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Bitcoin Powers Past $57,000 on Its Quest to Hit a New All-Time High

Bitcoin powered past $57,000 on Monday for the first time since May as a number of positive crypto developments galvanized investors in the month of ?…

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This article was originally published by US Global Investors

Bitcoin powered past $57,000 on Monday for the first time since May as a number of positive crypto developments galvanized investors in the month of “Uptober.”

For one, legendary investor George Soros’s family office fund confirmed last week that it held Bitcoin in its nearly $6 billion portfolio. Speaking at a Bloomberg event, Soros Fund Management CEO and chief investment officer Dawn Fitzpatrick said that Bitcoin was more than an inflation hedge, having “crossed the chasm to mainstream.”

Indeed, there were an estimated 221 million people actively involved in the crypto ecosystem in June, according to Crypto.com. That’s more than twice the number of people who were trading and holding cryptos at the beginning of 2021, suggesting an exceptionally robust growth rate that’s far outpaced stock ownership.

Still in the early innings: Global Crypto Market size over time
click to enlarge

Also supporting cryptos was an assurance by Gary Gensler, head of the Securities and Exchange Commission (SEC), that his agency does not have the authority or intention to ban cryptocurrencies as China has done in recent weeks.

Gensler, who’s under fire from certain U.S. lawmakers for signaling an interest in regulating the industry, said last Tuesday that a crypto ban would be “up to Congress.” However, I believe this is just as unlikely, given that there are a number of staunch pro-Bitcoin members of Congress, including Sen. Cynthia Lummis (R-WY) and Rep. Warren Davidson (R-OH).

Bank of America Introduces Coverage of Digital Assets

One of the most constructive bits of crypto news, as I see it, is Bank of America’s decision to introduce coverage of digital assets. In its maiden report last week, the second biggest U.S. bank said the $2 trillion crypto space is just “too large to ignore.”

Crypto strategist Alkesh Shah is particularly “bullish on the long-term prospects for the digital asset ecosystem as it enters the mainstream.” (There’s that word again!) “We anticipate significant growth as digital asset use cases move beyond Bitcoin’s store of value thesis to an industry characterized by product innovation, regulatory clarity, increased institutional participation and mainstream adoption.”

Bank of America also spends time discussing non-Bitcoin coins (altcoins), writing that digital assets that can “enable a platform to be built, like the Apple iPhone did for applications, are gaining the most value.”

The biggest altcoin is Ether with a current market cap of $427.7 billion, and it’s up 392% for the year. I’m pleased to share with you that HIVE Blockchain Technologies mines both Bitcoin and Ether, which helped it generate a record $37.24 million in revenue during the quarter ended June 30. That’s the highest revenue of any publicly traded crypto miner, and what’s more, HIVE appears the most attractive on a relative basis when looking at market cap-to-revenue.

HIVE looks most attractive based on market cap-to-revenue
click to enlarge

In case you missed HIVE’s earnings webcast for the first fiscal quarter of 2022, I invite you to watch the replay below.

Bitcoin Now the Eighth Largest Asset

After the recent price surge, Bitcoin’s market cap rose above $1 trillion once again. This puts it above Facebook’s market cap, making Bitcoin the world’s eighth largest asset.

Bitcoin surpasses facebook to become the worlds eighth largest asset
click to enlarge

Of the assets shown above, Bitcoin was also the best performer for the year as of last Friday. The digital currency was up more than 84%, followed by Alphabet (+62%), Microsoft (+36%) and Facebook (+23%).

2021 has been a challenging year for the two precious metals, gold and silver, with the former down 9.5% as of Friday, the latter down around 16.5%.

Much of this price action is due to institutional investors’ evolving preference for Bitcoin, if JPMorgan’s analysis is any indication. In a report last week, the bank said it believes big investors “appear to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold.” JPMorgan adds that the success of the Lightning Network, which allows nearly instantaneous crypto transactions, and El Salvador’s adoption of Bitcoin as legal tender have helped convince investors that the digital currency can scale up to meet institutional demand.

Gold Miners Flush with Cash

Speaking of gold miners… A recent chart by “Bear Traps Report” founder Lawrence McDonald shows that the number of companies in an NYSE Arca Gold Miners ETF that are trading above their 200-day moving averages is coming off recent lows. As McDonald points out, “Historically this has led to strong returns in the following six months.”

In other words, this may be an opportune time to get exposure.

