Bitcoin Fundamental Briefing, June 2021

Bitcoin Fundamental Briefing, June 2021

Fragile equilibrium

So, guys – the first month since the miserable collapse passed. As we’ve expected – as BTC as ETH and other cryptocurrencies have spent this time in a tight range, trying to inhabit the new reality and accommodate to new levels. On a background of sideways action stands investors’ thinking process as they try to understand what is going on and perspectives stand for the market in the foreseeable future.

Thinking about events of the recent month, we try to find major driving factors. And conclude that mostly there are two of them. First is – Fed interest rate policy, as cryptocurrencies show high sensitivity to the recent tapering announcement.

The second is – institutional investors’ capital and interest in cryptocurrencies. How strong big companies and hedge funds are present on the market, and what are they going to do. The recent rally mostly is a result of the massive inflow of “Big whales” money. And future at high degree depends on how much capital they intend to keep here.

At the same time, the vast presence of institutional investors destroys the unique features of cryptocurrencies, cut their personality, and built them into the global financial system, somewhere between gold and stocks. As cryptocurrencies become a part of the worldwide financial system – they become a hostage of the same rules that drive long-term economic cycles. 

Market sentiment analysis

Several US insurers begin to dabble with cryptocurrency investments in Q1

Six insurers in the first quarter picked up shares of digital currency investment vehicles offered by Grayscale Investments, LLC. While the companies did not directly purchase Bitcoin or Ethereum, they did participate in investment vehicles that derives their value from cryptocurrencies in the form of shares of Grayscale Bitcoin Trust or Grayscale Ethereum Trust.

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Intertrust Group: hedge funds are getting ready for a dramatic shift towards digital asset classes.

Hedge funds expect a dramatic uptick in crypto investments. An overwhelming majority (98%) expect their hedge fund to invest in cryptocurrencies in the next five years, which means time is of the essence to strengthen their operational controls in this space.

By 2026, the share of cryptocurrencies in net assets of hedge funds will reach 7.2%, which is equivalent to $ 312 billion at the moment. These results were obtained by the administrator of Intertrust funds in the course of the survey.

The study involved strategists from 100 firms with an average of $ 7.2 billion in assets under management.

14% of respondents are ready to invest in digital assets over 10% of the funds entrusted to them, 3% – over 20%. Only one in fifty people surveyed completely rejected the idea of investing in cryptocurrencies.

Bitcoin holdings top $43bn across global investment funds

On the balance sheets of investment funds, ETPs and ETFs, bitcoins worth $ 43.2 billion are concentrated – 5.75% of the market capitalization of digital gold. Another 1% of the supply (more than $ 6.5 billion) is controlled by 19 public companies.

CNBC: MicroStrategy keeps backing up the truck on bitcoin, even issuing the world’s first “bitcoin bond.”

MicroStrategy has purchased an additional 13,005 bitcoins for ~$489 million in cash at an average price of ~$37,617 per bitcoin. As of 6/21/21 we hodl ~105,085 bitcoins acquired for ~$2.741 billion at an average price of ~$26,080 per bitcoin

MicroStrategy announces pricing of $500 Million of 6.125% Senior Secured Notes due 2028 to acquire additional bitcoin.

Galaxy Digital has become a liquidity provider for Goldman Sachs in Bitcoin futures transactions on the Chicago Mercantile Exchange. This is stated in a press release.

Michael Novogratz’s firm acts as a market maker for 90 digital assets. The trade partner network includes 300 firms focused on working with institutions.

Galaxy Digital co-chairman Damien Vandervilt said in an interview with CNBC that Goldman Sachs cannot directly deal with Bitcoin due to the strict regulation of the banking sector.

The top manager explained the initiative of the investment bank by the active demand from clients.

China urges banks, Alipay to crack down harder on cryptocurrencies

The People’s Bank of China’s meeting came after China’s State Council, or cabinet, last month said it would tighten restrictions on bitcoin trading and mining. Beijing has sharply ratcheted up its campaign in the last few weeks.

