”
Despite Bitcoin’s ascendance to new all-time highs over the winter period, Ruffer said he felt only “nervously satisfied” with the outcome, and that keeping clients safe was more important than short-term price pumps.
Bitcoin price nears $44K as large Coinbase outflows fail to stop the sell-off
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9 mins ago
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February 26, 2021
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Bitcoin (BTC) hit fresh local lows on Feb. 26 despite what appear to be ongoing largescal institutional buy-ins.
New lows despite bullish signs
Data from Cointelegraph Markets and TradingView showed BTC/USD $44,150 during Friday trading — last seen two weeks ago — after a rebound to $50,000 fizzled overnight.
Bitcoin had seen good news in the form of asset manager Stone Ridge planning to become the first Bitcoin mutual fund, along with major corporate purchases from MicroStrategy and Square. These, however, failed to stem the bearish mood, with 24-hour losses standing at near 10% at the time of writing.
“Everyone wants 42k, so we probably just go up now or drop to 38k on a savage wick. Crowd rarely gets what it wants,” popular trader Scott Melker summarized on Twitter.
Cointelegraph Markets analyst Michaël van de Poppe had prevously forecast ultimate support lying at around $38,000 should Bitcoin not find buying volume at higher levels.
“Bitcoin doesn’t look too great for a bull continuation coming period,” he said on Thursday.
“Still, retest at $54,000-55,000 could happen, but I’m cautious when we get there. If we lose $47,000, then I’m looking at $42,000-44,000 and $37,000-38,500 next. That should be the low.”
BTC/USD 1-hour candle chart. Source: Tradingview
Institutions are still buying: data
Data from the professional trading arm of U.S. exchange Coinbase meanwhile showed another major tranch of BTC leaving its books for a private or custody wallet — something which traditionally suggests institutional buying.
The latest spike of 12,100 BTC is the second this week, such large volumes themselves being a rarity, a fresh chart from on-chain monitoring resource CryptoQuant confirms.
Coinbase Pro outflow annotated chart. Source: Lex Moskovski/ CryptoQuant
The so-called “Coinbase premium,” the difference in price between Coinbase and Binance, flipped to negative for several brief moments as Bitcoin dropped to nearly $44,200.
Coinbase premium vs. BTC/USD chart. Source: CryptoQuant/ Tradingview
As Cointelegraph reported citing CryptoQuant, whales appear to favor buying at current price levels, with the result that a dip much below $44,000 would be “unlikely,” according to CEO Ki Young Ju.
On Thursday, Ki described the last Coinbase Pro spike, which occurred at $48,000, as “the strongest bullish signal” he had yet seen in Bitcoin.
A $40,000 Bitcoin Likely as Price Breaks Critical Support Zone
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51 mins ago
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February 26, 2021
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A relief bounce in the Bitcoin market Thursday did little in offsetting its prevailing correction bias as its price slipped inside a critical support area.
The BTC/USD exchange rate touched an intraday low of $45,000 during the early Asian trading session Friday, down by up to 22.90 percent from its record high established earlier this week. Traders held on to $45,000 and the levels around it as support, given the range’s historically-verified capability of capping downside corrections.
Bitcoin Support Confluence
Nonetheless, the latest downside move appeared much stronger, raising possibilities that bitcoin would extend its decline further lower.
“[I’m] keeping an eye on the $44ks — tested once, but a break below there likely sends price back down to $40k,” alarmed Josh Rager, the co-founder of BlockRoots.com. “And if price makes way to $40k — you know it’s going to wick in the mid to upper $30ks. [It] could bounce here — but going to take it level by level/day by day.”
Bitcoin is down over 22 percent from its record high. Source: BTCUSD on TradingView.com
Mr. Rager’s downside target at $40,000 converged well with the blue wave in the chart above.
It represents the 50-period simple moving average (50-SMA) on Bitcoin’s daily chart. The wave has underpinned the cryptocurrency’s uptrend throughout 2020. Many instances showed the price breaking below the 50-SMA but only to reclaim the wave later to confirm the market’s bullish bias.
Analyst Willy Woo’s floor model—which has zero evidence of turning false—also alerts about hard price support near $39,000. Mr. Rager agreed that Bitcoin could fall to $40,000 in the coming sessions while forming a wick towards $38,000-39,000. The cryptocurrency may resume its uptrend at a later stage.
Psychological Price Floors
Bitcoin rallied by almost 100 percent in 2021 to hit an all-time high above $58,000. Its gains appeared on growing institutional adoption, led by Tesla’s $1.5 billion investment into the cryptocurrency and its intentions to use the decentralized token as a form of payment for its services and products.