 

Having come across this, I was curious to see which gold mining companies had the strongest cash positions right now. Specifically, I looked at free cash flow (FCF) yield, which tells you how well a company can meet its financial obligations, pay down debt and potentially raise its dividend. You can calculate the yield by dividing a company’s per-share FCF by its market cap. I like to see a number above 7% or 8%.

The results are below. For comparison’s sake, I also included the FCF yield for the gold mining index as well as the S&P 500.

Most cash flush gold miners in universe of investable companies
click to enlarge

As you can see, there are quite a few companies that have very strong cash positions at a time when investor sentiment for gold miners is very low. Again, when sentiment has been this low, returns have historically been attractive six months later. The companies above, I think, would be a good place for investors to start hunting for opportunities in anticipation of the next bull run. We invest in several of the names here at U.S. Global Investors.

Topping the list is Toronto-based Torex Gold, which reported last week that it produced 111,220 ounces of gold in the quarter ended September 30, and that it’s well on track to meet the upper end of its 2021 guided range of 430,000 to 470,000 ounces. Torex sold nearly 119,000 ounces during the quarter, at an average price of $1,785 per ounce.

If you’re familiar with crypto miners, you know that they HODL (“hold on for dear life”) most of the coins they produce. I wish more gold miners did this. Of the miners featured above, the only one I’m aware of that HODLs its gold is Gran Colombia. HODLing their metal would help them appeal to more millennial investors.

Check out my interview today with Stock Talk with Eli, by clicking here. We talk HIVE and go over the recent earnings presentation. Don’t miss it!

The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Frank Holmes has been appointed non-executive chairman of the Board of Directors of HIVE Blockchain Technologies. Both Mr. Holmes and U.S. Global Investors own shares of HIVE. Effective 8/31/2018, Frank Holmes serves as the interim executive chairman of HIVE.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (09/30/2021): Tesla Inc., Amazon.com Inc., Apple Inc., Torex Gold Resources Inc., Centerra Gold Inc., Gran Colombia Gold Corp., Dundee Precious Metals Inc., Pretium Resources Inc., Endeavour Mining PLC, Barrick Gold Corp., Eldorado Gold Corp., SSR Mining Inc., Silver Lake Resources Ltd., Karora Resources Inc.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.








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Precious Metals

Current Bitcoin Fear & Greed Index

Each day, we analyze emotions and sentiments from different sources and crunch them into one simple number: The Fear & Greed Index for Bitcoin and…

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Each day, we analyze emotions and sentiments from different sources and crunch them into one simple number: The Fear & Greed Index for Bitcoin and other large cryptocurrencies.
This post by Lorimer Wilson, Managing Editor of munKNEE.com is an edited ([ ]) and abridged (…) version of an article by Alternative.me for the sake of clarity and length to ensure a fast and easy read.
<img src=”https://alternative.me/crypto/fear-and-greed-index.png” alt=”Latest Crypto Fear & Greed Index” />

Why Measure Fear and Greed?

The crypto market behaviour is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear Of Missing Out). Also, people often sell their coins in irrational reaction of seeing red numbers. With our Fear and Greed Index, we try to save you from your own emotional overreactions. There are two simple assumptions:

  • Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.
  • When Investors are getting too greedy, that means the market is due for a correction.

Therefore, we analyze the current sentiment of the Bitcoin market and crunch the numbers into a simple meter from 0 to 100. Zero means “Extreme Fear”, while 100 means “Extreme Greed”. See below for further information on our data sources.

Data Sources

We are gathering data from the five following sources. Each data point is valued the same as the day before in order to visualize a meaningful progress in sentiment change of the crypto market…

1. Volatility (25 %)

We’re measuring the current volatility and max. drawdowns of bitcoin and compare it with the corresponding average values of the last 30 days and 90 days. We argue that an unusual rise in volatility is a sign of a fearful market.

2. Market Momentum/Volume (25%)

Also, we’re measuring the current volume and market momentum (again in comparison with the last 30/90 day average values) and put those two values together. Generally, when we see high buying volumes in a positive market on a daily basis, we conclude that the market acts overly greedy / too bullish.

3. Social Media (15%)

While our reddit sentiment analysis is still not in the live index (we’re still experimenting some market-related key words in the text processing algorithm), our twitter analysis is running. There, we gather and count posts on various hashtags for each coin (publicly, we show only those for Bitcoin) and check how fast and how many interactions they receive in certain time frames). A unusual high interaction rate results in a grown public interest in the coin and in our eyes, corresponds to a greedy market behaviour.

