The week that ended for the Rivemont crypto fund was one of timid recovery in the markets following the sudden drop on September 7. The bullish technical portrait remains intact, however, with in particular a golden cross that is emerging even today for bitcoin. If we will come back to what the prices tell us in 2e half letter as is the tradition, let’s first talk about the fundamental expression of the current cryptocurrency market. We sometimes stick our noses too much on prices to see the giant steps taken by the industry. Let’s address them.
El Salvador became the first country last week to make bitcoin legal tender. All traders today are required to accept cryptocurrency as a method of payment. At the same time, Panama introduced a bill to also accept bitcoin as common currency, without however making it mandatory. The most recent reports now suggest that Ukraine could be the next country to join the parade. President Zelensky is an avowed follower of digital currencies and he is said to have already sent his initial instructions to make Ukraine a pro-digital nation.
According to geopolitical expert Vyacheslav Evgenyev, the plan is to make bitcoin legal tender by the start of 2023 and to create a “dual currency country” where bitcoin rubs shoulders with the hryvnia before gradually becoming the backbone. dominant financial. “Ukraine is naturally suited to such a plan,” said the expert. “The Ukrainian people are not only prepared for a financial revolution, they are also used to it and expect it.”
The effects of such migration on traditional financial actors should not be underestimated, as should the potential savings for citizens receiving international cash transfers where the financial structures in place make them difficult. Just take Western Union transfers, charging 12.5% fee and taking days to reach the recipient. In 2020, El Salvador received nearly $ 6 billion in remittances, which represented about 23% of its gross domestic product. Some 70% of the Salvadoran population receives such remittances. President Nayib Bukele estimates that money service providers like Western Union and MoneyGram will lose $ 400 million a year in remittance commissions, thanks to the country’s adoption of bitcoin.
This website cumulates the number of times the media announced the death of bitcoin. The count now stands at 429. However, we must be fooled not to admit that the network is on the contrary more alive than ever. Proof being, the 700,000e block of the chain was discovered on Saturday. The 600,000e had been mined on October 18, 2019 when the price was less than $ 8,000. As of this writing, the total supply is 18,816,562 BTC, or 89.6% of all bitcoin that will ever be created. Bitcoin has been programmed to be a self-regulating market with an unchanging coded monetary policy that is not dependent on any outside party. Unlike national central banks, for example, which can change the size and growth rate of the money supply at will, bitcoin maintains an absolute cap on supply and cannot be created without the massive influx of energy from minors.
One user underscored this milestone with a quote very about the late Hal Finney:
“With each passing day that Bitcoin hasn’t crashed due to legal or technical issues, it brings new information to the market. This increases the chances of eventual success of Bitcoin and justifies a higher price. ”
Also remember that the miners approved the first major update of the network in four years at the end of last spring. The latter, nicknamed “taproot”, will strengthen the confidentiality and efficiency of transactions and, above all, unleash the potential of smart contracts, an essential characteristic of its technology. blockchain. Its establishment is scheduled for next November.
Then, in practice, the incredible innovation which makes it possible to transfer gigantic sums almost instantly and at ridiculous prices. Data collected from the blockchain on Monday night shows a $ 2 billion transaction processed for 0.00001713 BTC, the equivalent of $ 0.78. According to BitInfoChart, the average price of the transaction fees on the main level (layer one) of the blockchain comes in at 0.000058 BTC ($ 2.67). This is a constant floor level over the past two months.
Coinbase last month announced that it was investing $ 500M of its reserve liquidity in a diverse portfolio of cryptocurrencies. In addition, 10% of net quarterly revenue will be added to it. During the announcement, CEO Brian Armstrong insisted on owning Ether, assets proof-of-stake and decentralized finance tokens. Today, the American company, faced with a higher demand than initially estimated for its junk bonds (junk bonds), increased the sale amount by a third, from $ 1.5 billion to $ 2 billion. At the same time, MicroStrategy continues in its likely quest to become the largest holder of BTC, having purchased an additional 5,050 BTC at an average price of $ 48,099. This is a purchase of approximately $ 240M.
Not all projects enjoy the same decentralized governance, yet the central element of digital currency technology. The project that has turned the heads of many investors recently is that of Solana, another smart contract platform promising superior technology. While we will not conduct an analysis of the technology here, let us highlight the events of yesterday. Indeed, after the discovery of a bug, the blockchain was completely stopped by its developers for almost a full day. Stop a blockchain? This sends out a message of complete centralization for a project that prides itself on being “decentralized and unstoppable” on its very home web page. A price correction continues for the token. Will this exodus translate into a homecoming to ETH, by far the largest network of smart contracts?
Let’s move on to the technical portrait where, as we mentioned at the beginning of the letter, the price of bitcoin today draws a golden cross. This technical pattern occurs when the 50-day moving average crosses the 200-day moving average upwards. If some detractors claim, and rightly so, that this is a late indicator, it has nevertheless often led to price surges.
Here is the current portrait:
In comparison, here is the most recent drawn golden cross dated May 20, 2020:
Then that of April 22, 2019:
No indicator is infallible, however. The golden cross of February 18, 2020 was brought to a halt by the COVID-19 crisis and the subsequent fall in prices in March.
After resuming the significant resistance at $ 47,000, bitcoin is currently in true recovery mode. It can be seen short term resistance at $ 48,000 and $ 50,000. The most important thing, however, is to have successfully defended the 200-day moving average, after having formed what may appear to be a local double dip. The more global picture is however clearer than ever, with a supply shock that seems more and more inevitable. We have often mentioned in recent months the increasingly thin reserves of bitcoin available for purchase on exchanges. This threshold is now reaching downright critical levels:
Meanwhile, bitcoin reserves in corporate coffers are skyrocketing. Demand rises and supply falls, as much by market trends as the intrinsic code of bitcoin.
Cathie Wood, CEO of Ark Invest, in fact mentioned this factor during the SALT conference on Monday. Its price prediction depends on companies continuing to diversify their balance sheets into bitcoin and institutional investors starting to allocate 5% of their funds to it. If that happens, “we think the price will be tenfold from what it is today,” she said. “So instead of $ 45,000, more than $ 500,000.”
In short, it would be surprising if we saw the highs of this bull cycle.
The monthly results of Rivemont’s three alternative funds for the month of August are now available. You can consult the performances of the Rivemont crypto fund, but also of the Rivemont Alpha fund and the Rivemont MicroCap fund under this page.
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