Bitcoin Spot Metrics, USDC Leads Ethereum, & GBTC's Plunge

BTC Losses Ramping Up?

• Treasury yields have been picking up considerably over the last few weeks and risk assets have reacted negatively, with the $41-42k levels currently being defended. BTC briefly breached the $40K psychological level on the Jan. 10 before buyers rushed to defend Sept. lows, as we highlighted here.
• Bitcoin’s recent price action has caused the percentage of BTC in profit to fall to levels not seen since Jul. last year, and it currently stands at 68.7%. This suggests that over 30% of Bitcoins have exchanged hands within the last year, when the cryptocurrency was trading above current prices, and these entities are holding on to an unrealized loss.
• With BTC’s price action turning positive over the last few hours, some of this may have trivially changed. And percentage of supply in profit hitting lows tends to point to a mid-term bottom — but not always.

Miners Accumulate at Higher Rate

• Miner’s net position gives the change of supply held in miner addresses. The green bars on the chart display periods where miners have been accumulating; the red bars are periods where they were offloading their holdings.
• The data shows that miners have been accumulating BTC for weeks — since mid Nov. to be precise, when BTC price fell into the $50K region. Since the beginning of this year, there has been an increasing rate of accumulation, indicating bullish sentiment among bitcoin miners. However, keep in mind the impact of miners on the market has dwindled dramatically over the last five years, so this doesn’t entail a meaningful shift in market outlook.
• Interestingly, total miner revenue hasn’t suffered a significant drop despite the downturn. In fact, Bitcoin’s mean hash rate has surpassed May’s all-time highs.

USDC Flips USDT on Ethereum

• USDC has gradually become Ethereum’s most popular stablecoin, as it eclipses USDT to become the largest capitalized stablecoin on the network. For the most part, USDC’s goodwill in the Ethereum ecosystem has been driven by uncertainty around Tether and how it holds its reserves.
• USDC has said that the tokens are mostly backed by cash and cash equivalents as well as short-term treasury bills. On the flipside, 44% of USDT’s backing is held in commercial paper.
• On the surface, users might perceive USDC and USDT as susceptible to the same risks (e.g regulation, censorship), but USDT also bears a higher redemption risk than USDC due to the risk profile of its reserves.

GBTC in a Tight Spot

• GBTC discount to BTC spot price took a massive hit, and is down -28% against spot prices as of yesterday. Since the start of the year, GBTC has plunged -17% compared to BTC which has declined only -9%.
• Investors of GBTC must go through a 6 month lock-up period before they can sell their shares in secondary markets. Furthermore, there is no redemption function for the current Trust, which is a contributing factor to the large GBTC discount today.
• Grayscale has been trying to convert the trust into a spot BTC ETF. If and when they succeed, one can expect discounts to be cleared up by arbitrageurs fairly quickly.

Notable Tweets

Luna Foundation Guard (LFG) Formed to Support the Terra Ecosystem

1/ The first step towards {REDACTED} is now complete.

Introducing the formation of the Luna Foundation Guard (LFG).

https://lfg.org

—Terra (UST) 🌍 Powered by LUNA 🌕  (@terra_money) January 20, 2022

Philippine Bank Launches Crypto Trading Services

Union Bank of the Philippines plans to offer trading and custodial services for cryptocurrencies.

https://www.bloomberg.com/news/articles/2022-01-20/crypto-enthusiasm-prompts-philippine-bank-to-launch-trading

—unfolded. (@cryptounfolded) January 20, 2022

Thread on Luna Foundation Guard (LFG)

1/ 1 out of 3 Gem stone

http://LFG.org is born:

– a non-profit foundation
– governed by top builders in @terra_money eco
– dedicated to $UST stability and adoption
– decentralizing core teams behind @terra_money

—Do Kwon(@stablekwon) January 20, 2022