Powell to Deliver Major Speech at Jackson Hole Annual Meeting, MicroStrategy Increases Holdings — Where Have the Long-Absent Institutions Been?

BCH-0. 42%

This Monday, Bitcoin reclaimed the $50,000 level for the first time since mid-May, signaling a recovery for the world's largest crypto asset following three months of disorderly decline.

On May 13, Bitcoin opened at $55,477, peaked at $55,667 intraday, and then entered a downward spiral, bottoming at $45,750 — a single-day loss exceeding $9,900 per coin. Although the price rebounded to $49,636, the daily decline still came in at 10.53% versus the opening price.

Following this, market sentiment soured noticeably with strong selling pressure, and Bitcoin continued its decline before the "May 19" crash struck six days later. Bitcoin broke below $40,000, falling as low as $29,000. Although it closed at $37,277, panic and anxiety spread throughout the market, triggering a two-month consolidation range between $30,000 and $40,000.

A turning point emerged on July 21. After successfully defending the $30,000 support, Bitcoin entered a sustained five-week uptrend. From its July 21 opening price of $29,893 through August 23, Bitcoin surged 66% in just one month. Its push toward the $50,000 level rekindled bold predictions among investors, with discussions of new all-time highs resurfacing across communities.

However, Bitcoin's attempt to reclaim the $50,000 level on Monday faced significant resistance, with prices closing below $50,000 for three consecutive days thereafter. Edward Moya, senior market analyst at Oanda, attributed this to investors taking profits.

On the news front, MicroStrategy purchased additional Bitcoin, Citigroup plans to offer CME Bitcoin futures trading, and PayPal further expanded its crypto services by beginning to offer cryptocurrency to UK customers — all laying a foundation for a healthy bull market. On the technical side, Bitcoin has established a long-term uptrend in the long run. It is currently undergoing a minor pullback. EMA 26 has shifted from declining to rising. The short-term EMA has crossed above the medium-term EMA, while the long-term EMA has formed a bullish golden cross. The MACD line has produced a golden cross, and the MACD histogram has broken above the zero line into a bullish trend. RSI has dipped slightly but shows no pronounced bias. In the medium term, both MACD and RSI are showing double-top divergences, and Bitcoin has seen a net fund outflow of $2.606 billion over the past seven days, with trading volume declining.

Bitcoin Eyes $50,000, Market Revives $100,000 Target

Bitcoin's return above $50,000 on Monday sparked excitement across the crypto market. Although still far from its all-time high of $64,847 set on April 14, Bitcoin's year-to-date gains have reached 64.39%, and its total market cap has reclaimed the $900 billion level — requiring only a 12% further rise to break through the trillion-dollar mark.

Three months on, Bitcoin's reclaim of $50,000 represents a significant psychological victory, reigniting market enthusiasm over how long it might take for Bitcoin to set a new all-time high.

In a research note, Oanda's senior market analyst Craig Erlam noted that whispers of the $100,000 figure have already begun. Ledger's VP of Trading, Iqbal Gandham, stated that there are several market predictions regarding Bitcoin's trajectory through the end of 2021, with most pointing to $100,000 as the next major resistance level. Given various developments, including discussions around a Bitcoin ETF and national adoption of Bitcoin, it is easy to assume Bitcoin will reach that level by year-end.

Earlier this month, SEC Chair Gary Gensler indicated he is more open to ETFs related to Bitcoin futures contracts, such as CME's Bitcoin futures, rather than Bitcoin itself. Futures trading is regulated by the CFTC, the SEC's sister agency. This signal prompted eager parties to spring into action. VanEck submitted a Bitcoin futures ETF application to the SEC in the second week. Additionally, Galaxy Digital — the financial services and crypto asset investment management firm founded by Mike Novogratz — recently filed with the SEC to register a Bitcoin futures ETF under the name "Galaxy Bitcoin Strategy ETF." According to the filing, the ETF seeks capital appreciation primarily through managed Bitcoin futures exposure rather than direct investment in Bitcoin, and may invest in Bitcoin futures registered with the CFTC, Canadian exchange-traded funds, and money market instruments, among others.

Regarding the recent withdrawals of Ethereum futures ETF applications by VanEck and ProShares, Bloomberg's senior ETF strategist Eric Balchunas tweeted that this is a positive sign, increasing the likelihood of a Bitcoin futures ETF launching by late October. Once a Bitcoin futures ETF receives U.S. SEC approval, it would launch approximately 75 days after filing. He cited a new report from Bitcoin Smart ETF analyst James Seyffart, noting that the most likely ETF to launch is the one filed by ProShares.

On-chain data shows that Bitcoin's active address count has risen to 888,598 from the prior low of 787,767 on July 1 — an increase of 100,831 — but remains 28% below the year's high of 1,236,396.

Exchange balances have shown an uptick followed by a decline in recent days. Between August 11 and August 23, exchange balances rose from 2,481,400 to 2,520,500, an addition of 39,100 coins. This was followed by a net outflow of 30,000 coins between August 24 and August 25. Generally, when users transfer assets to an exchange, it signals an intent to sell, while transferring assets off an exchange indicates a decision to accumulate, with no intention of selling in the short term. Therefore, the decline in exchange balances over these two days is a positive sign.

As shown above, exchange Bitcoin balances increased by 144,000 coins between April 19 and May 19, during which time Bitcoin's price also trended steadily downward. Meanwhile, from July 21 through July 31, exchange Bitcoin balances decreased by 105,900 coins, during which time Bitcoin's price climbed from $32,132 to $41,693.

