ADVERTISEMENT
Advertise with BNC

Word on the Street: Crypto’s promise wanes as an alternative investment

Stocks and crypto fall in tandem as Bitcoin's compute metrics in hashrate and difficulty drops the most since 2009.

The crypto and stock markets again tanked in unison this week and although both have steadied, the S&P is potentially in the process of forming a large head and shoulders pattern and Bitcoin has shattered its technical support around $6,000. The overall market capitalization slid ~25% during the week, down from $185 billion on Monday to ~$137 billion by Friday.

The sell-off in stocks was led by tech companies with the Nasdaq down almost 5% by the end of the week, the S&P -3% and Bitcoin down around 22% in the past 5 days. Over the same time period BTC/USD has moved in lockstep with the Nasdaq and S&P indices. Despite all the turmoil, gold is only up ~0.7% since Monday.

btc spx ndx

*BTCUSD (red line) moved in lockstep with the S&P 500 (SPX, blue line) and Nasdaq (green line) on four ocasssions this week during the biggest selloffs, marked by the vertical lines.
*

Legacy market correlations

Correlation charts show Bitcoin has a semi-weak positive relationship of 0.2 with the S&P which is twice as correlated as it was at the start of the year. Bitcoin isn’t fulfilling its role as an alternative asset to stocks or as digital gold as it continues its weak to 0 correlation with the precious metal.

correlation
*Bitcoin’s correlation with the US dollar Index DXY (blue line); S&P 500 (grey line); and gold GLD (purple line) since the start of the year.
*

Bitcoin trading dominance

In the past 24hrs, trading in Bitcoin continues to be be dominated by USDT which accounts for 59% of overall global trading, over double that in USD and up from 57% the same time last week, according to BNC’s global spot price.

btc constituents

Top 5 performers

Stablecoins were among the strongest performers of the top 100 coins this week with all holding a strong 1:1 peg throughout the turmoil. Of the top 10 movers this week half were stablecoins.

top 5

Top 10 performers

top 10

Worst 5 performers

bottom 5

Trading in stablecoins

Trading volumes in stablecoins continued apace with TUSD closing the gap with Tether. In BNC’s global weighted-average volumes (GWA is the global spot price based only on the volume in the base currency of a trading pair) True USD (TUSD) and Tether (USDT) had the most inflows and outflows throughout the volatile week. Newcomer PAX also saw steady volume.

stablecoin volumes

The drop-off in volume towards the end of the week looks like a risk-off sentiment even though markets are by no means out of the woods yet.

Trading volumes in DAI and USDC remains subdued.

Bitcoin cash hard fork fiasco drags on hashrate

The Bitcoin Cash fiasco has been a drag on the compute power and hashrate of both Bitcoin and Bitcoin Cash ABC and SV. The hashrate of Bitcoin Cash is down sharply since the hard fork last week.

bch hash
*The Bitcoin Cash hashrate has almost halved from almost 8 Exahashes per second mid November to 4E.
*

btc hash

Bitcoin’s hashrate is down from almost 60 Exahashes per second to 40 E – an almost 20% drop.

Bitcoin difficulty level

Bitcoin’s difficulty levels have also seen a steep decline since October, down almost 1 Terrahash from over 7.1T to 6.6T a drop of over 7%.

btc diff
Bitcoin’s difficulty level, the mathematical value of how hard it is to find a block, saw its largest decline in November since 2009.

According to data at Bitcoinity, the next difficulty adjustment is estimated to be on December 2 and estimated to drop around 10% from the current 6.5T to 5.9T. Zooming out to its full historic data, the latest drop in difficulty has broken through the parabolic trend line.

btc diff 09

The difficulty level has broken its parabolic trendline beginning in 2009.

Around the world in macro:

North America:
Morgan Stanley Calls It: "We Are In A Bear Market"

Bridgewater hedge funder found Ray Dalio implores Fed to consider slowing interest rate rises as "Fed rates are hurting assets".

Europe:

Switzerland’s stock exchange, the SIX Swiss Stock Exchange, is to launch the world’s first multi crypto exchange traded-product (ETP) next week.

Italy is facing a nefarious doom loop: Italian banks own a large chunk of Italian government debt and the government is liable for the bank sector.
With Rome appearing to square off with Brussels over its contentious budget,
as the ECB raised its quantitative easing to all time-highs.

According to IMF data, Italian banks own 26% of Italian government debt, far above the 19% simple average for developed markets. Moreover, euro-area debt securities constitute 12% of Italian bank assets.

India: The Indian government, which has all but banned the trading and use of crypto, filed a counter-affidavit in the Supreme Court this week that provides a chance of the ban to be reversed and being properly regulated.

Mastercard has complained to the US government that the Indian government is deliberately promoting domestic payment networks over international ones like Mastercard and that the Prime Minister, Narendra Modi, has actively used nationalism in promotion of payment processing network RuPay.

Research round-up:

Bitcoin Cash hard fork report: A full background on the schism between ‘Satoshi’s vision’ and ‘Satoshi’s original vision’; the op code changes planned for BCH ABC and why this fork has been nastier than previous bitcoin forks.

Forecasting the future of decentralized prediction markets: Circle’s comprehensive look at Augur, Gnosis and Stox.

The seven deadly paradoxes of cryptocurrency: The befuddling truths behind mining, storage, concentration, valuations, anonymity and valuation.

Wall St believes S&P will peak at 3,056: Bank of America’s latest sentiment report shows fund managers believe value stocks will outperform growth in next 12 months.

Follow @AndrewBNC


ADVERTISE WITH BRAVE NEW COIN

BNC AdvertisingPlanning your 2024 crypto-media spend? Brave New Coin’s combined website, podcast, newsletters and YouTube channel deliver over 500,000 brand impressions a month to engaged crypto fans worldwide.
Don’t miss out – Find out more today


ADVERTISEMENT
Advertise with BNC
ADVERTISEMENT
Advertise with BNC
BNC Newsletters: A weekly digest of the most important news and analysis.
ADVERTISEMENT
Advertise with BNC
Submit an event on bravenewcoin.com
Latest Insights More
ADVERTISEMENT
Advertise with BNC