A brief foray over the $60,000 mark didn’t last long for bitcoin, but the cryptocurrency remained steadfast over much of last week. Bitcoin topped $60,000 for the first time amid continued buying by institutional and retail investors alike.
But over the next several days, prices eased back below that nice round number, though they are still in the upper-$50K range, equal to a market cap in excess of $1 trillion. On a Friday-to-Friday basis, prices were little changed.
Bitcoin’s resilience this week in the face of what was rather bearish news out of India is impressive. Reuters reported earlier in the week that India’s government was due to unveil a bill that would ban the mining, trading and holding of cryptocurrencies, with the potential for jail time for violators of the law.
According to Reuters, if the bill comes to pass—and there is a good chance it will—India would become the first country to ban the mere holding of cryptocurrencies, a more stringent prohibition than even in China, where mining and trading are restricted, but possession is allowed.
India’s participation in the cryptomarket is currently modest; Reuters estimates there are 8 million Indian investors holding $1.4 billion of crypto, equal to less than 1% of the crypto market cap. That’s probably why the prospect of this bill hasn’t had much of an impact.
But longer term, you have to think that shutting 18% of the world’s population out of the market (36% if you include China) is a blow to the ultimate potential of the crypto space—though bulls will argue it’s a moot point with so much untapped potential outside of those two countries.
Retail Vs. Institutions
Who’s driving crypto prices higher, institutions or retail investors? Both, according to analysis by J.P. Morgan.
Analysts at the investment bank this week took a look at bitcoin purchases facilitated by Square and PayPal as a proxy for retail demand, while they looked at flows into bitcoin funds, CME bitcoin futures positions and company announcements as a proxy for institutional demand.
What they saw based on those rough estimates it that retail and institutional investors have bought similar amounts of bitcoin this quarter—187,000 bitcoins and 173,000 bitcoins, respectively. Last quarter it was about 307,000 bitcoins for institutions, compared with 205,000 bitcoins for retail investors.
In other words, this is by no means a one-legged rally.
No-Fee Bitcoin Transactions
As the aforementioned data from .J.P Morgan illustrates, PayPal and Square have done much to open the bitcoin market to retail investors. Billions of dollars’ worth of bitcoin transactions are flowing through these digital wallets on a quarterly basis, a number that may increase after Square cut fees for certain bitcoin transactions to zero.
The company tweeted on Wednesday that users of Cash App can now send bitcoin to other users of the app for free. Previously, Cash App charged a service fee and a volatility-related fee for bitcoin transactions, but it looks like those fees will now only apply when transacting with wallets outside of the Cash App ecosystem.
New Grayscale Trusts
Grayscale Investments, the asset manager responsible for the popular Grayscale Bitcoin Trust (GBTC), announced this week it is expanding its lineup of digital currency investment trusts.
The five trusts target the Basic Attention Token (BAT), Chainlink (LINK), Decentraland (MANA), Filecoin (FIL) and Livepeer (LPT).
They add to Grayscale’s existing lineup of products that include trusts providing exposure Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Horizen, Litecoin, Stellar Lumens and Zcash. Grayscale also has a diversified crypto fund, the Grayscale Digital Large Cap Fund.
Like all of Grayscale’s crypto trusts, the five new ones will be available to institutional and individual accredited investors through periodic private placements.
The company said it will also try to get these new products quoted on a secondary market. Currently, Grayscale has six products, including GBTC, which are quoted on the OTCQX, an over-the-counter network of broker-dealers.
The $38 billion GBTC and all of the trusts in Grayscale’s lineup are not ETFs, so their market prices often deviate significantly from the value of their underlying holdings.
NFT Mania Continues
Few things are hotter than the non-fungible tokens (NFT) market these days, with multimillion dollar transactions taking place all the time. It’s hard to top last week’s $69 million purchase of an artwork from Beeple, but here is another interesting one: Artist Krista Kim sold a digital house for about $500,000.
What’s interesting about this NFT is that it’s designed to be put to use in a digital world like Decentraland or The Sandbox.
Kim and others believe that NFTs tied to digital items will become increasingly common as people spend more and more time in virtual worlds, especially when they are accessed through augmented and virtual reality technologies.