This week, mobile payment app Square announced that it had also upped its Bitcoin reserves by investing another $170 million into the cryptocurrency. The Jack Dorsey-headed firm had added $50 million worth of bitcoins to its balance sheet late last year.
Nasdaq-listed business intelligence firm MicroStrategy also took a similar but heightened call to increase its bitcoin exposure. It put $1.06 billion to purchase another stash of the digital assets, pushing its total reserves from around 71,000 BTC to above $90,500 BTC.
Square has 5% of their balance sheet in bitcoin.
Tesla has 8% of their balance sheet in bitcoin.
Microstrategy has 95%+ of their balance sheet in bitcoin.
All the firms revealed the average rates at which they purchased Bitcoin. For Tesla, it was between $35,000-$40,000. MicroStrategy’s latest investment into the Bitcoin market arrived when it was trading above $52,000. Meanwhile, Square stated that it purchased the cryptocurrency at a mean price of a little over $51,000.
That also increased Bitcoin’s ability to reclaim levels above $50,000 in the coming sessions, given the corporates’ high-profile exposure in the cryptocurrency above the said levels.
Richly Valued Bitcoin Extends Decline After Positive Jobs Data
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2 hours ago
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February 26, 2021
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Bitcoin prices dropped Friday, tracking declines in the US indexes after new data indicated a stronger economic recovery and an auction of seven-year bonds met with lukewarm demand from investors.
The flagship cryptocurrency’s upside momentum faltered earlier this week after establishing a record high above $58,000. At first, the move downside appeared like a natural downside correction that follows massive parabolic gains. Nonetheless, the sell-off accelerated in response to the latest macroeconomic updates, showing a positive correlation with tech stocks.
Bitcoin is down 20.78 percent from its record high. Source: BTCUSD on TradingView.com
Investors rushed out of some of the hottest pandemic winners in 2020. Shares of technology companies like Apple, Alphabet, and Netflix fell 2 percent apiece. Meanwhile, Tesla, the US carmaker which holds $1.5 billion worth of bitcoin in its reserves, suffered a share drop of 8 percent.
Dwyfor Evans, the head of macro strategy at Hong Kong-based State Street Global Markets, noted that expectations of the Federal Reserve’s rate hikes in the US prompted investors to de-risk their portfolios. That happened despite reassurances from the central bank’s chairman Jerome Powell that they would keep rates near zero until 2023.
Bond Sell-Off Ripples into Shorter-Dated Notes
Shorter-dated bonds experienced sell-offs. The five-year yield rose to 0.799 percent on Thursday from its previous session’s close of 0.612 percent, logging its largest one-day surge since December 2010. Meanwhile, the 10-year note yield touched another high at 1.513 percent before closing Thursday at 1.513 percent—still its highest level in a year. Yields move inversely to prices.
The US dollar index, a barometer to track the greenback’s value against top foreign currencies, opened 0.24 percent higher from its previous close on Wednesday. Its dramatic climb served as one of the major catalysts behind Bitcoin’s overnight plunge. The cryptocurrency’s loyal investor base treats it as a hedge against dollar depreciation.
US dollar index climbs higher on investors’ risk-off bets. Source: DXY on TradingView.com
Investors tend to sell Treasurys when they expect faster inflation and growth. That lowers the value of bonds’ fixed payments and can ultimately prompt the Federal Reserve to increase short-term interest rates. Bitcoin, which remains uncorrelated to macroeconomic updates, could become a de-facto cash provider for investors who want to offset losses in traditional markets.
Lower yields served as the main reason behind its supersonic rally throughout 2020 and this year. Mainstream investors treat it as a hedge against global uncertainty. Therefore, it cannot always maintain its correlation with conventional assets, especially as the economic outlook improves from investors’ point-of-view.
Jobs Data vs. Bitcoin
At the core of recent sell-offs in bonds, tech shares, and bitcoin remain the US jobs data.
Labor Department data released Thursday showed the number of unemployed claims fell dramatically last week. That raised possibilities that the Fed would end its open-ended bond-buying program and raise benchmark interest rates much sooner than expected, given Mr. Powell’s earlier statements on the jobs market.
These developments hurt Bitcoin in the short-term. Nonetheless, when interest rate rises, it could also increase the cost of borrowing for companies and consumers, making them more likely to stay invested in profitable assets. Meanwhile, a continuous injection of the US dollar liquidity into the market dents their cash reserves’ valuation.
Bitcoin has emerged as an asset that offers hedging capabilities against fiat-linked inflation. Meanwhile, its profits in the previous year has paved way for many investors to treat it as a “digital gold.” Analysts believe the cryptocurrency is off to hitting $100,000 by the end of this year.