New ATH Reached: Bitcoin Update ⚡

Bitcoin passes $66k as it reaches a new all time high. ETH passes $4k.

Issue summary: Bitcoin (BTC) has passed $66k today for the first time ever. We write about what’s next for Bitcoin in Q4 2021. We also summarize and highlight the most important crypto news, stats, and industry reports.

In This Week’s Issue:

  1. This Week in Crypto… 

    1. 🗞️ Top Weekly News 

    2. 💵 Weekly Fundraises

    3. 📊 Key Stats

    4. 📝 Report Highlights

    5. 🎧 Best Podcasts 

    6. 📈 Top 10 Performers

  2. Q4 Bitcoin Update - What’s Next After All Time Highs By Mike Gavela

  3. Coinstack Podcast Episodes

  4. Top 30: A Good Long-Term Crypto Portfolio

  5. Join Our Telegram Group

  6. Who We’re Following Closely on Crypto Twitter

  7. How to Get Started in Crypto Learning

🗞️ Crypto News Recap: The Top 10 Stories

Welcome back to This Week in Crypto… everything you need to know in one scannable format. Here are the top 10 stories of the week...

  1. ​​⚡ Bitcoin Hits All-Time High Above $66K on Strength of ProShares ETF Debut - The latest rally appears fueled by the successful debut on Tuesday of the first U.S. bitcoin futures exchange-traded fund. (Source)

  1. 💳 CFTC Fines Tether and Bitfinex $42.5M for ‘Untrue or Misleading’ Claims - The U.S. regulator issued an order “simultaneously filing and settling charges against Tether,” the issuer of the crypto industry’s largest stablecoin. (Source)

  1. 💰 Australia Has Third-Highest Rate of Crypto Adoption in the World: Finder Survey - According to a survey published by comparison site Finder on Sunday, Australia is more bullish on cryptocurrencies than most other countries around the world. (Source)

  1. 🤑 Brazilians Bought More Than $4 Billion in Cryptocurrencies This Year As the Country Looks To Regulate Bitcoin - Bruno Serra, the director of monetary policy at the Central Bank of Brazil, believes that the people’s interest in cryptocurrencies is unlikely to fade anytime soon. (Source)

  1. 🏦 Polkadot Unveils $770M Development Fund Ahead of Parachain Auctions - Polkadot’s Gavin Wood has announced a more than $770 million development fund just weeks before the network’s parachain auctions are set to go live. (Source)

  2. 😮 Ethereum Developers Delay the Difficulty Bomb, Again. - The proposal will move the adjustment from December 2021 to June 2022, a date developers expect to have finished the transition to Proof-of-Stake. (Source)

  3. 🇺🇸 US Treasury Department Says Cryptocurrencies Could Undermine Sanctions - The agency issued the warning after a six-month review of U.S. sanction programs. (Source)

  4. 📈 French Central Bank Pilots Blockchain-Based CBDC for Debt Market- Led by Belgian financial services firm Euroclear, the latest French CBDC trial involved a system by tech giant IBM. (Source)

  1. 🏧 New York AG Directs Two Crypto Lending Platforms to Cease Activities - New York Attorney General Letitia James ordered two crypto lending platforms to cease their activities, which were determined to be unregistered and unlawful. (Source

💬 Tweet of the Week

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💵 Weekly Crypto Fundraises & Deals

Here are all the crypto fundraises we heard about this week, ranked by size…

  1. Element Finance, a DeFi protocol, raises $32M in Series A funding led by Polychain Capital

  2. Manta Network, a privacy project, raises $5.5M from over 30 VCs

  3. PsyOptions, an options platform, raises $3.5M in a Seed round led by Alameda Research

  4. Sublime, a social staking platform, raises $2.5M in a Seed round led by Galaxy Digital

  5. Good Games Guild, a gaming developer, raises $1.7M in a Seed round

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📊 Key Stats of the Week

Here are the most important and interesting stats in crypto this week...

1. Ethereum Reaches a New ATH of $178.8B in Realized Cap During BTC’s First ETF Day of Trading

2. Binance Announces Their Largest BNB Burn at $635M in the 3rd Quarter of 2021

3. Yearn Surpasses $5.3B in TVL, $44M in Revenue YTD

4. The Doodles NFT Drop Pushed Mean Gas Prices As High as 7,000 GWEI (>$16K) Over the Weekend on Ethereum’s Blockchain

5. A Healthy Balance Between Longs and Shorts Remains in BTC Perpetual Swaps Signaling Funding Rates Remain Positive, but Not at Alarming Levels

6. L2s Reach $3.8B in TVL With Arbitrum Accounting for Over 60% of Market Share

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📝 Highlights from Crypto Reports

Here are the top highlights from the best crypto research reports this week…

1. 2021 Q3 Crypto Venture Capital Fundraising Overview

Crypto Fundraising Report: Q3, Oct 18, 2021

Dove Metrics is the leading crypto fundraising database tracking over 2,900 active crypto investors (including funds, DAOs, and angels). Founders Regan Bozman and Pierre Chuzeville breakdown the deal activity in the space during Q3. 

“The crypto fundraising ecosystem is maturing quickly, with companies raising later and larger rounds compared to previous quarters. Capital flowing into the space grew by nearly 50% even as fewer rounds were announced. DeFi has cooled down. DeFi deals are only 25% of rounds, down from 35% last quarter. ETH seems to be gaining market share and investor attention, with 75% of DeFi deals happening in that ecosystem (a major increase from last quarter).”

The above graph includes venture capital rounds only and not funds raised from token offerings.

2. At Least 52 Companies Worth $7.1 Trillion Hold Digital Assets

Creeping Crypto: Cryptocurrency Risk and ESG, Oct 13, 2021

At least 52 companies representing $7.1 trillion in market capitalization have some exposure to cryptocurrencies, according to an analysis by MSCI.

MSCI in their report documented the the lack of C-suite talent with digital asset expertise, showing how important it is for Board Members to get up to speed on the world of blockchains, crypto, and DeFi.

“Really simple questions start to become really tricky here,” Harlan Tufford, who leads MSCI’s North American corporate-governance research, said in a podcast discussing the report. “Who in the company knows the passkey to access your private anonymous wallet that stores, you know, a billion dollars in Bitcoin? And how do you monitor that? Adding to the challenge is what appears to be a lack of crypto expertise among members of corporate boards of directors. MSCI searched the biographies of about 6,500 board members and found only 79 people at 64 companies included references to cryptocurrency or blockchain while 1,114 contained references to cybersecurity. A search for “risk management,” meanwhile, yielded 5,155 results.”

3. Almost Half of Blockchain Active Wallets Are Connecting to Games

BGA Blockchain Report Q3, Oct 14, 2021

Dapp Radar is an analytics platform tracking over 7775 Dapps from over 20 protocols. In their latest Q3 report, the team uses on-chain analytics to find insights in the current Dapp ecosystem ultimately finding the source of utility for active wallet addresses to be related to gaming Dapps. 

“The blockchain industry registered 1.54 million UAW during Q3, growing 25% quarter-over-quarter (QoQ) and 509% year-over-year (YoY). One of the main drivers behind the surge of this metric is blockchain-based games. Propelled by the P2E narrative, the number of unique active wallets connected to blockchain games reached 754,000 in Q3. This amount represents 49% of the whole industry’s usage.”

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🎧 Top Crypto Podcasts of The Week

Here are the crypto podcasts that are worth listening to this week...

  1. Coinstack - Terra Deep Dive

  2. The Breakdown w/ NLW - Massive Trading Volume for ProShares Bitcoin Futures ETF as NYAG Targets Crypto Lenders

  3. Bankless - 88 - Forward With Crypto | Andrew Yang

  4. The Delphi Podcast - Demystifying Crypto Legalities, the Motivations of Regulatory Bodies, and Stablecoin Regulation

  5. The Defiant - Bitcoin ETF Explained - What's Next?

📈 Top Performers This Week

Here are the top 10 performing digital assets this week, out of the top 100 by market cap. Some of our favorites like DOT, MATIC, and KSM had an especially great week.

And here are the top 15 performers in the last week from all tokens with a market cap of $20M+.

The Top Performers This Month from the Top 100: Shiba Inu is a meme coin, Axie Infinity is a game, Fantom is an L1, Stacks is a BTC L2 

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🏦 Q4 Bitcoin Update - What’s Next After All Time Highs?

By Mike Gavela

The first ever Bitcoin futures Exchange Traded Fund (ETF) going live on Monday has led to a new all-time high this week for Bitcoin, as BTC passed $66k for the first time ever today.

Before we predict where Bitcoin is going later this year, let’s start with some history about Bitcoin ETFs.

The first BTC ETF application was filed back in 2013 by Cameron and Tyler Winklevoss. It has been eight years since that first application, and we now have a BTC Futures ETF. An ETF brings legitimacy to the institutional investors seeking exposure to the cryptomarkets. 

This deep dive explores the increasing demand from institutional adoption in Q4. We do this by exploring the nature and history of BTC ETFs and how this institutional demand matches the bullish on-chain metrics that signal us setting more new records in the digital asset total market cap in Q4 2021.

What is an ETF?

An ETF is an exchange-traded fund. It is a security that tracks an index sector or commodity but can be purchased or sold on the stock exchange the same way a regular stock can. The magic behind an ETF is that it can be structured to track anything, but getting one approved around Bitcoin has proven extremely difficult over the past few years. ETFs come in all shapes and sizes and offer a more liquid, more tax-efficient, and lower-cost way to gain exposure to specific market segments. 

In the case of Bitcoin, the ETF has long been seen as a simple way to reduce friction to onboarding traditional investors to the asset. There is no need to set up any wallets, open any Coinbase accounts, or deal with self custody. Traditional retail and institutional investors in the US could use their current brokerage accounts to buy any other commodity ETF and execute the trade with ease.   

Current Institutional Offerings

Before this week, institutional investors were unable to purchase BTC through an ETF. Instead, institutional investors had to use publicly traded vehicles, such as GBTC or BITW, that give exposure to either Bitcoin or a collection of other cryptocurrencies. 

Some of those trusts usually do not have a redemption functionality, so they can trade either under significant premiums or big discounts. There are certain fee structures that those funds have been able to charge because of the lack of competition. Now that the SEC seems to be “unlikely to oppose” what we are watching, tons of new applications are eager to get their piece of the institutional pie. 

Spot vs. Futures ETF 

Those Bitcoin ETF applications traditionally have followed one of two structures. The first is a Bitcoin spot ETF, this is holding actual Bitcoin, and it is just purchasing at the spot price. Think of this as a true ETF in the sense that what you do is you go buy the shares. Those shares take your dollars, and they are buying Bitcoin into the fund. 

The second structure is a Bitcoin futures ETF. This type of ETF essentially uses the futures market to give you exposure to Bitcoin but not buying Bitcoin at a spot price. These are future contracts filed under mutual fund rules, meaning there are larger fees to be paid than a spot ETF. 

The Bitcoin futures ETF may not be as ideal as a Bitcoin spot ETF because the Bitcoin futures ETF has some structural changes and some fee drag on it that may not provide the exact same exposure. Regardless of the nuances, investors now have an easier on-ramp to gain direct crypto exposure while still using the same terminals and brokerages they use today to execute their trades. 

Current Performance

In her article, Bitcoin Futures ETF Debuts as Second-Highest Traded Fund Ever, Vildana Hajric highlights the rampant success of the newly minted ETF.

“The first Bitcoin-linked exchange-traded fund listed in the U.S. debuted as the second-most heavily traded fund on record in a watershed moment for the crypto industry.  

The ProShares Bitcoin Strategy ETF -- trading under the ticker BITO -- rose about 4.9% to $41.94. More than 24 million shares changed hands Tuesday, according to data compiled by Bloomberg. Because of the way the fund settles trades, net flows into or out of the product probably won’t be known until overnight on Wednesday.

With turnover of almost $1 billion, BITO’s debut ranked only behind a BlackRock carbon fund for a first day of trading, the latter of which ranks higher due to pre-seed investments, according to Athanasios Psarofagis at Bloomberg Intelligence. Bloomberg also reported that options on BITO will begin trading on the NYSE Arca Options and NYSE American Options exchanges on Wednesday.”

The Proshares ETF hauled in $570 million of assets on its first day of trading, a sign of just how hungry investors remain for bets on the cryptocurrency as prices approach a record high. This rampant success has Grayscale filing form 19b-4 to convert it’s Grayscale Bitcoin Trust (GBTC) into a Spot ETF.

On-Chain Metrics 

There is clear macro demand for crypto exposure coming off of the excitement from BTC’s first Futures ETF. The four on-chain metrics below are what give us the conviction that the market has yet to achieve it’s blow off top and is set to come by the end of Q4.

URPD shows at which price the current set of Bitcoin UTXOs were created, i.e., each bar indicates the number of existing bitcoins that last moved within that specified price bucket. The price specified on the x-axis refers to the lower bound of that bucket.

At the time of writing, only 311.8k BTC were last moved at a price level above $60,187. Note also that the owners of these coins HODLed throughout all the ups, downs and volatility of the last 6 months and did not sell. With only 1.66% of the supply held at an unrealised loss, this means 98.34% of coins are now held at an unrealised profit giving long term holders incentive to feed institutional demand and realize profits.

The MVRV-Z Score is used to assess when an asset is overvalued or undervalued relative to its "fair value", as underlined by the deviation between its market cap and realized cap. When market value is significantly higher than realized value, it has historically indicated a market top (red zone), while the opposite has indicated market bottoms (green zone).

Historically every time MVRV z-score reclaimed 3.0, Bitcoin went on a parabolic price run for the next 1-2 months.

Lightning Network Rapidly Scaling

Lightning Network is a Layer 2 technology for Bitcoin that aims to scale transactions more efficiently. The transfer of BTC within the LN occurs off-chain (outside the blockchain) and is faster, cheaper and more readily confirmed. In this way, Layer 2 is designed to decongest the main network and reduce transaction fees. BTC’s lightning network has reached an all-time high of $189M demonstrating the demand for the network by its users continues to escalate and trend vertically. 

Liquid Supply Shock in Play

Famed on-chain analysts Willy Woo and Will Clemente teamed up this fall and created a new on-chain metric called, Liquid Supply Shock: Coins held by investors with a history of accumulating vs coins held by speculative investors with a history of buying and selling.

Clemente writes the following in his latest newsletter, “Macro still highly bullish. Long term holder supply shock has soared to unquestionable new all time highs.

Remember: At some point we will start to see LTHs begin distributing, which is normal. Long term holders (and whales) buy weakness and sell strength. (see 2017 & 2020)”

Conclusion - $87k+ BTC By EOY

Right now based on on-chain metrics, the realized price for BTC is $22k, our price floor model shows $43k floor, and the ceiling we are expecting based on current fundamentals is $87k.

The BTC Futures ETF is not the only catalyst to the blow-off top coming Q4. The futures ETF is a signal confirming that institutional investors are starving for more crypto exposure using legacy brokerages and terminals. The ETF simply legitimized crypto as an asset class to wall st, giving institutions a higher degree of confidence to allocate a portion of their portfolio into the space. 

Combining the macro demand along with on-chain metrics we see an $87k+ BTC price probable by the end of Q4.

We see many in the industry expecting a $100k+ price by the end of December. We shall see if we hit that fabled mark this year.

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🎧 Latest Episodes of The Coinstack Podcast

We have a new Coinstack podcast. So far we’re at 7,518 listens and growing!

You can listen to it on Anchor, Spotify, or Google Podcasts -- or add the RSS feed to Apple Podcasts.

Here are the episodes we’ve released so far...

You can listen and subscribe on:

  1. Anchor

  2. Spotify

  3. Google Podcasts

  4. Apple Podcasts (add RSS feed manually)

  5. Breaker

  6. Radio Public

  7. PocketCasts

We really appreciate you listening and sharing the link with your friends.

📈 Our Top 30: A Long-Term Crypto Portfolio

Each week we include our top 30 list. If we were creating a portfolio from scratch right now that we didn’t want to touch for 5-10 years, we would be sure to include our top 5: ETH, DOT, SOL,  AVAX, & FTM. Here’s our current top 30 for a well-rounded long-term crypto portfolio…

To see which exchanges to buy these on, use Coinmarketcap or Coingecko. We recommend using dollar-cost averaging and holding for a 5-10 year time horizon for any crypto investor as prices can fluctuate a lot in the short term.

💬 Join The Coinstack Telegram Community

Join our Telegram Channel here to chat with our community, ask questions, and learn more about the future of money as we move to a decentralized internet and the creation of a new open global monetary system that works for everyone. We now have over 1700 members on our Telegram.

💬 The People We’re Following Closely on Twitter

  1. Vitalik Buterin

  2. Justin Drake

  3. Hayden Adams

  4. Zhu Su

  5. Hasu

  6. Ryan Adams

  7. Vance Spencer

  8. Camila Russo

  9. Ryan Selkis

  10. Anthony Sassano

  11. Lyn Alden

  12. Gavin Wood

  13. Cathy Wood

  14. Beniamin Mincu

  15. Barry Silbert

  16. David Hoffman

  17. Preston Pysh

  18. Willy Woo

  19. Ultra Sound Money List

  20. Polkadot Ecosystem List

📚 How To Get Started With Crypto Learning

  1. Crypto: Explain It Like I’m 5 (Article)

  2. The Infinite Machine by Camila Russo (Book) 

  3. Crypto Theses for 2021 by Messari (PDF)

  4. Bankless - The DeFi community (Substack + Podcast + Discord)

  5. Understanding Polkadot - The Next Generation Blockchain Tech (Website)

  6. The Ethereum 2.0 Report from Messari (PDF)

  7. Blockgeeks Video Tutorials (Video)

  8. The Coinstack Website (Website)

  9. 2008 Bitcoin Whitepaper (PDF)

  10. 2013 Ethereum Whitepaper (PDF)

📰 The Coinstack Newsletter:

Tracking the most important blockchain stories of the 2020s including a decentralized internet and the creation of a new open global monetary system that works for everyone. As always, published for informational purposes only. Please do your own research. Just our opinions. Not intended as financial advice as we are not financial advisors. We may be long on many of the digital assets we write about as we believe strongly in the sector. Please do your own research. Published and written weekly by Ryan Allis and Mike Gavela. 

The information above does not constitute an offer to sell securities or a solicitation of an offer to buy securities. Further, none of the information here is a recommendation to invest in any securities. Past performance is no guarantee of future results. Any historical returns, expected returns or probability projections may not reflect actual future performance. All investments involve risk and may result in loss.

Comments and thoughts welcome on our Telegram channel:

Please share with your friends and colleagues.

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