Perfect Storm — June 29

Chart of the Day

Self-fulfilling prophecy. The impact of the largest mining exodus in history has yet to fully unwind. Despite the price of Bitcoin settling above the $34k level, on-chain metrics appear as gloomy as ever — a sign that is not to be taken lightly. Notwithstanding several premature bearish calls since the beginning of the year, the current landscape is, well, unpleasant to say the least. Hashrate has plunged so much that it takes twice as long to mine the next block. Miners’ revenue being slashed by half led to more coins sold to cover fiat-denominated costs, piling onto miners’ selling pressure. The Puell Multiple, an indicator that looks into the supply side of Bitcoin’s economy, has re-entered the buy zone — a level unseen since May 2020. As shown in the chart, the Puell Multiple has been a rather accurate market top/bottom indicator in previous cycles, which leaves us wondering if and when will this perfect storm end.

Talk of the Town

Gradually, then suddenly? Institution demand has been a primary driver of the aggressive bull rally in the second half of 2020. By June 2021, Bitcoin has finally reached Wall Street, with several banking giants pioneered in offering crypto exposure to wealthy clients, while others are still weighing the pros and cons. A recent SEC filing revealed that Morgan Stanley has given green light to several funds to gain Bitcoin exposure indirectly, among which the Europe Opportunity Fund has acquired more than 28,000 shares of Grayscale’s Bitcoin Trust product. However, the largest asset manager in the crypto space has been in a rut since February, trading at a persistent discount and slowing institutional demand.