Bitcoin up 100% in 2023
A quiet bull market from the king. We go through 12 charts on bitcoin, bitcoin versus Ethereum, yields topping, and stocks falling. Markets give a massive hint.
Dear readers,
Be honest. Be completely honest. You had fun last night. And when bitcoin prices hit their highest level in almost two years, there’s no shame in your game. As news that Blackrock’s bitcoin ETF ticker has been readied by the custodial authorities hit the tape, bitcoin’s embedded rocket fuel met traders’ matches Monday evening. We weren’t fully distracted by the dramatic albeit typical price action, however, as Treasuries show us signs of a bottom, stocks continue to lose steam, and the Fed gets backed into a corner by the rates market. You won’t want to miss this crucial chart pack, including a screaming rates signal hiding in plain sight.
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Bitcoin breakout
SEC approval of spot ETFs is now imminent—by the time you read this, there’s a chance more official headlines will have arrived. But we had a sense this was coming, especially with the collapse of GBTC’s discount.
While the bitcoin price is certainly a clear signal that something is brewing in regulatory land, bitcoin’s price takes 20% leaps and falls all the time. Not lately, of course, as bitcoin has traded without drama for most of 2023. But large moves are regular business. For this reason, we are not truly able to isolate individual drivers of price. With the latest moves in GBTC, however, we are able to extract additional information.
A quick review for those who haven’t been following the saga, GBTC, operated by Grayscale, has long been the preferred bitcoin investment vehicle in the United States for people trying to purchase bitcoin within a brokerage account. Ask the person sitting to your left and to your right in any bitcoin-friendly investment circle, and you’re likely to find a GBTC holder. The problem with this vehicle is that it rarely has traded near its net asset value—for years, GBTC traded with a premium, meaning you had to pay more for your portion of the fund’s bitcoin than market price, and lately, GBTC has traded with an immense discount. Holders of GBTC shares have waited months for any positive news out of the SEC that Grayscale might be able to convert its fund into a proper ETF, with each sliver of hope reducing the discount.
Today, the discount is practically gone. And it is through the discount to NAV of GBTC that we are more clearly able to attribute recent performance. See bitcoin’s price soar through all resistance levels from the past 18 months: