2 Important Stories and Metrics You Need to Know
Many of you reading this, myself included, have ridden Bitcoin down from $20k in late Dec 2017 to just over $3,000 a couple of months ago. Was that the bottom? Is the bear market finally over?
I don't know and no one else does either. Yet, I found 2 pieces of under-the-radar news that I think are huge bullish signs for Bitcoin. Let's take a look at them. One involves a bank. The other involves who is holding, buying and starting to accumulate more Bitcoin.
Story #1: Big Swiss Private Bank Offers Cryptocurrency Services
Old-school private Swiss Bank Julius Baer announced this week they have plans to provide 'storage, transactions, and investment solutions for digital assets', as reported by Trustnodes. Here's a link to the headline below.
Julius Baer has $380 billion in assets under management at its private bank. Its clients are very high net worth individuals (HNWI), family offices, and even some sovereign wealth funds. They have $1 trillion in total assets so they are huge even as banks go. Baer is working with a startup called SEBA Crypto AG, that the bank invested in. The Baer head of markets said 'we are convinced that digital assets will become a legitimate sustainable asset class of an investor's portfolio'. Baer wants to ensure they have a good system in place for managing these assets for customers.
This is an incredibly bullish sign as Baer is without a doubt one of the banks who benefit most from our existing financial system the way it is. Yet, they see the potential of Bitcoin and how it can help their clients despite it being disruptive to the existing system.
For those of you who keep wondering when more signs of legitimacy and adoption for Bitcoin will come, this is one of those signs. And it's bullish.
Story 2: Industry Insiders Accumulating Bitcoin
Those most in the know and most invested in Bitcoin are buying more. How do we know this?
In the stock market, one of the things an investor can track is insider activity. The legal method of insider activity with the filing of proper paperwork gives us an indication of insider buying, insider selling, and sometimes short interest. Short interest is how many short positions (shares are borrowed and sold with the hope to buy back at a lower price) are open on the stock. Short interest is a bet the stock will decline in value. Many stocks have the short interest amount available if you look it up.
With Bitcoin, it's more difficult but we do have some things we know. For instance:
- Exchanges have the largest active wallets
- The 5 largest active wallets, in order, belong to Bittrex, Bitfinex, Bitstamp, Huobi, & Binance (all exchanges)
- Thanks to BitInfoCharts, we know that these top 5 wallets have more than $2 billion worth of Bitcoin or 560,000 BTC
Here is the actual Bitcoin wallet distribution
I find it interesting that 95.73% of all Bitcoin wallets have at least 1 BTC in them and there are over 20 million wallet addresses. Remember this is wallet addresses (wallets), not people. Many people have their BTC spread out in more than one wallet.
AMBCrypto did an analysis of these wallets. They learned that during the bear market in Bitcoin these exchanges and huge wallets saw it as a buying opportunity and accumulated a total of 178,000 BTC. All this in the 100 largest wallets and all within the last 60 days.
A little deeper look into the wallet numbers and BitInfoCharts reports that of the over 20 million addresses, only 342,470 addresses (or 1.71%) of all addresses have a value of more than $10,000 at the current ~$3800 price. That's +/- 2.5 BTC. While some large holders have many smaller wallets to protect their interests, this distribution of addresses implies that there are many people with a small amount of Bitcoin.
The True Believers Are Holding More, Too
I'm not the only one who noticed this. Industry insider Ryan Selkis @TwoBitIdiot on Twitter and founder of Messari Crypto (where I am an analyst contributor) tweeted this just yesterday.
Per @DiarNewsletter, more than half a million addresses now hold $4,000-$40,000 of bitcoin.
That’s 2x the 2015 bear market equivalent “true believer” base at ~15x the price.
And the metric is growing again after a net flat / negative 2018. pic.twitter.com/J8PfQcQIS0
— Ryan Selkis (@twobitidiot) February 28, 2019
The idea is most of the true believers in Bitcoin hold more than 1 but less than many Bitcoins. People like you and me. A common number used to identify these people is those that own 1-10 BTC. Two things are happening here for these true believers:
- There are 2x the number of these true believers holding at $3800, or around 15x the price of the bottom of the last bear market ~$250.
- The number of these true believers, regardless of price, is growing again after a negative 2018.
In other words, those that believe in it most, first industry insiders/exchanges and then these true believers are now buying Bitcoin again. Maybe we have hit bottom where conditions are oversold and there are no more big sellers in the market. These 2 groups are the closest we have to insider buying like in the stock market. An old adage in stock investing is that insiders sell for many reasons, but insiders only buy for one reason. They think their company stock is cheap/undervalued. Our 2 biggest groups of 'insiders', the exchanges & the true believers, are telling us the worst is over and a bull market is nearby.
Again, this is a very bullish sign for Bitcoin. When people look for signs a market has turned, or that the worst is over, these are the types of signs industry leaders are looking for.