The PBOC said its recent meeting with financial institutions was aimed at fully implementing State Council’s crypto ban.

Glassnode: Bitcoin on-chain activity has fallen dramatically this week, returning to levels not seen in 1yr.

On-chain activity across the board is remarkably low across Bitcoin and Ethereum, with demand for block-space falling to levels last seen in 2020. However, whilst low demand for transactions is a generally bearish insight, it also reflects an unwillingness of strong hands to spend at these prices. Are they waiting for a relief rally?

Both Bitcoin and Ethereum have experienced dramatic slow-downs in on-chain activity with active addresses and total transfer volume falling back to 2020 and early 2021 levels. Bitcoin active addresses have fallen by 24% from the generally sustained peak of 1.16M from March to early May. The current activity of 884k addresses was last seen this time last year.

For Ethereum, the fall in active addresses has been even larger, dropping 30% from the brief peak of around 676k addresses. Activity is now down to 474k addresses/day, last seen in Q1 2021.

When it comes to USD value settled on the networks, the decline in activity is even more dramatic. Both Bitcoin (change-adjusted) and Ethereum (ETH transfers) are settling -63% and -68% less USD value respectively, compared to the recent highs set in May.

Bitcoin is settling around $18.3B per day, whilst Ethereum is settling $5B/day in ETH transfers, both demonstrating equivalent volume to Q1 2021.

From a macro perspective, there are remarkable similarities to the 2017 macro peak in regards to the balance of supply held by Long (blue) and Short (red) Term Holders. The chart below shows the relative supply held by each cohort and whether they are in profit (dark colours) or loss (light colours).

After reaching ‘Peak HODL’ (maximum LTH supply), both cycles demonstrated a macro distribution event, as BTC wealth is transferred from Long term to Short term holders. After the top was put in, we have started to see the opposite effect, where Long-term holders stop spending and begin re-accumulating, despite their coins often falling into an unrealised loss.

Since the $64k top, Long-term holders own an additional 5.25% of the circulating supply of which 1.5% of this is currently underwater (held at an unrealised loss). Despite prices approaching the cost basis for many long-term holders, they continue to HODL on.

Over the past two weeks, the estimated mean hash-rate (7DMA) has declined by around 16%, falling from approximately 155 EH/s to around 125 EH/s. Hash-power has now returned to levels that were sustained throughout mid 2020.

As the Chinese mining industry comes to grips with the logistical challenges of relocating, migrating or selling their hardware and facilities, some are likely to liquidate a portion of their accumulated BTC treasuries. These coin sales may represent miners hedging risk, obtaining capital to facilitate and fund logistics, and for some miners, may be a general exit from the industry entirely.

The Miner net position change metric shows the 30-day rate of change of miner unspent supply. This shows a notable increase in distribution over the last two weeks, generally coincident with the decline in overall hash-rate. Miners have on net distributed at a rate of around 4k to 5k per month over the last two weeks. This has reversed the trend of net accumulation which was active since April.

Finally, we take a look at the holdings on OTC desks which are utilised by miners for matching their large size distribution, with large volume buyers.

During both the May Sell-off and over the last two weeks, between 3.0k and 3.5k BTC in net inflows have been observed. However in both instances, almost the full inflow size was absorbed by buyers over just a few weeks. On aggregate, the total BTC holdings on OTC desks we monitor have remained relatively flat since April.

Glassnode drew two conclusions:

  • the demand for on-chain transactions is extremely low, which can be considered a bearish factor;
  • long-term investors do not leave the position at current prices (neutral-bullish factor, according to analysts).

Bitcoin Miner Calls China’s Crypto Crackdown ‘Fantastic News

Getting banned in China is a “rite of passage” for freedom technology and shows Bitcoin is working, Brandon Arvanaghi, a Bitcoin mining engineer and former Gemini security engineer, says.

Roughly 70% of the bitcoin mining capacity in China has gone offline and by the end of this month, it’ll be closer to 90% offline.

Sentiment is obviously quite dreary and the reality is setting in that it’s GG for mining in China. Some mining friends have stuck around Sichuan since the Bitmain conference to drink their sorrows away.

