Matrixport

Bitcoin tops $40K for first time in 19 months, Matrixport tips $125K in 2024

Bitcoin has hit a 19-month high, and Matrixport predicts it will keep climbing well into next year.

Bitcoin (BTC) has reached the $40,000 level for the first time since late April 2022, climbing around 2% in 24 hours.

Bitcoin surged from under $39,500 to strike above $40,000 on Dec. 3 to hit a 19-month high, according to CoinGecko data.

It also marks a new year-to-date high for Bitcoin, which is up over 140% since Jan.

*The price of Bitcoin over the last 12 months, which has gone from under $17,000. Source: CoinGecko*

In a Nov. 30 note, Matrixport research head Markus Thielen predicted that Bitcoin would hit over $60,000 by April next year and $125,000 by the end of 2024.

Thielen said the last three crypto bear markets saw a following three year bull cycle and an analysis suggested “another three years of this bull market, with 2023 being the first year.”

“Historically, the years when Bitcoin mining rewards were halved were generally bullish,” Thielen explained.

Stablecoins not the target in BUSD crackdown: Matrixport head of research

Crypto financial service Matrixport’s head of research believes regulators are not targeting all stablecoins with the regulatory crackdown on BUSD issuer Paxos.

Crypto financial services Matrixport’s head of research believes the recent scrutiny of Paxos and its Binance USD (BUSD) token is not a direct attack on stablecoins themselves.

In a Feb. 14 analysis, Matrixport’s Markus Thielen suggested that BUSD issuer Paxos Trust Company may not have been stringent enough with its oversight of the token.

He added that the issue “does not appear to be around stablecoins” in itself.

“Paxos had violated its obligation to conduct tailored, periodic risk assessment and due diligence of Binance and Paxos-issued BUSD customers,” Thielen argued.

On Feb. 13, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the issuance of BUSD “as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance.”

Paxos also recently confirmed that on Feb. 3, the United States Securities and Exchange Commission (SEC) sent a Wells notice to the stablecoin issuer over its alleged failure to register the offering under federal securities laws.

Thielen notes that BUSD has issued $11 billion on Ethereum, but there’s also $4.8 billion of Binance-Peg BUSD Token on BNB Smart Chain. Binance provides a pegged token service in which BUSD is locked on Ethereum and Binance-Peg BUSD is issued on BNB Chain and other blockchains such as Avalanche and Polygon.

“It appears that NYDFS is now worried that the $4.8 billion might not be properly backed or have had issues with being 1:1 backed,” he said.

However,Paxos has stated as recently as Feb. 13, that, “BUSD tokens issued by Paxos Trust have and always will be backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts.”

In a statement to Cointelegraph, Binance reiterated this stance, saying, “BUSD is a 1 to 1 backed stablecoin that is one of the most transparent stablecoins in existence.”

Thielen notes some of the regulatory actions could have also been sparked by the Jan. 24 incident when Binance mixed customer funds with collateral.

The recent actions against BUSD have still caused some to believe that other stablecoins could be in trouble.

Paxos recently stated that besides the current issue around BUSD, “there are unequivocally no other allegations against Paxos.”

Meanwhile, USD Coin (USDC) issuer Circle’s chief strategy officer and head of global policy, Dante Disparte, told Cointelegraph:

“Circle maintains that USDC is a regulated dollar digital currency issued as stored value under U.S. money transmission law.”

“Facts and circumstances in any type of regulatory action like this are all different, as are the structural and regulatory considerations with each of the cryptocurrencies that are in circulation around the world,” Disparte added.

Thielen has however urged the industry not to be overly concerned about the future of BUSD.

“Binance has shot itself a little bit in the foot here, but they are working on it and it should be resolved. So should we be really worried?” Thielen said.

“I don’t think so. Is the peg breaking? NO. We are no longer in a bear market where you worry about downside, in bull markets, you focus on the upside,” he added.

US institutions account for 85% of Bitcoin buying in ‘very positive sign’ — Matrixport

Matrixport’s head of research and strategy suggests the industry will soon see layer 1 and other altcoins outperforming relative to Bitcoin.

Institutional investors are “not giving up on crypto,” with recent data pointing to as much as 85% of Bitcoin buying being the result of American institutional players, according to Matrixport’s chief strategist.

Markus Thielen, the head of research and strategy at the financial services firm, told Cointelegraph the evidence shows that institutions are not “giving up on crypto” and is an indicator that we might be entering a new “crypto bull market now.”

The data was shared in a Jan. 27 report from Matrixport, which suggests that it can be distinguished whether a digital asset is more favorable by retail or institutional investors at any given time based on whether that asset is performing well in the United States or Asian trading hours.

