Why the Market is Thinking About Bitcoin Differently
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Why the Market is Thinking About Bitcoin Differently

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Bitcoin Longer Term Holders

The Briefing

  • Bitcoin investors are increasingly long-term focused. In 2020, 57% of bitcoin’s (BTC) supply was held onto for more than a year
  • Today, nearly 22% of BTC supply is held for more than five years
  • Bitcoin hit a $1 trillion market cap milestone in 2021

Why the Market is Thinking About Bitcoin Differently

The bull case for bitcoin is linked to the cryptocurrency’s limited supply of only 21 million coins. But scarcity is forming in another way, revolving around investor behavior.

According to research from Ark Invest, investors are holding onto bitcoin for longer and longer durations. By holding the asset rather than selling, it decreases the supply of coins available on the market at any given moment, which can drive up price. This suggests that market participants see the long-term value and potential future payoff the asset possesses.

In the past, durations of days and months were the most common holding periods for bitcoin investors, while holding for more than a year was practically non-existent up until recently.

BTC Duration Held% of BTC Supply
>5 years21.80%
3 to 5 years13.38%
2 to 3 years10.99%
1 to 2 years10.70%
6 months to 1 year8.30%
3 months to 6 months7.07%
1 day to 3 months27.76%

But days and months have now transitioned towards years.

Near the end of 2020, 57% of bitcoin supply has been held for at least a year. In fact, investors who have held for five years or greater now make up a near 22% of the BTC supply, up from 13% in 2016.

Old School vs. New School

Cryptocurrencies are still a relatively new phenomena. As with many new things that look to upend the status quo, they are often faced with resistance. For much of Bitcoin history, there’s been a tug of war between the old school and the new school of investors.

The more traditional views dismiss its application, and see its price run-up as speculative mania. But it appears the new school train of thought has gained the upper hand in recent times as the cryptocurrnecy demonstrates further signs of entering the mainstream.

1. CEOs begin to show interest
Elon Musk and Jack Dorsey have made sizable bitcoin investments through Tesla and Square, respectively.

2. New ETFs on the block
Multiple Bitcoin ETFs have just been approved as of late by Canadian regulators. For many years the Grayscale Bitcoin Trust (GBTC) was the only readily accessible investment vehicle trading on equity markets that had exposure to BTC.

3. Financial institutions finally joining in?
Mastercard, Visa, and Bank of New York Mellon have made announcements to make it easier for customers to use cryptocurrencies.

The bitcoin price has frequently broken past former thresholds to enter new all-time highs. Recently milestones include BTC briefly skipping past $60,000 in mid-March while also surpassing $1 trillion in total market capitalization.

Where does this data come from?

Source: Ark Invest Big Ideas Report
Notes: This data was released on January 27, 2021

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Seeing Red: Is the Heydey of Pandemic Stocks Over?

Worries over post-COVID demand and rising interest rates have fueled a market selloff, with pandemic stocks hit particularly hard.

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pandemic stocks

The Briefing

  • Global equities are in a downward spiral, and experienced their worst week in more than a year.
  • Worries about slowing post-COVID demand and rising rates fueled the selloff.
  • Pandemic stocks were some of the hardest hit, with Shopify and Netflix dropping 35.3% and 33.5% respectively.

Seeing Red: Is the Heydey of Pandemic Stocks Over?

The stock market, and the stocks that flourished during the COVID-19 pandemic in particular, are off to a rough start in 2022. If you’ve been watching your investment accounts, chances are you’ve been seeing a lot of red. Shaken by the uncertainty of a pandemic recovery and future interest rate hikes, investors have been selling off their stocks.

This market selloff—which occurs when investors sell a large volume of securities in a short period of time, leading to a rapid decline in price—has investors concerned. In fact, search interest for the term “selloff” recently reached peak interest of 100.

2022 market selloff

Which stocks were the hardest hit, and how much are their prices down so far this year?

The Lackluster Returns of Pandemic Stocks

Pandemic stocks and tech-centric companies have suffered the most. Here’s a closer look at the year-to-date price returns for select stocks.

CompanyYear-to-Date Price Return
Shopify-35.3%
Roblox-30.2%
Block-28.0%
Moderna-31.9%
Zoom-19.9%
Netflix-33.5%
Snapchat-31.1%
Peloton-23.1%
Coinbase-23.5%
DocuSign-26.0%
Amazon-16.3%
Robinhood-29.6%

Price returns are in U.S. dollars based on data from January 3, 2022 to January 21, 2022.

Netflix fueled the selloff after it reported disappointing subscriber growth. The company added 8.28 million subscribers in the fourth quarter, which is less than the 8.5 million it added in the fourth quarter of 2020. It also projects to have slower year-over-year subscriber growth in the near term, citing competition from other streaming companies.

Meanwhile, Coinbase stock lost nearly a quarter of its value so far this year. As the price of cryptocurrencies such as Bitcoin have plummeted, investors worry Coinbase will see lower trading volume and therefore lower fees.

The contagion also spread to other pandemic stocks, such as Zoom and DocuSign, as investors began to doubt the staying power of stay-at-home stocks.

Following the Herd

While investor exuberance drove many of these stocks up last year, 2022 is beginning to paint a different picture.

Investors are worried that rising rates will negatively impact high-growth stocks, because it means it’s more expensive to borrow money. Not only that, but they also may see Netflix’s growth as harbinger of things to come for other pandemic stocks.

The psychology of the market cycle also plays a role—amid these fears, investors have adopted a herd mentality and begun selling their shares in droves.

Where does this data come from?

Source: Google Finance

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How People Around the World Feel About Their Economic Prospects

In many of the world’s largest economies, including the U.S., Germany, and China, optimism around economic prospects sits at an all-time low.

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economic prospects of people around the world

The Briefing

  • Economic prospects are at an all-time low in nine countries, including the U.S., Canada, Germany, Japan, and China
  • China and the U.S. experienced the biggest year-over-year drops, at -8 p.p. and -6 p.p., respectively

How Countries Feel About Their Economic Prospects

Each year, the Edelman Trust Barometer report helps gauge the level of trust people place in various systems of power.

The report is also a useful tool to gauge the general mood in countries around the world—and when it comes to how people in developed economies feel about the near future, there’s a very clear answer: pessimistic. In fact, optimism about respondents’ economic prospects fell in the majority of countries surveyed.

Here’s a full look how many respondents in 28 countries feel they and their families will be doing better over the next five years. Or, put more simply, what percentage of people are optimistic about their economic circumstances?

Country% who are optimisticAll-time low?Change from 2021 (p.p.)
🇯🇵 Japan15%-1
🇫🇷 France18%-1
🇩🇪 Germany22%-2
🇮🇹 Italy27%0
🇳🇱 Netherlands29%-1
🇬🇧 UK30%+2
🇷🇺 Russia31%+1
🇨🇦 Canada34%-1
🇪🇸 Spain36%+1
🇰🇷 South Korea39%+6
🇺🇸 U.S.40%-6
🇦🇺 Australia41%-2
🇮🇪 Ireland42%-1
🇸🇬 Singapore43%-1
🌐 Global51%0
🇲🇾 Malaysia55%0
🇦🇷 Argentina60%-2
🇹🇭 Thailand60%-2
🇨🇳 China64%-8
🇿🇦 South Africa66%-2
🇲🇽 Mexico68%-1
🇧🇷 Brazil73%0
🇸🇦 Saudi Arabia73%0
🇦🇪 UAE78%+6
🇮🇳 India80%0
🇮🇩 Indonesia81%+11
🇨🇴 Colombia83%-1
🇳🇬 Nigeria87%n/a
🇰🇪 Kenya91%-2

Interestingly, nine countries (those with checkmarks above) are polling at all-time lows for economic optimism in survey history.

Whose Glass is Half Empty?

Japanese respondents were the most pessimistic, with only 15% seeing positive economic prospects in the near term. Only 18% of French respondents were economically optimistic.

While most developed economies were slightly more optimistic than Japan and France, all are still well below the global average.

As tensions between China and the U.S. continue to heat up in 2022, there is one thing that can unite citizens in the two countries—a general feeling that economic prospects are souring. As the U.S. heads into midterm elections and China’s 20th National Party Congress takes place, leaders in both countries will surely have the economy on their minds.

Whose Glass is Half Full?

Of course, the mood isn’t all doom and gloom everywhere. The United Arab Emirates saw a 6 percentage point (p.p.) jump in their population’s economic prospects.

Indonesia saw an 11 p.p. increase, and in big developing economies like Brazil and India, the general level of optimism is still quite high.

In some ways, it’s no surprise that people in developing economies are more optimistic about their economic prospects. Living standards are generally rising in many of these countries, and more opportunities open up as the economy grows. Even in the most pessimistic African country surveyed, South Africa, the majority of people still see improving circumstances in their near future. In Kenya and Nigeria, an overwhelming majority are optimistic.

Diverging Outcomes

One major prediction that experts agreed on for the year ahead is that economic outcomes will begin to diverge between countries with differing levels of vaccine access.

While this doesn’t seem to have affected attitudes towards economic optimism yet, it remains to be seen how this will play out as the year progresses.

Where does this data come from?

Source: 2022 Edelman Trust Barometer

Data notes: This data is derived from Edelman’s annual Trust Barometer survey, which includes 30,000+ respondents in countries around the world.

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