According to OKLink data, whale addresses holding more than 1,000 Bitcoin have also been increasing in recent days, rising from 2,160 on August 24 to 2,165 on August 25. Whale accumulation is viewed as a bullish indicator, reflecting confidence from major fund holders in Bitcoin's future prospects.

As shown above, the number of whales holding 1,000+ Bitcoin has been in continuous decline since June 15, hitting a low on July 1. Over this half-month period, the whale count fell by 34. Since then, whales have been buying Bitcoin, adding 24 whales over the following month-plus before reaching a short-term high on August 9. However, the whale count began declining thereafter, a trend that persisted until August 24 before rebounding on August 25.

Additionally, during this consecutive five-week rally, the number of Bitcoin profitable addresses rose from 26.1437 million on July 21 to 34.0119 million on August 23, a gain of 30%. The year's high was set on April 13 at 37.5304 million.

In the short term, Bitcoin still faces corrective pressure. QKL123 data shows major fund outflows today, exceeding recent daily outflows, while retail trader funds also showed increased outflows compared to recent periods. Today's outflows were primarily directed toward USDT (49.18%) and USD (39.48%). Net outflows over the past seven days reached $3.251 billion.

MicroStrategy Continues to Accumulate, PayPal Expands Crypto Services

Bitcoin's short-term price correction seems to have done nothing to deter its steadfast supporter, MicroStrategy. On August 24, the company filed with the SEC revealing the purchase of 3,907 Bitcoin using $177 million in funds, at an average price of approximately $45,294 per coin. MicroStrategy CEO Michael Saylor confirmed the news on Twitter, stating the company now holds a total of 108,992 Bitcoin at an aggregate cost of approximately $2.9 billion.

OKLink institutional holdings data shows MicroStrategy's average holding price at $26,800. At the time of writing, OKX real-time market data shows Bitcoin trading at $46,953, implying an unrealized gain of approximately $2.197 billion on MicroStrategy's Bitcoin position.

Jefferies analyst Brent Thill published a research report raising MicroStrategy's (MSTR.US) price target from $640 to $700, while maintaining a "Hold" rating. Yesterday, MSTR closed at $726.71. Because of the company's substantial Bitcoin purchases, MicroStrategy's stock price is closely correlated with Bitcoin's movements, earning it the nickname "shadow stock."

Another closely watched public company in the space — Tesla — holds approximately 40,900 Bitcoin at an average price of approximately $32,100, implying an unrealized gain of approximately $607 million.

Since launching crypto services in the United States last October, PayPal began offering cryptocurrency services to UK customers this week, allowing UK customers to buy, hold, and sell crypto assets (BTC, BCH, ETH, or LTC) with a minimum purchase as low as £1. This is widely seen as PayPal's first international expansion of its crypto services, carrying significant strategic weight and injecting further confidence into the crypto industry. This move may also catalyze greater mainstream adoption of crypto assets going forward.

Additionally, an anonymous banking insider stated that U.S. banking giant Citigroup is awaiting regulatory approval to begin trading CME Bitcoin futures, apparently driven by surging customer demand for crypto assets. Citigroup said in an email statement: "Our clients are becoming increasingly interested in this space, and we are closely monitoring developments in the crypto sector." Another source familiar with the crypto derivatives market noted that Citigroup is actively recruiting for a crypto team in London, believing the team could receive approval to first begin trading CME Bitcoin futures before moving on to Bitcoin ETNs. This aligns with a May report by the Financial Times stating that Citigroup was considering offering crypto asset trading, custody, and financing services to its clients.

On August 26, SEC filings revealed that more than 30 Morgan Stanley funds hold substantial GBTC shares, with the largest appearing to be Morgan's Insight Fund, holding over 920,000 shares worth approximately $36 million or more than 700 Bitcoin. Clearly, the pace of institutional entry is accelerating.

The highly anticipated global central bank annual symposium will release its full agenda at 8:00 PM Eastern Time on August 26. This year's theme is "Monetary Policy in an Unbalanced Economy," and Federal Reserve Chair Jerome Powell will deliver a speech on the economic outlook at 10:00 AM Eastern Time on Friday (10:00 PM Hong Kong Time Friday).

Goldman Sachs analyst David Mericle stated in a report released Monday that Powell is expected to acknowledge the strong jobs growth in June and July as well as the downside risks posed by the Delta variant. Dallas Fed President Rob Kaplan previously stated that if the spread of the Delta variant appears to be slowing economic momentum, he would reconsider his earlier calls for the Fed to quickly begin tapering its monthly $120 billion in Treasury and mortgage-backed securities purchases. Following Kaplan's remarks, markets are anticipating a slightly more dovish tone from Powell.

Tom di Galoma, Managing Director of Fixed Income Trading at Seaport Global Holdings, stated that he does not expect the Fed to announce a taper at the Jackson Hole symposium, with November or December being the most likely timing. Oanda's London-based senior analyst Craig Erlam also noted that while Jackson Hole appeared to be an ideal venue to signal a taper warning, the more likely scenario is to wait and observe economic data in the weeks leading up to the September meeting before releasing a major signal.

Given the interconnected nature of global financial markets, we should closely monitor Powell's remarks at this week's Jackson Hole symposium as well as the Fed's September meeting.

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