The report stated that if an asset that trades 24 hours “performs well” during U.S. trading hours, it indicates that U.S. institutions are buying it, while an asset that sees growth during Asian trading hours indicates that Asian retail investors are buying it.

The report cited that Bitcoin (BTC) is up 40% this year, with 35% of those returns occurring during U.S. trading hours, meaning there is an “85% contribution” associated with U.S.-based investors, indicating that U.S. institutions are buyers of Bitcoin right now.

Bitcoin Fear and Greed Index is 55 – Greed
Current price: $23,033 pic.twitter.com/OAt0TakkZR

— Bitcoin Fear and Greed Index (@BitcoinFear) January 27, 2023

Thielen added that previous data shows that institutions typically first start buying Bitcoin before investing in other cryptocurrencies. He noted:

“If history is any guide, then we should see the outperformance of layer 1 and altcoins relative to Bitcoin.”

While the report highlighted that news regarding other projects positively impacted token prices such as Lido DAO (LDO) and Aptos (APT), the crypto rally only started once the U.S. inflation data was released on Jan. 12.

It was also mentioned that Ether (ETH) appears to be performing well during U.S. hours, indicating “institutional flows” into the cryptocurrency, however, APT is doing well around the clock.

“Aptos is seeing a mix of strong returns during U.S. trading hours AND during Asia trading hours.”

The report concluded that this “should be a very positive sign for Bitcoin” as institutional adoption continues.

In earlier comments to Cointelegraph, economist Lyn Alden believes that Bitcoin is currently playing “a bit of catch-up,” getting back to where it would have beenwithout the FTX collapse occurring.

Alden warned that there is “considerable danger ahead” for the second half of 2023, citing liquidity conditions being “good right now” partly because of the U.S. as a significant factor.

#Bitcoin is a Masterpiece. pic.twitter.com/2rhnCYlkW1

— Michael Saylor⚡️ (@saylor) January 25, 2023

Alden explained that as the U.S. Treasury is drawing down its cash balance to keep the country’s debt levels low, it pushes “liquidity into the financial system.”

Meanwhile, popular trader and market commentator TechDev posted a Twitter update on Jan. 26 showing the price correlation between Bitcoin and gold, stating that if Bitcoin continues to follow the price of gold, it might even “crack the $50,000 mark.”

Almost everything could be tokenized in 5-10 years — Matrixport co-founder

Cost efficiencies, improved liquidity, 24/7 market access and the removal of intermediaries were the main advantages cited that blockchain infrastructure has over current legacy systems.

In five to ten years, almost every “real world” asset class could be tokenized in the form of a nonfungible token (NFT) according to Cynthia Wu, co-founder of digital asset service platform Matrixport.

Speaking to Cointelegraph, Wu said the best case for NFTs would see the widespread representation of real-world assets to be stored and traded on-chain:

“Eventually, all the major financial asset classes are going to be represented on this new financial infrastructure [and] NFTs could be our instrument to represent off-chain assets like real estate deeds, equities or bonds.”

The move on-chain would make these real-world assets “more liquid and more tradable,” which would improve price discovery and transaction activity, Wu added.

But Wu said that while it’s great that we’ve created over two trillion worth of digital native assets on-chain from Bitcoin (BTC), Ether (ETH) and other tokens, the only niche to have generated NFT transaction activity has come from digital collectibles — which hasn’t really helped institutional adoption:

“We haven’t really been seeing off-chain assets being represented on-chain […] we’re now really only at the first 3-5% of it.”

But, nonetheless, Wu is confident that the tide will turn.

Earlier this month, a report from Boston Consulting Group (BCG) estimated that the total size of tokenized illiquid assets could reach $16.1 trillion by 2030.

BCG predicted much of this tokenization to come from pre-initial public offering (IPO) stocks, real estate, private debt, and revenue generated from small to medium-sized businesses.

However, while the tokenization of real-world assets has piqued the interest of financial institutions, Wu said some have been a bit reluctant to move on from the legacy systems that have served them well over the years.

Wu pointed out the traditional financial system hasn’t accounted for the trading of nonfungible assets because they can’t easily be exchanged the same way a fungible or divisible asset can, but tokenization on the blockchain provides a solution for that.

She also argued that blockchain infrastructure is the superior option to legacy systems, citing cost efficiencies, improved liquidity, 24/7 market access and the removal of intermediaries as the main factors that would lead to a more streamlined financial system.

Matrixport was established in Feb. 2019, and currently manages between $3-4 billion in digital assets from a broad mix of retail and institutional clients.