Crypto Market Cap Surges Past 2 Trillion as Bullish Indicators Stack Up

The total cryptocurrency market cap passed the $2 trillion mark this week as bitcoin blew past the $50K mark. Elsewhere, Dogecoin developers relaunch the Dogecoin Foundation alongside big-name supporters and the second largest mortgage provider in the US will begin accepting crypto repayments.      

• Bitcoin Stock to Flow indicates 2nd leg higher could be likely 
• United Wholesale Mortgages to start accepting bitcoin repayments
• Lloyds Bank and Walmart search for cryptocurrency experts
• Dogecoin Foundation relaunches with key crypto players
• US FOMC minutes suggest QE tapering before the end of 2021
• Big-ticket reports to watch out for this week

Bitcoin pushes towards $50,000 as stock to flow suggests new leg 

It was another bullish week across the board for cryptocurrencies as Bitcoin, Ethereum, Cardano, and XRP all posted double-digit gains. As a result, the total cryptocurrency market cap reached the pivotal $2 trillion mark for the 2nd time. A $2 trillion market cap has not been seen since May after environmental and China concerns crept into the markets.

As Bitcoin dropped below $30,000 less than a month ago, many analysts had believed that the bull run of 2021 was over. However, the king of cryptocurrencies has displayed a remarkable turnaround from the lows experienced in July. 

The Stock to Flow (S2F) model has been one of the most accurate Bitcoin price predictors to date. The model currently predicts that Bitcoin has not yet completed a true bull cycle, which could mean there is more upside to come. 

The S2F model works by dividing the current supply (stock) of Bitcoin by the annual production (flow). In April 2021 according to Forbes, Bitcoin’s current stock was approximately 18.6 million and after the latest halving, the flow has been reduced to 328,500. The model has predicted Bitcoin’s price movements over the last two bullish cycles and many believe the model will do the same for the current one. 

When analyzing the current S2F chart, the on-chain signal (colored dots) has not reached the yellow/green peak as seen in previous bull cycles. In the chart below, the two previous all-time high peaks have usually occurred 1000 – 800 days before the next halving event. This has not yet happened. 

While the S2F method has been around for decades and has primarily been applied to commodities it was applied to Bitcoin by the pseudonymous Twitter user ‘Plan B’. The infamous bitcoin S2F promoter shared his views on the resurgence of Bitcoin last week. “Both #bitcoin S2F (white line) and on-chain signal (color, not red yet) still indicating a 2nd leg of this bull market.” The influencer later added, “IMO [in my opinion] we are going up, first to $100k, then $288k”. 

Likewise, Mike McGlone, Bloomberg’s senior commodity strategist, and Tom Lee, Head of Research at Fundstrat Global Advisors both believe Bitcoin is due to surge higher – with a strong rally expected by them during the remainder of 2021. 

Of the $2.1 trillion market cap recorded during the week, Bitcoin accounted for $883 billion, which represented 42% of the total value. Ethereum commanded a further 17.9%.

US mortgage-provider to start accepting bitcoin

United Wholesale Mortgage (UWM), the second-largest mortgage provider within the US, announced last week plans to begin accepting bitcoin for repayments. UWM holds one of the largest networks of real estate brokers in the US and is now leading the race for cryptocurrency adoption within the real estate sector. 

The CEO of the company, Mat Ishbia, commented on the news during the company’s second-quarter earnings call last Monday. “We’ve evaluated the feasibility, and we’re looking forward to being the first mortgage company in America to accept cryptocurrency to satisfy mortgage payments. That’s something that we’ve been working on, and we’re excited that hopefully, in Q3, we can actually execute on that before anyone in the country because we are a leader in technology and innovation.”

Alongside confirmation of bitcoin, the company also revealed that it is currently evaluating the feasibility of Ether and a few other cryptocurrencies. The company has not yet confirmed whether all cryptocurrency payments will be kept on the balance sheet or instantly converted into fiat. The company is expecting to have the correct systems in place by Q3 2021. 

Lloyds Bank and Walmart search for cryptocurrency experts

One of the largest financial institutions in the world, Lloyds Banking Group, the owner of Lloyds Bank, is set to hire a digital currency and innovation senior manager. The group is one of the largest in the world, holding $500 billion in assets under management (AUM). Analysts have speculated that the latest job posting highlights the group’s ongoing preparation for cryptocurrency adoption.

Lloyds serves 30 million customers in the UK, however, according to the role description, the executive position will be focused on wholesale banking in comparison to retail. The job will be based within the ‘Payments Liquidity & Settlement’ team, a new team that is focused on future development.

The posting last week follows a surge in crypto-related roles that have been advertised by Fortune 500 companies. During the week, Walmart, the world’s largest retailer announced that it is looking for a digital currency and cryptocurrency product lead. 

Similar positions have been announced at Amazon and Apple in recent months. Job opportunities such as these are another sign that corporations are continuously searching for ways to benefit from cryptocurrencies and blockchain technology. 

Dogecoin Foundation relaunched with Elon Musk advisor & Ethereum co-founder

There were encouraging remarks for Dogecoin token holders as the Dogecoin Foundation announced a relaunch thanks to support from one of Elon Musk’s closest advisors, Jared Birchall, and Ethereum’s co-founder Vitalik Buterin. Jared manages Elon Musk’s family office, while Vitalik was one of the key developers behind what has now become the second-largest cryptocurrency project, Ethereum.

The reestablishment of the foundation was announced during a tweet from the official Dogecoin account titled ‘Guess who’s back!’. The accompanying article outlines that the Dogecoin Foundation is “here to accelerate the development effort by supporting current Dogecoin Core and future Dogecoin Developers to work on a full-time basis through sponsorship, as well as providing a welcome landing for new contributors hoping to help with the project.” 

The Foundation was initially created in 2014 but now has renewed enthusiasm after the latest announcements. It is a nonprofit organization and is responsible for protecting Dogecoin from abuse or fraudulent behavior, and producing a roadmap for future development. 

Earlier in the year, Buterin speculated about a future collaboration between Dogecoin and Ethereum and commented specifically on the potential for a Doge-to-Ethereum bridge. 

US Fed to potentially taper QE 2021

US Federal Reserve July minutes have shown that the FOMC is now considering tapering quantitative easing (QE) policies during the second half of 2021, instead of 2022. 

Quantitative easing policies were ramped up due to the ensuing COVID-19 pandemic that swept across the world from March 2020. Since then, the US Fed increased bond purchases to $120 million per month.

A quote taken from the minutes stressed the potential for earlier easing. “Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year.”

The report goes on to state that the committee will continue to evaluate the economic outlook and adjust monetary policy appropriately. Many analysts anticipate that the tapering of QE will occur before the raising of interest rates.

The announcement of reductions in quantitative easing sent major indexes, such as the S&P 500 and Dow Jones, spiraling downwards as investors pulled money from the equity markets. However, most price reductions were eaten up during the trading that ensued throughout the remainder of the week. 

 

Big-ticket reports to watch out for this week:

Monday – Australia Retail Sales (MoM), Euro Markit PMI Composite, UK Markit Services PMI, US Existing Home Sales, New Zealand Retail Sales (QoQ)

Tuesday – US New Home Sales (MoM)

Wednesday – US Durable Goods Orders

Thursday –  US Jackson Hole Symposium, US Initial Jobless Claims, US GDP Annualized

Friday – Australia Retail Sales (MoM), US Goods Trade Balance, US Michigan Consumer Price Index, US Fed’s Chair Powell Speech

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