Is the crypto market finally back?

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As many crypto investors jealously watch the increase in assets of gold and equity investors, is it possible that cryptocurrencies have just reached the turning point that many have been waiting for?

The crypto market has lost more than 50% in recent months, with many fears that a bear market is in full swing and an 80% loss in value is looming.

People tend to think the worst, but again, crypto always finds a way to surprise us, and this time around is no different. Bitcoin is currently up over 30% from its lows, shortly after rumors of potential adoption of Amazon payment methods, as well as the recent B Word conference featuring Twitters Jack Dorsey and Teslas Elon Musk, which has praised the crown cryptocurrency on all levels.

when it rains, it pours

The FUD (fear, uncertainty and doubt) came from all directions, whether it was the crackdown in China, the halving of the hashrate, the end of bitcoin payments by Tesla, the consumption of Too high energy from mining, or even the view that the grayscale premium has declined, FUD Central has had a huge impact on investor demand in recent months.

All of this news surfaced in a flood of bad press, but all of this can be explained as being a positive factor for long-term growth; you just need to know what’s going on behind the curtain and not fall for the click trap at cash.

Repression in China and drop in mining hashrate

It’s no secret that bitcoin mining in China accounts for 66% of global bitcoin production. This raised concerns that bitcoin mining was too concentrated in one region of the world, which would put the network at risk of blackouts and political interference.

Positive outlook: This migration will begin to decentralize the previously centralized bitcoin hashrate. This is one of the most important steps bitcoin has taken towards true decentralization, and it will end the fear of hashrate concentration.

Musk and green energy

Elon Musk added fuel to the fire by saying Tesla will no longer accept bitcoin payments due to its excessive energy consumption and reliance on dirty coal.

Positive outlook: This has driven a green movement in bitcoin and crypto like never before, with most miners actively looking for ways to reduce their carbon footprint and increase the odds of a clean mining process for them. to come up. This will inherently strengthen the longevity of cryptos and induce more ESG (environment, social and corporate governance) investments in the future.

The grayscale premium is negative

During this pullback, the Grayscale Bitcoin Trust (GBTC) premium turned negative, which many saw as a bad sign – assuming institutional demand was declining at a rapid rate. But what if it was the opposite?

Positive outlook: More bitcoin options, such as ETFs in Canada, mean Grayscale is not the only option investors can use to gain exposure to bitcoin. Therefore, while the demand for its product decreases a bit, the demand for bitcoin investment options increases. Additionally, the fact that GBTC stocks are becoming more liquid due to the reduction in the lock-up time from one year to six months means that premiums could go down due to more precise pricing of the stocks.

It is not finished; it never was

Let’s take a step back and look for signs that the crypto market is back on track.

Stock-to-flow Is it July 2013 The stock-to-flow (S2F) model was developed as a simple model for valuing rare commodities like gold. The S2F ratio shows the current stock of a product (current total supply) versus the new production flow (quantity mined that year). For store-of-value (SoV) commodities like gold, platinum, and now bitcoin, a high ratio indicates that they are generally not consumed. Instead, the majority is stored as currency hedge, thus increasing the S2F ratio.

In the chart below, the price of bitcoin is superimposed above the S2F ratio line. We can see that the price of bitcoin has continued to track bitcoin’s S2F over time. The theory therefore suggests that we can project where the price may go by looking at the projected S2F line, which can be calculated because we know the approximate timing of future bitcoin mining.

Similarities with 2013 are significant, with a mid-cycle decline in July 2013 which then hit a new all-time high in December of the same year. This year looks surprisingly similar, with both showing declines below the projected line about a thousand days before the next halving.

If 2021 is to follow the shape of 2013, we could see bitcoin surpass the US $ 100,000 mark by the end of the year.

The 2021 newspaper graph copies 2013 into the week. It is always a good idea to examine long term price data using a log chart – for the simple reason that price changes are difficult to display on a linear scale and can be misleading on a linear scale. an extended period. We can see the similarities between 2013 and today with a mid-cycle pullback that happened just before the big rally at the end of 2013.

There are some surprisingly close similarities:

The year 2013 saw its mid-cycle high the week of April 8, while the mid-cycle high of 2021 was a week later, the week of April 12. The 2013 fund was frozen the week of July 1, while it looks like the 2021 fund was frozen the week of July 19.

It might just be a coincidence, but the case for this 2021 weakness being a mid-cycle pullback is growing. If 2021 goes like 2013, we could see an increase in the price of bitcoin to the level of $ 138,000 by December 2021.

B Word The future is bright This could be the turning point the crypto market needed. After months of bad news, some of the most respected people in business have come together to talk about the state of cryptocurrencies and what the future holds.

The B Word conference was the most anticipated crypto debate yet, with arguably three of the biggest names in the corporate crypto space sitting down to talk about the future of crypto. The conference did not disappoint, as Elon Musk, Jack Dorsey and Cathie Wood all expressed increased enthusiasm and hope for the future of asset classes. This ultimately ended any speculation about Elon Musk’s take on the asset class, as well as Tesla and SpaceX’s holdings and whether they would sell, which he said they wouldn’t. would not.

How to gain visibility?

On the Revix investment platform, you can access ready-made crypto sets. These bundles allow you to own an equally weighted basket of the biggest and, by default, the best performing cryptocurrencies in the world.

You don’t have to try to guess which emerging cryptocurrencies will become the next bitcoin since you will have a diverse basket of cryptos that will automatically update each month based on the performance of the crypto market.

Diversification works in all asset classes around the world. It’s no surprise that this also works in crypto.

For more information on Revix’s USDC Savings Vault, Crypto Packages, or a direct way to invest in Bitcoin, Ether, Pax Gold, or USDC, visit Revix.

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