Dispatch #58: 2½ Reasons Behind Bitcoin’s New ATH

In this patch of your weekly Dispatch:

• Competing explanations for Bitcoin’s rally
• What's the latest in the Nexoverse
• Big tech doubles down on crypto

The Big Idea

The Real Cause of Bitcoin’s Rally Is…

There’s nothing like a new Uptober all-time high to get the heart pumping. Now, we know that Bitcoin has peeled off a bit since cresting $66,000 on Wednesday, but that doesn’t change the fact that after what seems like months of a never-ending barrage of China FUD, Tether FUD, environmental FUD and more, we had a new Bitcoin ATH.

The question, of course, is what’s driving it? There are two compelling answers.

The first is the inflationary macro environment. Hedge fund legend Paul Tudor Jones said on CNBC this week that inflation was probably the most significant threat to financial markets and society in general. What’s more, he said that he now believes crypto is a better hedge against inflation than gold. If many investors are thinking like this, maybe that’s driving the rally?

Another possibility is that this was powered first by the hyped lead up to the launch of the first-ever Bitcoin futures ETF, the ProShares $BITO ETF, launching this week. And as if that initial excitement wasn’t enough, the ETF was the second most traded debut ETF ever, and the fastest to get to $1B in assets under management, which it did in just two trading days. Perhaps this new ATH is all attributable to ETF fever?

There are reasons to be skeptical of both. Inflation concerns have been with us for months. Why the sudden focus on Bitcoin now? When it comes to the ETF, there are plenty out there who argue that it’s less significant now than it would have been a few years ago.

The reality is, as is always the case with Bitcoin, the new price milestone is likely a combination of factors, including those above and other things we haven’t even discussed. Perhaps then, what matters is that a new psychological barrier has been breached, and the industry is looking to the rest of the fall with even more excitement than before.

The Latest In…

The Nexoverse

Because Dispatch once a week is not enough to keep you on top of your crypto game, you should open your Nexo App and dive into our ultra cool new feature – Markets & News. You can now track the price changes of all your assets on Nexo in real time and read the latest news from top-tier crypto media without even leaving the app.❕Make informed decisions about your portfolio and never miss the perfect moment to buy, sell or borrow against your crypto on Nexo.

The Latest In…

Big Tech in Crypto

Web2.0 is really not comfortable letting a new era of the internet have all the fun. This week, we learned that Mark Zuckerberg is so intent on transforming Facebook into… well, a thing in the Metaverse, that they’re actually going to rebrand to be more relevant. Jack Dorsey and Square doubled down on their commitment to Bitcoin with a new thread in which the CEO discussed open sourcing a process to build more decentralized, efficient Bitcoin mining. Two very different companies, two very different leaders, two very different visions for the crypto-powered world they want to build. 🍿

The Latest In…

Fundraising

By any standard it was an absolutely insane week of fundraising. Let’s just take a tour through some of it, shall we?

• FTX was back in the news after raising $420,690,000 from 69 investors in their Series B-1 round that valued the company at an eye-popping $25B. Memes ftw!
• Candy, the official NFT partner of Major League Baseball, raised $100M at a $1.5B valuation.
• Variant, a web3.0 focused fund, raised $110M after merging with Atelier Ventures.
• Stronghold, a US-based Bitcoin mining company, raised $127M in its IPO.
• Somewhat controversially, Worldcoin raised $25M at a $1B valuation to give crypto to everyone who scans their eyeball.

It’s clear that it’s Uptober in the private markets as well!

The Latest In…

DAOs

This is a category we expect to see a lot more of here at Dispatch. DAOs are lurking just around the corner as the next crypto hotness, and one unique story from this week shows why. Legendary hip hop group Wu Tang Clan recorded an album over the course of six years in secret. In 2015, a single copy of the record was produced. Legally, it can only be played at listening parties and cannot be commercialized until 2103.

It used to be owned by pharmaceutical-exec-turned-jailbird Martin Shkreli, but when he went to jail the US seized his assets, including the album. News broke this week that it had a new owner and that the new owner was none other than crypto collective PleasrDAO and that they had bought the album for $4M. So yeah, if you don’t think DAOs are going to be a thing, just remember the US government sold one a Wu-Tang album.

The Latest In…

Nexo’s High Yields

17% Yield on $DOT 🤯. You heard that right. Parachains are coming, and Polkadot is on a roll, so it’s Polka-promo time here at Nexo where we offer you up to 17% interest on your DOT. The offer is valid through November 30, 2021, so the earlier you buy or add Polkadot to Nexo, the more yield you’ll earn.

The Week’s Most Interesting Data Story

Why This All-Time High Is Different

There are lots of ways to squint at a market price to try to understand what makes it different. We have been here to ~$64,000 exactly once before, earlier this year. So how does the market differ in a moment when the price is the same?

One of the best indicators is long-term hodlers’s behaviour and what it says about what they think will happen next. LTHs sold throughout the winter/spring run up, but since then have been accumulating. While the rate of accumulation has slowed recently, they’ve still been buying more. This suggests to many analysts that they believe there is more room for this bull market to run. Of course, no one knows the future, but boy if that’s not a pretty big positive indicator…

Hot Topics

What the Community Is Discussing

How things change in 8 years.

NFTs = legos?

Think you’re bullish on DAOs now?

What to Watch for Next Week:

• How will the Bitcoin ETFs change the market dynamic?
• Will Bitcoin sustain it’s new levels or fall back?
• Alt szn? #NEXO