Before resellers and opportunists get way too ahead of themselves for scooping up discounted electrical equipment, they should consider that most of the gear wont be up to code for established Western countries (not UL Listed or CE Certified, aluminum transformers vs copper)

Which leads to my next point that the “Great ASIC Exodus” will be anything but seamless… Hosting capacity outside China was already oversubscribed and scarce prior to these regulatory announcements. Additionally, expectations for hosting terms are greatly MISALIGNED

Crypto is ‘rat poison’, a third of mainstream investment firms tell JPM

Only 10% of institutional investment firms surveyed by JPMorgan trade cryptocurrencies, with nearly half labelling the emerging asset class as “rat poison” or predicting it would be a temporary fad.

Of those firms who did not invest, 80% did not expect to start investing or trading in cyptocurrencies, according to the survey conducted at JPMorgan’s Macro, Quantitative and Derrivatives conference, attended by some 3,000 investors from around 1,500 institutions.

Four-fifths of investors also expected regulators to get tougher on the asset class, while a whopping 95% of them believed fraud in crypto world was “somewhat or very much prevalent”, the survey released late on Tuesday found.

Billionaire investor Warren Buffett has in the past characterised bitcoin as “rat poison squared”. One third in the JPM survey agreed with that view. Another 16% thought it was a temporary fad.

Bitcoin Drops Amid Weibo Crypto Suspensions, Goldman CIO Survey

In a development that undermines the narrative about institutional adoption, a Goldman Sachs note on Saturday showed that not everyone in finance is eager to jump in.

“We held two CIO roundtable sessions earlier this week, which were attended by 25 CIOs from various long-only and hedge funds,” the strategists led by Timothy Moe wrote. “Their most favorite is Growth style but least favorite on Bitcoin.”

relates to Bitcoin Drops Amid Weibo Crypto Suspensions, Goldman CIO Survey



Bitcoin price crash isn’t over: JP Morgan

“We had argued previously that the failure of bitcoin to break above the $60k threshold would see momentum signals turn mechanically more bearish and induce further position unwinds, and that this has likely been a significant factor in the correction last week in pushing CTAs [commodity trading advisor] and other momentum-based investors to cut positions. The longer-term signal remains problematic, as it has yet to turn short. It would still take price declines to the $26k level before longer-term momentum would signal capitulation,” said Panigirtzoglou in a new research note to clients.

Panigirtzoglou sees medium-term fair value for bitcoin in the $24,000 to $36,000 range. 

The analyst thinks the May crash in bitcoin has badly weakened institutional demand, which is likely to keep prices under wraps for now.

“There is little doubt that the boom and bust dynamics of the past weeks represent a setback to the institutional adoption of crypto markets and in particular of Bitcoin and Ethereum. We note that the mere rise in volatility, especially relative to gold, is an impediment to further institutional adoption as it reduces the attractiveness of digital gold vs. traditional gold in institutional portfolios,” Panigirtzoglou said.

JP Morgan: Bitcoin’s recent bounce has yet to dispel doubts about its vulnerability following a rout in May.

While the momentum may cheer bulls, a JPMorgan Chase & Co. team said backwardation in a part of the futures market — where the spot price is above futures prices — is reason for caution.

We believe that the return to backwardation in recent weeks has been a negative signal pointing to a bear market,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note. They added that Bitcoin’s relatively depressed share of total crypto market value is another concerning trend.

The JPMorgan analysis is based on the 21-day rolling average of the 2nd Bitcoin futures spread over spot prices, and pointed out the Bitcoin futures curve was in backwardation for most of 2018. That year, the cryptocurrency fell 74% after a boom. Backwardation is an “unusual development and a reflection of how weak Bitcoin demand is at the moment from institutional investors” who tend use contracts listed on the Chicago Mercantile Exchange, according to the report.