4. Dominance (10%)

The dominance of a coin resembles the market cap share of the whole crypto market. Especially for Bitcoin, we think that a rise in Bitcoin dominance is caused by a fear of (and thus a reduction of) too speculative alt-coin investments, since Bitcoin is becoming more and more the safe haven of crypto. On the other side, when Bitcoin dominance shrinks, people are getting more greedy by investing in more risky alt-coins, dreaming of their chance in the next big bull run. By analyzing the dominance for a coin other than Bitcoin, you could argue the other way round, since more interest in an alt-coin may conclude a bullish/greedy behaviour for that specific coin.

5. Trends (10%)

We pull Google Trends data for various Bitcoin related search queries and crunch those numbers, especially the change of search volumes as well as recommended other currently popular searches. For example, if you check Google Trends for “Bitcoin”, you can’t get much information from the search volume. Currently, you can see that there is a +1,550% rise of the query “bitcoin price manipulation“ in the box of related search queries (as of 05/29/2018). This is clearly a sign of fear in the market, and we use that for our index.

 

Surveys (15%) currently paused

Together with strawpoll.com (disclaimer: we own this site, too), quite a large public polling platform, we’re conducting weekly crypto polls and ask people how they see the market. Usually, we’re seeing 2,000 – 3,000 votes on each poll, so we do get a picture of the sentiment of a group of crypto investors. We don’t give those results too much attention, but it was quite useful in the beginning of our studies. You can see some recent results here.

Editor’s Note:  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

Related Articles from the munKNEE Vault:

1. Bitcoin Surges; Dollar Dives; U.S. Economic Outlook Plummets

Tuesday was all about two things – what went up and what went down – and below is a look at what happened in chart form.

2. New ETF Will Make It Easier, Safer & More Convenient To Invest In Bitcoin

A futures-based exchange-traded funds based on Bitcoin called the ProShares Bitcoin Strategy ETF (BITO) started yesterday and I believe it will be a major factor in making the process to invest in Bitcoins considerably easier, safer, and more convenient. Here are 5 reasons why:

3. Average of 50 Bitcoin Price Predictions: End of 2021 ($71,445); By 2025 ($249,578) and $5,237,082 By 2030

Find out why 50 industry experts think Bitcoin will be worth US$71,415 by the end of 2021, before rising to US$249,578 by 2025 and why holding till 2030 will be the real payoff.

4. Bitcoin Is Going To $500,000 and the Rationale Is Simple

While there are risks, cryptocurrencies can reap huge rewards for those who make the right investment decisions. In this blog post, we discuss how to invest in cryptocurrency and what you need to know if you want to get involved!

8. Bitcoin vs. Gold: Which Is the Better Asset To Own?

Gold and Crypto are both expected to embark on their next bull run and, a disadvantage to owning one asset is often an advantage of owning the other. Therefore, we believe both deserve a place in your portfolio for at least insurance purposes.

9. Bitcoin vs Gold: A Surprising Price Correlation

It would be wise for bitcoin traders to use any kind of hedge that they can find and over the past few months, one such hedge has been, ironically, gold.

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The post Current Bitcoin Fear & Greed Index appeared first on munKNEE.com.


Author: Lorimer Wilson

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Precious Metals

Gold Prices Accelerate as Fears Over Global Inflation Mount

Gold prices are once again on the rise, as investors around the globe prepare for the elevated risk of inflation
The post Gold Prices Accelerate as Fears…

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Gold prices are once again on the rise, as investors around the globe prepare for the elevated risk of inflation that is anything but transitory.

December gold futures hit a high of more than $1810 per ounce on Friday, marking an increase of about 2.5% during the week— the fastest weekly gain since the beginning of spring. The bullion’s popularity has accelerated over the past month, as investors look to hedge against growing inflation risks despite assurance from central banks and policymakers that price pressures will abate soon.

Moreover, gold prices are also getting a boost from a declining dollar index, as the US dollar continues to weaken against other major currencies, most notably the euro, yen, and the yuan.

Indeed, the latest rally suggests that an increased number of investors prefer “hard” assets such as precious metals to counter a rising inflationary environment. As a result, some industry leaders are expecting the rally to continue, and likely coincide with price accelerations across other commodities, such as natural gas and aluminum.

Former chiefs of Canadian-based gold mining company GoldCorp Inc., Rob McEwen and David Garofalo, recently told Bloomberg that the inflationary phenomenon currently witnessed around the globe will not be as transient as central banks’ official figures suggest. As investors begin to take into account a more permanent state of price pressures, the price of gold could hit $3,000 per ounce, they said.

