Bitcoin price steadies around US$35,000 as markets recover from weekend losses
Bitcoin prices may be showing stability after recovering from the weekend's $11,000 plunge.
- Bitcoin prices have started ranging around US$35,000 as the weekend sell-off seems to have abated.
- Bitcoin bounced back with other assets in a broader market rally that may have been inspired by future COVID-19 stimulus.
- ICE's lagging Bitcoin company Bakkt is proposing a US$2.1 billion public offering while Kentucky state reps are exploring Bitcoin mining.
Bitcoin has rebounded from losses earlier in the week and is now stabilising at around the mid-US$30,000s mark. Bitcoin is currently at US$34,339 and the gap between today’s high and low was 10.8% with a high of US$36,544 and briefly trading as low as US$32,566.
The market for altcoins has followed Bitcoin’s lead with 48 of the top 50 cryptocurrencies in positive territory. Some of the big gainers are Stellar Lumens (+19.5%), Synthetix (+20.3%) and the privacy coin Zcash (+20%).
Bitcoin, US treasury yields, stocks and gold have all been buoyed by an incoming Biden administration that looks set to expand COVID-19 stimulus measures over the coming year with crude oil one of the few commodities to go down in price in recent days.
Bitcoin whales accumulating
Bitcoin whales with wallets composed of over 1,000 Bitcoin went up to a new high of 2,140 on Monday 11 January according to data from Chainanalysis. This is despite the fact that Bitcoin was well on its way to losing nearly 30% of its value hitting nearly as low US$30,000.
The sudden sell-off which ended the largest rally in cryptocurrency’s 12 years was driven by heavy resistance at US$40,000. However, with Bitcoin now steadying in the mid-US$30,000s there may be enough optimism to stem further losses for now at least. The ongoing demand for Bitcoin, and in particular from financial institutions, shows that many in the market believe the recent contraction in Bitcoin’s price is most likely temporary.
Some well known high net worth investors began diversifying their portfolios with Bitcoin in 2020. With the money market awash in treasury notes the move to diversify with Bitcoin was spearheaded by hedge fund mogul Paul Tudor-Jones labelling Bitcoin as the “fastest horse” beating inflation risk.
Shark Tank investor Mark Cuban also added some thoughts on the emerging space, comparing it to the dot com bubble in that most cryptocurrencies would die, while a few survive.
Watching the cryptos trade, it’s EXACTLY like the internet stock bubble. EXACTLY. I think btc, eth , a few others will be analogous to those that were built during the dot-com era, survived the bubble bursting and thrived, like AMZN, EBay, and Priceline. Many won’t
— Mark Cuban (@mcuban) January 11, 2021
He added: "All the narratives about debasement, fiat, etc are just sales pitches. The biggest sales pitch is scarcity vs demand. That's it."
In that respect, it’s worth noting that aside from a handful of leading stocks such as Tesla and Moderna, Bitcoin far outperformed any commodity or index although Bitcoin rallied most significantly in the fourth quarter.
When speaking about financial markets more broadly Barclays analyst Jason Goldberg commented that “you can look at Q4 as somewhat of a transition quarter as you put some of the challenges from 2020 in the rear-view mirror and look ahead to an improved 2021.”
Bakkt exchange goes public in $2.1 billion M&A deal
A major development in the market for digital assets was announced on Monday 13 January. Bakkt, an Atlanta based cryptocurrency exchange, will undergo a merger with a “special purpose acquisition company” valuing the combined publicly traded company at $2.1 billion.
Bakkt was founded in 2018 by the Intercontinental Exchange (ICE), majority stakeholder of the New York Stock Exchange, and will result in a cash balance of $500 million of which over $200 million is being added to Bakkt Holdings as a result of the merger.
Bakkt equity holders, which includes former Bakkt CEO Kelly Loeffler who recently lost her re-election bid to the US Senate, will control 78% of the new entity and ICE holding around 12% according to the information provided in the media brief.
Despite the fanfare, critics were quick to point out that it’s a bit of a joke that Bakkt, whose Bitcoin trading platform flopped after a much-hyped launch last year, is dragging itself back to the table with a self-described $2.1 billion valuation that seems to be based on pure optimism and overly-generous assumptions.
Meanwhile in Kentucky, legislators have submitted a bill aimed at making the state a haven for cryptocurrency mining outfits. The proposed bill would exempt potential companies from paying over 6% in taxes for both sales and the electricity tariff.
Due to low-cost electricity in the state of Kentucky, the representatives claim Kentucky has the potential to become a nation-wide leader in blockchain innovation.
Like the Bakkt pitch deck, the representatives’ claims may contain forward-looking statements.
Interested in cryptocurrency? Learn more about the basics with our beginner’s guide to Bitcoin, see how to keep your crypto safe with our end to end guide to cryptocurrency security and dive deeper with our simple guide to DeFi.
Disclosure: The author owns a range of cryptocurrencies at the time of writing