The Digital Commodity Market attracted a tremendous amount of Capital over the past seven days increasing more than 30% and puts the total valuation at more than 431 billion dollars. The rally was broad based as Bitcoin’s share of the total market decreased from 41.5 to 37.1 percent.
I have mentioned in the majority of the market updates how important it is for the BTC share of the market to decrease vs all other currencies, as 37% is still an extremely high number as compared to other markets.
If one draws comparisons to the NASDAQ, the total market share of Apple, Microsoft, Google and Amazon combined is 40%.
One of the key notes from this week is while Bitcoin Dominance decreased to its lowest point since February of 2018, the total market valuation is at early March of 2018 levels and this to me, illustrates that market participants may be doing more research and diligence which an excellent attribute is.
The all time low in Bitcoin market share was 32% in January of this year. This will be a highly important number to watch as for a sustained rally, it can not be simply Bitcoin based. Bitcoin is by far the most liquid and fungible commodity, as it is widely accepted as a payment mechanism, but over time, as more learn about digital currencies, so too will others. The other key level is 45% which has served as an invisible barrier since December of last year.
What Bitcoin Dominance is truly a barometer of is the difference between a long-term asset class vs. a singular store of value. Bitcoin will always be known as the first and have the brand notoriety, but as industries become mature, new technology is brought to market and implemented.
In the past week, I marked the 360bb and 400bb areas as resistance, those will now become the support and the upside resistance zones for the crypto market will be 460bb and 500bb zones. After strong rallies like the one experienced last week, it would not be unfathomable to have a period of consolidation between 400 and 435.
In other asset classes, trading desk began the Crude Oil story as WTI neared $70 for the first time in years and is currently $68.
The NASDAQ had profit taking and leveraged funds getting forced out, as it fell 5% over the past seven days.
US 10’s fell to multiyear low today and the dreaded 3% yield on 10-year treasuries surfaced for the first time in nearly a decade. Many are blaming “speculator” for buying crude and shorting treasuries, that said the average hold time in US equities in well under one second. That said, more than 86% of equity trades are algo driven, it would be hard to believe that these are all fundamental and research driven investors.
The subject of Master Nodes has been a topic that has been receiving more attention over the past year, so I decided do some more in-depth research and gather facts which may be useful to those not familiar with that term or asset.
Since I have a financial markets background, not a technology-based area of expertise, my examples will be equated to equities and fixed income.
What intrigued me is that the foundation of this investments return is somewhat of a hybrid between a CD or a Dividend Reinvestment plan with a corporation.
With the CD, historically those who put larger amounts of capital on deposit earn a larger amount of interest than those who keep only a few dollars in a checking account. Since digital commodities have a much higher volatility than equities, they need to offer a higher rate of return to attract longer term investor capital.
When investing in a CD, the majority of the time you are only paid interest on your deposit, while your interest simply accrues a minimal rate.
On the contrary, in the Corporate Dividend Reinvestment Plan, each cent you earn is invested back into that individual equity, whether you have 1 share or you own 40% of the company. While investigating, I found that some businesses have offered services where a smaller investor can pool assets with others until they collectively have enough currency to convert loose coins into a return yielding masternode. Many groups offer Shared Master Node Services, I will not go into the technical side, as that is not my strong suit. This allows the investor with one asset to earn the same yield as an investor who has a much larger stake.
These services also allow larger investors a place to put capital until the accrued interest equals that of another masternode.
Simply put you have One Dollar in a drawer.
Entity “A” offers to pay a fixed amount to keep that dollar in the drawer.
Entity “B” offers to pay zero for keeping the dollar in the drawer.
Which do you prefer?
Below are some of the charts that recap last weeks market movements.