Bitcoin stuck in a range and JPM flags bearish futures signal


The cryptocurrency’s share of overall crypto market value is about 42% currently, down from roughly 70% at the start of the year, according to data from tracker CoinGecko. For some analysts, that’s in part a sign of retail-driven investor froth lifting other coins.

Traders are waiting for the next catalyst to break Bitcoin from a $30,000 to $40,000 range that’s been in place since a decline from a record of almost $65,000 in April.

“We will need to see a break here for the bulls to feel we’re out of this period of vulnerability,” Chris Weston, head of research with Pepperstone Financial Pty, wrote in a note Thursday.

Bitcoin may have to drop below $30,000 to lure back institutional investors, a JPMorgan strategist said.

One of the key reasons for the recent tumble in bitcoin’s price has been a sharp decline in interest from big players, Nikolaos Panigirtzoglou, a managing director and global market strategist at JPMorgan, told Insider.

Panigirtzoglou said major buyers were drawn towards bitcoin as the price started shooting up in 2021. But he said the soaring cost then began to put them off.

“If you ask, right now, institutional investors whether $50,000 or $60,000 is looking like an attractive level for bitcoin, they will most likely say no,” Panigirtzoglou said. I fear we might need to see bitcoin moving below $30,000 for that institutional interest to pick up considerably.”

Despite bitcoin’s rally in recent days, Panigirtzoglou said he saw little sign that institutions were moving back in.

“If I look at these bitcoin fund flows, there is no evidence here of a buying-the-dip mentality,” he said.

Panigirtzoglou’s view differs from some strategists, who think a drop below $30,000 would likely spell further trouble for bitcoin. Edward Moya, senior market analyst at currency firm Oanda, said on Tuesday that “a break of $30,000 could see a tremendous amount of momentum selling.”

Panigirtzoglou, who edits JPMorgan’s weekly flows and liquidity note, which regularly looks at bitcoin, said the lesson from 2018’s price crash was that the current phase of lower prices could last months.

He said one important metric of whether institutional demand was picking up again would be rising futures prices relative to the spot price. Another positive signal would be if the share of bitcoin in the cryptocurrency market began to grow again, after shrinking in recent months.

Decent Trader: S2F Model points on 85 000$ BTC target

The Active Address Sentiment Indicator  triggered an ‘oversold’ signal, suggesting that $BTC may soon be ready to turn around and move to the upside. 

SOPR (Spent Output Profit Ratio) shows whether bitcoin wallets are selling at a profit or loss on any given day.  When price drops rapidly in bull markets we see increased selling where wallets have to sell at a loss.  This is shown by the green bars on the chart below.

After the crash, we saw sustained loss selling over the past couple of weeks, but are now starting to see some signs that SOPR is resetting, with the last couple of days showing that on average wallets were selling at a profit.

What is interesting about Stock to Flow right now is how far price has moved away from the Stock to Flow line.  The divergence tool at the bottom of the Stock to Flow chart shows the extent to which price is moving either side of the stock to flow level.  

On the chart below we see price is trending below the stock to flow line and has only ever been this far away from it four times previously in Bitcoin’s entire history.

After each of these times in 2012, 2013, and 2017 price rebounded hard as it tried to catch back up with the stock to flow level.

The last time was in the 2017 bull run when price was at $1,900 before rallying up to $5000 in the following 6 weeks.

While we may not rally so hard and fast this time, fundamentally nothing has changed with how Bitcoin works, nothing is broken, we are just experiencing a lot of bad media coverage after a strong rally at the start of the year.   

So we may well see price make its way back up to the stock to flow line in the coming months.  This would mean new all-time highs for $BTC before the end of this year, as the Stock to Flow line is currently sitting at $85,000.

Other analysis that track S2F model also agree on upward continuation but set different targets. Thus, PlanB model suggests that BTC should aim on $288K level:

$288K still in play. It would really surprise me if Bitcoin would not touch the black S2FX model line this phase. Regardless of current volatility, yellow green and blue dots will be (much) higher than red orange dots.


Stock-To-Flow Deflection on Bitcoin shows it’s the most undervalued in the past 10 years at the current prices. But, people will wait for $20,000 to come.


Fidelity Investments: Bitcoin could drop to $23K

Bitcoin’s never-ending triangle: to me the decline from 65k still seems incomplete, with a 5th wave back to 30k (or even 23k) still looming. The analog to meme stocks fits this pattern. We’ll find out soon enough, but either way my sense is that most of the decline is behind us.


Bitcoin is a “farce”- Amundi CIO

Cryptocurrencies such as bitcoin are a “farce” and a symptom of bubbles forming in financial markets, Amundi chief investment officer Pascal Blanque said.

“Bitcoin will be remembered for pushing central banks to adopt digital money,” he said, adding that governments and regulators will ultimately “stop the music.”

Blanque said that it was much more important for investors to increase their exposure to the renminbi, China’s currency, then diversify into crypto currencies.
Pantera Capital: Human Nature Is Pro-Cyclical
For new investors, it’s best to buy when the market is well below trend. Now is one of those times. Bitcoin has only been this “cheap” relative to its trend 20.3% of the past 11 years.
Biggest bubble in world history getting bigger. Biggest crash in world history coming. Buying more gold and silver. Waiting for Bitcoin to drop to $24 k. Crashes best time to get rich.

Ki Young Ju: I hate to say this, but it seems like the BTC bear market confirmed.

Too many whales are sending BTC to exchanges.  his indicator is based on Exchange Whale Ratio, top 10 inflow transactions to total inflows. I’ve been using this indicator for years. If this ratio keeps over 85% (8760h,30d MA) the market is likely to be bearish or fake bull.


To be clear, I expect my $BTC bearish bias won’t last long (maybe just a few weeks) because the market looks good in terms of supply/demand in the long term (e.g., Stablecoins ratio(USD) and SSR) So don’t get me wrong, I’m not saying it’s over.

Santiment: Whales are buying deeps with confidence

The key Bitcoin whale holder demographic we generally look at (addresses with 100-10,000 BTC held) has been rising steadily for about two and a half weeks now. This appears to be a dip that whales are buying with confidence.

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Here guys, we have to split our view in two parts. Long-term perspective brings no doubts that Bitcoin is more alive than dead. Cryptocurrency topic still stands on the table and remains hot among big funds and companies. At the same time, based on surveys that were made by Goldman and JP Morgan institutional investors chill a bit to the market with its current performance – huge volatility and 2021 return of just 14% which is less that Bloomberg Commodity index. At the same time, survey shows that additionally 1.5-2% of the assets could be sent to cryptocrrency market within few years.

Besides, indirect signs, such as demand for Microstrategy bonds, Galaxy Digital cooperation with Goldman Sachs and other news support the view that recovery should start sooner rather than later, but it probably will last longer than initially expected, and definitely will show not as explosive pace as the rally to 60K top. 

In shorter-term, situation stands worse. Multiple factors show that market still stands in depression – low activity, drop of performance statistics and indirect signs shows that downside action might be not over yet. It means that highs chances on another dive are present right now. Mostly it is expected to 20-26K area, and it should be short-term. 

By our technical view, BTC has to stay above 20K area (ETH above 1300) to keep long-term bullish trend intact. From technical point of view, real downside breakout of 20K area could push the market in long-term wide sideways action in the range of 3-20K – the mirror action to the market performance until 20K upside breakout. 

Hopefully the majority of market society suggests that any dive to new lows should be short-term, as already now bullish signs and divergences start to appear. 

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Sive Morten

Sive Morten

By day Sive Morten works for the large European bank. In that roll he evaluates the markets including currencies market managing bank risks and evaluating the bank portfolio.

At the Forex Peace Army, he is known as an author of Forex Military School, which quite unique free forex trading course. We do not know of any other free forex trading education covering such a broad spectrum of forex market concepts in such details while keeping it easy to understand and practically use.

As if that wasn't enough, he is the part of the Shoulders of Giants Program. He shares with his fellow traders at FPA his view and forcast of the Gold Market, Currency Market, and Crypto Market in form of weekly analytics and daily video updates.

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