(Last Updated on November 4, 2020)
COVID-19 has rapidly accelerated the strains and drains on our economic systems around the planet. The effects have been absolutely exponential – the Federal Reserve responded this year by printing an additional 22% of the U.S. dollar supply.. We’ve survived the liquidity crisis created “flash crash” in March of 2020 to see Bitcoin rise again above $13,000!
And it looks like we have more money printing ahead.
Democrats are asking for a stimulus around the $3.3 trillion mark while Republicans are offering $1.8 trillion. Probabilities show they’ll probably end up around the $2-2.2 trillion mark.. absolutely mind blowing amount of dollars coming to the market.
Actual inflation will skyrocket and there is only one monetary tool to soak up all that junk fiat..
Now with the Biden vs. Trump election looming 6 days out we are seeing some drastic losses in the U.S. stock markets across the board.. Yet Bitcoin remains strong.
Uncorrelated price action vs. S&P 500, Nasdaq and Dow Jones
October 26th, 2020 – we are seeing all the major index take a large hit up from 1-3% while BTC keeps steady above the $13k line. In prior years we certainly would see the corn take a much larger hit that matches stock market dips. Each day Bitcoin is resilient above the $12 to 13k mark is a massive win showing strength and improving hodl wallet activity.
Bitcoin’s 30 Day correlation to the S&P 500 has dropped to ZERO
Supply drying up as more wallets HODL long term
When it comes to analysis that can give us some serious insight on what is happening in regards to wallet activity – Willy Woo is the man! On-chain analytics is best for giving insight on how long coins are being held and when long term holders are getting active. The trend seems to be heading toward more longterm holding and larger institutional players continuing to enter the space.
If companies continue to utilize Bitcoin as a reserve asset such as MicroStrategy and Square – we may see some major investments come in that have a very low time preference. Perfect for driving value higher as the market soaks inflationary fiat around the globe.
Is this what we are seeing happen currently? Only time will tell, but there are a lot of signs that we are building the foundations for a massive evolution in Bitcoin’s history.
Please follow @Woonomic on Twitter for the best on-chain Bitcoin analysis around!
The PayPal announcement brings easy user on boarding
The migration toward digital payments and digital representations of value continues to accelerate, driven by the COVID-19 pandemic and the increased interest in digital currencies from central banks and consumers. PayPal Holdings, Inc. (NASDAQ: PYPL) today announced the launch of a new service enabling its customers to buy, hold and sell cryptocurrency directly from their PayPal account, and signaled its plans to significantly increase cryptocurrency’s utility by making it available as a funding source for purchases at its 26 million merchants worldwide.
The PayPal announcement brings the possible of EASY ONBOARD ACCESS to Bitcoin, Litecoin, XRP, and BCH for 2x the amount of current estimated users on Bitcoin now.. Seems like a pretty massive opportunity for crypto to reach a new customer base.
Why is PayPal so important?
In theory – PayPal’s user base is one of the oldest, trusted payment platforms online. Many first time online businesses started with PayPal and have never left. Older age demographics show much higher trust with the web based PayPal portal than the new app based platforms.
Young generations are Venomo, CashApp, Square..
More specialized charts coming from Willy to show continued support for establishing a real decoupling between Bitcoin and S&P 500 at this time. Buying pressure seems to be at an all time high with the news about the Central Bank of Iran added to the expectations that more publicly traded (probably tech) companies will be purchasing BTC as a reserve asset.
Our current bull market climate is not full of “FOMO retail buyers” – instead we have calculated institutional buying pressure which seem to swoop in very, very strongly at any perceived discounted price.
It seems we are watching new, institutional buyers do their best to buy up supply without running the price up too quickly. A difficult balance to find when the total supply of this digital asset is only 21 million!
Bitcoin vs. Gold ratio breakout
For the first time in 3 years we are seeing Bitcoin break away from it’s entanglement with Gold. This has been expected as gold will continue to be mined, slight inflation, and other market mechanics in play as BTC steers toward inflation soaking, 21 million capped, golden energized goodness.
Skew’s chart helps highlight how difficult it will be for gold to keep up with the technological demands of our economies of today.
I think Bitcoin’s superior ability in regards to access, transmutability, and speed will be the factor in what monetary tool is used to defend wealth from inflationary fiat to come..