First U.S. publicly-trade company buys Bitcoin for their balance sheet. Uniswap launches new DeFi token but fails to respark the DeFi flame. Signs of sector rotation out of DeFi. This and more in this week's edition of the Bitcoin Economic Calendar. Click here for the video edition.
Not yet a Ledn client? Start earning 11.7% APY on your USDC and 6.5% APY on your Bitcoin today - click here to open your Ledn account!
Follow us in social media:
@hodlwithledn @cryptonomista
The Bitcoin Economic Calendar:
Week of Monday September 21st to Sunday September 27th.
Market Commentary:
We saw a strong weekly close on Bitcoin at $10,920, up 5.65% bucking its correlation trend with the S&P 500 which had a negative week down 21.5 points or -0.64%. Gold also had a strong week and closed up $10 or 0.56% as well. The strength came on the back of several announcements. On monday, Microstrategy, a publicly listed company (NSDQ: MSTR) announced that they had completed an acquisition of an additional $175M in Bitcoin, for a total purchase of $425M (more on this below). On Wednesday’s meeting, the U.S. Fed said that they foresee no rate increases until the end of 2023, on the same day, the news broke that Kraken had been the first crypto company to be awarded a bank charter.
Looking at the FTX DeFi Index, there seems to be a bit of a rollover since the hype, even Uniswap’s UNI token launch last week was unable to respark the hype and we are seeing the index close at its lowest level since July 20th. Many are hoping for a consolidation bounce but if Bitcoin continues to rally, the thin liquidity in these tokens can make a lot of these paper profits evaporate as people look to rotate to Bitcoin with increasingly less retail buyers.
https://www.tradingview.com/chart/oehuUdsL/
Microstrategy Purchase: The decision and announcement by Microstrategy to hold Bitcoin on its balance sheet has many implications. The first one being that Bitcoin has entered the realm of financial hedging tools which are “suitable” for publicly listed companies. The fact that a company with the highest levels of corporate oversight was able to carry out a transaction of that size, without moving the market, is a testament to the depth of Bitcoin’s liquidity. To put it in perspective, Microstrategy purchased $175 Million worth of Bitcoin in 74 hours and no one noticed until they made their announcement. Contrast that with DeFi liquidity, where an anonymous chef sold $13 M in a popular DeFi token in a short period of time and crashed the entire market.
In addition to the purchase itself, Mr. Saylor, the CEO, went on several shows to express his views and journey. Amongst the key takeaways from their thesis, is that to him, real asset price inflation is about 20-30%, and this means that based on that benchmark, other “stable” assets such as gold and bonds have negative real yields. Additionally, he expressed that if any other publicly listed company were to try to attempt a similar transaction, it would take them about 6-12 months to complete.
I would not expect Microstrategy to be the last publicly listed company to place Bitcoin on their balance sheet. With the current economic backdrop, it may not just be retail investors trying to buy the next dip.
Difficulty Commentary: Lastly, on Sunday morning Bitcoin reached a new all time high in mining difficulty at 19.31 TH - evidencing a continuation of investment in mining infrastructure. Hashrate continues to pour in and the next difficulty adjustment ,which is not for another 2 weeks, is already signalling another increase and a new all time high. Price action is favorable for miners and judging by the speed at which hashrate continues to grow, it seems unlikely that even a short term drop in price will slow down development.
https://www.tradingview.com/chart/oehuUdsL/
Last Week’s Content Podcast:
[English] UnHashed Podcast - Click here
[Spanish] Tech Con Catalina - Click here
[Portuguese] Bitcoinheiros - Click here
[Last Week’s Issue] Last Week’s Economic Calendar - Click here
Market-Moving Stats:
Bitcoin Hashrate and Network Difficulty:
Current Difficulty: 19.31 TH
Estimated Next Adjustment: 21.20 TH +9.78%
Time to next Difficulty Update: 12 days (Sunday October 4th, 2020)
Difficulty All-time-high: 19.31 TH
Canadian Central Banking Updates:
Current Target Interest Rate: 0.00 - 0.25%
Current Overnight Money Market Rate: 0.23%
Source: https://www.bankofcanada.ca/rates/
U.S. Central Banking Updates:
Current Fed Interest Target Rate: 0.00 - 0.25%
Current Effective Federal Funds Rate: 0.09%
Source: https://apps.newyorkfed.org/markets/autorates/fed%20funds
Event Calendar:
Tuesday September 21st:
Nike reports earnings after the bell @ 4 pm EST
Thursday September 24th:
Costo reports earnings (time TBD)
