Connect with us

Datastream

Why the Market is Thinking About Bitcoin Differently

Published

on

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

Click for Comments

Economy

Charted: Public Trust in the Federal Reserve

Public trust in the Federal Reserve chair has hit its lowest point in 20 years. Get the details in this infographic.

Published

on

The Briefing

  • Gallup conducts an annual poll to gauge the U.S. public’s trust in the Federal Reserve
  • After rising during the COVID-19 pandemic, public trust has fallen to a 20-year low

 

Charted: Public Trust in the Federal Reserve

Each year, Gallup conducts a survey of American adults on various economic topics, including the country’s central bank, the Federal Reserve.

More specifically, respondents are asked how much confidence they have in the current Fed chairman to do or recommend the right thing for the U.S. economy. We’ve visualized these results from 2001 to 2023 to see how confidence levels have changed over time.

Methodology and Results

The data used in this infographic is also listed in the table below. Percentages reflect the share of respondents that have either a “great deal” or “fair amount” of confidence.

YearFed chair% Great deal or Fair amount
2023Jerome Powell36%
2022Jerome Powell43%
2021Jerome Powell55%
2020Jerome Powell58%
2019Jerome Powell50%
2018Jerome Powell45%
2017Janet Yellen45%
2016Janet Yellen38%
2015Janet Yellen42%
2014Janet Yellen37%
2013Ben Bernanke42%
2012Ben Bernanke39%
2011Ben Bernanke41%
2010Ben Bernanke44%
2009Ben Bernanke49%
2008Ben Bernanke47%
2007Ben Bernanke50%
2006Ben Bernanke41%
2005Alan Greenspan56%
2004Alan Greenspan61%
2003Alan Greenspan65%
2002Alan Greenspan69%
2001Alan Greenspan74%

Data for 2023 collected April 3-25, with this statement put to respondents: “Please tell me how much confidence you have [in the Fed chair] to recommend the right thing for the economy.”

We can see that trust in the Federal Reserve has fluctuated significantly in recent years.

For example, under Alan Greenspan, trust was initially high due to the relative stability of the economy. The burst of the dotcom bubble—which some attribute to Greenspan’s easy credit policies—resulted in a sharp decline.

On the flip side, public confidence spiked during the COVID-19 pandemic. This was likely due to Jerome Powell’s decisive actions to provide support to the U.S. economy throughout the crisis.

Measures implemented by the Fed include bringing interest rates to near zero, quantitative easing (buying government bonds with newly-printed money), and emergency lending programs to businesses.

Confidence Now on the Decline

After peaking at 58%, those with a “great deal” or “fair amount” of trust in the Fed chair have tumbled to 36%, the lowest number in 20 years.

This is likely due to Powell’s hard stance on fighting post-pandemic inflation, which has involved raising interest rates at an incredible speed. While these rate hikes may be necessary, they also have many adverse effects:

  • Negative impact on the stock market
  • Increases the burden for those with variable-rate debts
  • Makes mortgages and home buying less affordable

Higher rates have also prompted many U.S. tech companies to shrink their workforces, and have been a factor in the regional banking crisis, including the collapse of Silicon Valley Bank.

Where does this data come from?

Source: Gallup (2023)

Data Notes: Results are based on telephone interviews conducted April 3-25, 2023, with a random sample of –1,013—adults, ages 18+, living in all 50 U.S. states and the District of Columbia. For results based on this sample of national adults, the margin of sampling error is ±4 percentage points at the 95% confidence level. See source for details.

Continue Reading

Subscribe

Popular