“I’m talking about months. The reaction tends to be immediate and violent when it does happen. That’s why I’m quite confident that gold will achieve $3,000 an ounce in months not years,” explained Garofalo, arguing that gold makes a better hedge against inflation than cryptocurrencies, due to the precious metal’s long-standing history as a universal asset.


Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Gold Prices Accelerate as Fears Over Global Inflation Mount appeared first on the deep dive.

Author: Hermina Paull

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Precious Metals

The Price of Bitcoin

Over seven and a half years ago, Jim remarked about Bitcoin: Hard to know where this is all going to lead. But one thing is clear– we have added a very…

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Over seven and a half years ago, Jim remarked about Bitcoin:

Hard to know where this is all going to lead. But one thing is clear– we have added a very interesting new chapter in the history of money.

In my course on the financial system, I’ve had to update the material to include cryptocurrencies and central bank digital currencies (CBDC). Here’s some pictures of cryptocurrencies.

Figure 1: Price of bitcoin (blue), ethereum (brown), litecoin (green), in USD, in logs, 2017M01=0. NBER defined recession dates shaded gray. Source: FRED, NBER.

These three particular cryptocurrencies have experienced proportionately enormous appreciations. Taking bitcoin as an example, it’s clear cryptocurrency returns have been enormous compared to even the S&P 500.

Figure 2: Price of bitcoin in USD (blue), London 3pm price of gold in USD/oz. (brown), S&P 500 index (green), in logs, 2017M01=0. NBER defined recession dates shaded gray. Source: FRED, NBER.

However, the month-on-month volatility of bitcoin is enormous, even dwarfing that of gold, as shown in Figure 3.

Figure 3: Month-on-month growth rate of the price of bitcoin in USD (blue), of London 3pm price of gold in USD/oz. (brown), of S&P 500 index (green), all calculated as log-differences. NBER defined recession dates shaded gray. Source: FRED, NBER.

The standard deviation of month-on-month (not annualized) changes was 2.8% and 3.9% for gold and S&P 500 respectively. For bitcoin, it’s 21.6% monthly. That means that bitcoin does not fulfill the third function of money, namely a store of value, very well.

Given this volatility, one has to wonder why one would want to hold bitcoin. In his post, Jim asks:

Why does the stuff have value in the first place? The answer is that it would be very helpful to many buyers and sellers of real goods and services if they were able to pay for transactions in this way. We can think of any form of money as an asset that provides liquidity services, which refers to the tangible benefit to its holder coming from the ability of the asset to facilitate certain transactions. The value of money, that is, the value of real stuff you’d be willing to give up to hold money, can be thought of as the present value of the stream of these future liquidity services.

Bitcoin has two potential advantages over credit cards for providing such liquidity services. First, the supporting network only needs to verify that the private code is valid, which is less costly than verifying that you are indeed the rightful owner of a credit card and are ultimately going to deliver good funds. …

Second, Bitcoins are relatively more anonymous than credit cards. In this respect, they enjoy some of the same advantages as cash….

One can formalize this argument by referring to the equation for pricing assets:

D stands for dividends when P refers to a stock price. In our context, D is the liquidity services provided by bitcoin (which can be small for those who don’t need to evade restrictions), P the price of bitcoin. If one can rule out bubbles, then a bitcoin price is equal to the present discounted value of liquidity services. However, there’s no reason to impose this assumption.

Then the price of bitcoin is moved primarily by new information that changes the information set used for forecasting the future price — in other words, the speculative motive is central.

The expected future price is in this interpretation driven by new information about the liquidity services provided by bitcoin. New regulatory measures — either tightening or loosening — should be associated with bitcoin price movements. Figure 4 highlights the role of such regulatory events, as well as the discount rate.

Figure 4: Price of bitcoin in USD (blue, left log scale), TIPS 5 year yield, in % (brown, right scale). NBER defined recession dates shaded gray. Source: FRED, NBER.

Chinese measures to rein in the use of bitcoin negatively impacted prices. On the other hand increasing acceptance of the use of bitcoin — as in the establishment of a bitcoin futures ETF — enhanced the liquidity services provided by bitcoin.

What does the future herald for the price of bitcoin? It depends on the balance between increasing regulations that limit the desirability of bitcoin as a pseudonymous means of transactions and the increasing usefulness of bitcoin as an asset class. The establishment of central bank digital currencies (CBDCs) will also certainly alter the relative desirability of cryptocurrencies.

For more, see Charles Engel’s paper on the subject. Eswar Prasad devotes considerable discussion of cryptocurrencies in his new, comprehensive assessment of the digital revolution in finance, The Future of Money.



Author: Menzie Chinn

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