The Daily Dive - Asia Sell Pressure And Altcoins Embrace Bitcoin
Regional Price Changes
Thanks to Glassnode’s latest creativity and data engineering, we have a unique view of bitcoin’s price changes across major regional working hours. The charts below leverage their new data which tracks the cumulative 30-day price change during U.S., EU and Asian trading hours.
This provides us with an interesting view of the market’s buy- and sell-side pressure across geographic areas. The first chart below shows the absolute 30-day change in price since 2018. As price progresses higher, the recent price changes over the last year stand out more in the first chart. Below, we normalize this to a relative percent change for easier historical comparisons.
Over the last year, we can see that the July 2021 drawdown was heavily sold by the U.S. and moderately from the EU with relatively small sell-side changes from Asia. Yet in the current drawdown from previous all-time highs, Asia has dominated the sell-side pressure in the market and continues to do so in bitcoin’s current $35,000-to-$45,000 price range. The latest price momentum to the upside and hints of increased demand as of late look to be coming from U.S. and EU buyers.
We find the data easier to compare on a relative percent basis in the below charts. The more recent Asia selling pressure (bitcoin price change during China Standard Time working hours) was some of the strongest sell pressure seen since the cycle top in December 2017.
The strongest sell pressure seen from the U.S. was from the two months prior to the July 2021 local bottom. Some of the largest U.S. buy-side pressure came right after this bottom with some immediate “buy the dip”-demand in August 2021. As we stand today, the 30-day percent change in bitcoin price is up 6.4% during EU trading hours, up 7.1% in the U.S. and down 11.1% in Asia.
With such a divergence in buy and sell pressure across regions and persistent Asian-hours selling pressure right now, it may be time for cautious optimism until we see bitcoin sustain a breakout above $45,000. From our view, we still look to be in a bear market rally period for risk-on assets. Approximately $46,000 still reflects the latest short-term holder on-chain cost basis.
Altcoins Embrace Bitcoin
One of the larger stories in recent days in the bitcoin market has been news that LFG (Luna Foundation Council) has plans to purchase billions of dollars of bitcoin for its reserves for the backing of UST, an algorithmic stablecoin built on the Terra protocol. While we won’t go into the specific technicalities for the protocol or its long-term viability in this Deep Dive, the mechanism for maintaining the stablecoin peg requires the protocol to maintain reserves, which were traditionally just the Luna altcoin, but now the project is looking to purchase a large sum of bitcoin to bolster its treasury.
The founding member of the project recently spoke on Twitter about buying bitcoin, and essentially reiterated that it was the only credibly neutral digital asset to purchase for liquid reserves.
While this is an idea that bitcoin proponents have been championing for years, it was nonetheless an insightful comment to hear from the leading member of an altcoin foundation. Of course, this isn’t the first altcoin to operate with/around/on top of bitcoin, and it certainly won’t be the last.
While the few billion worth of bitcoin planned to be purchased is the rather interesting thing at the moment in terms of market price, a bigger takeaway can be the idea of neutral native value on the internet.
Bitcoin is the only so-called “digital asset” with a rigid codebase that isn’t malleable to the whims of select developers and foundations; due to its seemingly immaculate conception and proof-of-work distribution, there is no alternative.
Just recently the Lead Developer for the Ethereum Foundation posted a thread (displayed below) on Ethereum’s increasing complexity and centralization due to its past design choices.
Szilágyi ended the thread by saying,
“I can’t say what the solution is, but my 2 [cents] is to stop adding features and start culling, even at the expense of breaking things. There are less and less people knowing and willing to piece together a broken network. And each change pushes more away.”
So while Ethereum and other altcoin projects can do a whole lot of things that bitcoin cannot, that is entirely the point, as the global monetary base layer isn’t able to be significantly changed or altered by just a few key decision-makers. A network of decentralized node runners imposing consensus enables this.
Relating this back to the Luna Foundation’s plans, it is totally to be expected for this sort of adoption to continue, whether it is by the leading member of an altcoin protocol, a business or even a nation state, as they come to recognize and appreciate the properties of the Bitcoin network.
And lastly, a fitting final note from Alex Gladstein:
