Insights, news and analysis for the professional investor |
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Bitcoin (BTC) - $19,974.14 |
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Prices as of 9/2/22 @ 9:01 p.m. UTC |
Welcome to Crypto Long & Short! It’s Labor Day weekend, which means that summer is over. No, I do not care that the autumn season hasn’t officially started; summer is over when August is over. Anyway, the finance world is usually slow in August since that’s when Wall Street’s finest unwind by doing work by the dim light of their mobile phones in the Hamptons instead of by the bright light of their offices in the Financial District. Now bitcoin, not to be upstaged, thought it would be best to buck that trend entirely by effectively erasing all of July’s price gains in August. So let’s talk about summer markets. – George Kaloudis |
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First, let’s let summer mean from the start of June to the end of August. If you look at bitcoin’s last two monthly candles, they look like mirror images of each other, with July’s green and August’s red (see below). |
Monthly bitcoin price chart (TradingView) Candles show how the price of an asset changed over a specified time period. The end of the lines (or wicks) on either side of the rectangles touch the low and high price during the time period, and the bottoms and tops of the rectangles (or candlesticks) represent the open and close price during that time period. Green candles mean the price went up; red candles mean the price went down. In this case: bitcoin started July around $19.9K, hit a monthly low of about $18.8K, peaked around $24.7K in July, and ended July around $23.3K. It then started August around $23.3K, sank to $19.6K, climbed as high as $25.2K, and ended the month around $20.0K. So you could say that bitcoin has taken the summer off – except June happened. Bitcoin opened June trading at about $31.8K, which means bitcoin’s price fell about 33% in the summer. To test the idea that “nothing happens in finance in the summer,” you could compare bitcoin’s summer to the S&P 500’s, which has lost about 4.3% since June (maybe things do happen in finance in the summer).
But an interesting fact pattern appears when looking at these summers: Bitcoin hadn’t had a negative summer since 2018 and the S&P 500 hadn’t had one since 2015.
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Bitcoin summer price performance (TradingView, CoinDesk Indices) You could insert an advertisement for the disclaimer that “past performance is not indicative of future results,” but also, we knew that. The only thing these historical time frames have in common over the years is the time frame itself. But we’ll look at these time frames for some insight anyway, because Mr. Market is emotional, irrational (a dog-themed cryptocurrency is worth billions (there are actually two of them!)) and inefficient (if it weren’t, prices would never move). Here are some truths about Bitcoin's cruel summer: ... Continue to read the full article. |
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California Assembly passed the Digital Financial Assets Law, dubbed California’s “BitLicense.” - TAKEAWAY: Governor Gavin Newsom is set to sign the recently passed bill that would require exchanges and other crypto companies to obtain a license to operate in the state. The bill would also prohibit California-licensed entities in dealing with stablecoins, unless that stablecoin is issued by a bank or is licensed by the California Department of Financial Protection and Innovation. Read more here.
The tide has turned for bitcoin mining in Texas. - TAKEAWAY: Texas was once a promised land for bitcoin miners, a business-friendly state with stable regulations and a seemingly endless energy supply. But the tide turned. The state’s grid operator, the Electric Reliability Council of Texas has slowed issuance of new permits for miners and the pipeline of readily available electricity in Texas has run dry. Read more here.
The District of Columbia is suing Michael Saylor for tax fraud. - TAKEAWAY: The Bitcoin maximalist and executive chairman of MicroStrategy is getting sued for allegedly never paying any income taxes in the district in the more than 10 years he has lived there. Additionally, Attorney General Karl A. Racine tweeted that his office is suing MicroStrategy “for conspiring to help him evade taxes he legally owes on hundreds of millions of dollars he’s earned” while living in Washington. Read more here.
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