Insto bitcoin adoption continues

Bitcoin, along with the broader crypto market, bounced from the week’s lows but still finished slightly lower over the last week, despite equities rallying on a US inflation slowdown.

Bitcoin and Ethereum were down 2.64% and 2.59% respectively, over the seven days to 18 August. Bitcoin’s market capitalisation is down to US$1.17 trillion. The global crypto market cap is at US$2.09 trillion, while bitcoin’s market dominance ticked up to 56.3%.

Source: CoinMarketCap. As at 18 August 2024. Past performance is not indicative of future performance. Performance is shown in US dollars and does not take into account any USD/AUD currency movements.

Source: Glassnode. Past performance is not indicative of future performance.

Crypto news we’re watching

Insto Bitcoin ETF adoption continues to increase

13F-filings (a quarterly report by investment managers to the SEC that discloses their US equity holdings) for the second calendar quarter have been released. These filings indicate there has been a 27% increase in institutional buying since the prior quarter. This suggests that institutions may continue to have confidence in bitcoin, despite weak quarterly price performance.

Over 262 new firms, for a total of 1,199, invested in spot bitcoin ETFs by 30 June. Although Bitcoin ETF holdings are dominated by retail holders, institutions now account for around 21% ¹.

Illicit activity in crypto falls

Last week, on-chain analytics firm Chainalysis released part 1 of its crypto crime report which showed that illicit activity using crypto this year had declined. YTD activity (to July 2024) dropped by almost 20% from $20.9 billion to $16.7 billion. The report also stated that, although illicit activity has dropped overall, there has been an increase in stolen funds and ransomware.

Stolen funds have nearly doubled, going from US$857 million to US$1.58 billion, while ransomware inflows are about 2% higher, going from US$449.1 million to US$459.8 million.²

CRYP company spotlight

Pension funds buying Microstrategy shares

The manager of the Government Pension Fund of Norway, Norges Bank, holds 1.123 million shares (currently valued at over A$210 million) in MicroStrategy (MSTR), according to 30 June 13-F filings. The sovereign wealth fund has been buying shares of MSTR since 2008, but has more than tripled its investment in the company in the last 12 months.

The Swiss National Bank has also reported that it holds around 466,000 MSTR shares, a 60% increase since the previous quarter, while South Korea’s public pension fund, National Pension Service (NPS), bought close to $34 million of MSTR shares in the second quarter of this year.³

MicroStrategy is currently held in Betashares Crypto Innovators ETF (ASX: CRYP)⁴. MicroStrategy is a company that specialises in business intelligence, mobile software and cloud-based services, and is also the largest corporate holder of bitcoin. The company is considered the be a bitcoin price proxy given its substantial bitcoin holdings.

Bitcoin (BTC): Accumulation Trend Score

This metric assesses a weighted balance change across the market. A score closer to 1 indicates that in aggregate, larger entities (or a big part of the network) are accumulating, while a value closer to 0 indicates they are distributing or not accumulating. This provides insight into the balance size of market participants, and their accumulation behaviour over the last month.

Source: Glassnode. Past performance is not indicative of future performance.

Altcoin news

Most ‘Top 20’ altcoins were in the red, but Litecoin (LTC) had a positive return of 10.5% over the 7 days to 18th August. There isn’t much news on why the altcoin is outperforming the market, although on-chain data suggest that existing large holders (addresses holding 1% or more of the circulating supply) of Litecoin are accumulating more LTC than they are selling⁵.

Litecoin is considered ‘the silver to bitcoin’s gold’, and is the oldest cryptocurrency after bitcoin, having started in 2011.

Investing in crypto assets or companies servicing crypto-asset markets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto-asset markets.

Investing in crypto assets or crypto-focused companies is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment. Any investment in crypto assets or crypto-focused companies should only be considered as a very small component of an investor’s overall portfolio.

References:

1. https://www.nasdaq.com/articles/institutional-bitcoin-etf-adoption-surges-bitcoin-price-struggles

2. https://www.chainalysis.com/blog/2024-crypto-crime-mid-year-update-part-1/#:~:text=Despite%20the%20overall%20decline%20in,through%20the%20end%20of%20July.

3. https://u.today/central-banks-of-norway-and-switzerland-disclose-massive-microstrategy-mstr-holdings

4. As at 18 August 2024. No assurance is given that this company will remain in the portfolio or will be a profitable investment.

5. https://en.coin-turk.com/whales-increase-altcoin-holdings-in-august-2024/

Off the Chain is published every second Tuesday. It provides the latest news on bitcoin and the rest of the crypto market, along with analysis and insights into the world of crypto.

It provides general information only and is not a recommendation to invest in any crypto asset, crypto-focused company or investment product.