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A somnolent summer has seen Bitcoin, the largest and oldest cryptocurrency, drift aimlessly.
Photographer: Virojt Changyencham/Moment RFMichael P. Regan
Welcome to Bloomberg Crypto, our twice-weekly look at Bitcoin, blockchain and more. If someone forwarded this to you, sign up here. In today’s edition, Michael P. Regan takes the temperature of the crypto market:
Doge Days of Summer
There’s that number again: $20,000. After its worst ever drawdown in market-cap terms from a high last November to an 18-month low in June, Bitcoin has done … well, not much of anything. A sleepy summer has seen the largest and oldest cryptocurrency fluctuate aimlessly, trading roughly between $19,000 and $25,000 and frequently landing back in the vicinity of that round-number level of $20,000.
In a glass-half-full reading of the price action, this could be seen as good news. At least the bleeding has stopped, and the trading range corresponds with a change of tone in crypto news flow. The headlines are way less hair-on-fire than they were in the spring as the failure of the TerraUSD stablecoin project infected various corners of the market. Crypto reporters are back to writing about stuff like new leveraged exchange-traded funds targeting the industry’s stocks, Bitcoin and Ether futures denominated in euros, or how Eminem and Snoop Dogg performed as their Bored Ape avatars at the MTV awards.
Smaller Swings
Bitcoin's average daily moves have compressed
Source: Bloomberg
Data analyzed since the beginning of 2022
It could be interpreted that this is a support level and there are buyers ready to act when Bitcoin dips noticeably below $20K. Positioning data from the CFTC suggest large speculators were almost as net long as they’ve ever been through Aug. 23, both in regular and micro Bitcoin futures. (Importantly, that data doesn’t capture the reaction to Federal Reserve Chair Jerome Powell’s hawkish speech on Friday, which sent risk assets reeling, nor does it capture the wide world of futures speculation that exists outside of contracts under the CFTC’s purview.)
And the glass-half-empty reading? Well, it’s hard not to wonder if $20,000 may be just a rest stop for Bitcoin on the road to irrelevance. For an asset that’s posted average moves of more than 800% annually, a tight trading range may kill off its most attractive attribute. It’s hard to imagine the perfect conditions that triggered its past parabolic moves – such as tame inflation, barely-there interest rates and voracious appetites for risky assets – returning anytime in the near future. Powell has more or less that they won’t.
Charting it out
Texas Crypto Boom Is Getting Even Bigger
State grid has seen the queue of mining projects double in four months
Source: Electric Reliability Council of Texas
Counting it out
- $875 billion While the market value of all cryptocurrencies approached $3 trillion last fall, the value based on what they actually fetched at their most recent transaction was closer to $875 billion.
Hearing them out
What we’re reading (and writing)
- SimCity Provides the Building Blocks for a Growing Metaverse
- Think Crypto’s Real Value Was $3 Trillion? Try $875 Billion
- Lack of Audits Keeps Crypto Firms’ Finances a Mystery to Investors (Wall Street Journal)
- Singapore Mulls Making It Harder for People to Trade Crypto
- The Crypto World Can’t Wait for ‘the Merge’ (New York Times)
- Crypto Winter’s Night King Spends Big to Reanimate the Industry
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— With assistance by Sidhartha Shukla, Emily Nicolle, and Naureen S Malik
