The Government That Promised Never to Sell Just Sold

From Yesterday's Simply Bitcoin Live | Episode 1609

The Numbers

The drop to the low 80s tracked two days of old government wallets moving onto Coinbase, not new selling from retail or long term holders.

The News

BlackRock's US head of equity ETFs, Jay Jacobs, told Bloomberg that spot Bitcoin ETFs have bought roughly 79,000 Bitcoin since the start of August, reversing the nearly 61,000 Bitcoin that left ETFs between January and June. He also said BlackRock cut its in-kind redemption minimum to about $2 million, which he described as opening the floodgates for holders moving spot Bitcoin directly into IBIT.

On the same day, Farside data showed IBIT pulling in a net $122 million while the rest of the Bitcoin ETF field barely moved. BlackRock is not just winning the ETF race. It is becoming the only one still running it.

The floodgates opened. They only lead to one door.

Over the past two days, wallets tied to old Bitcoin seizures sent close to 20,000 Bitcoin, worth more than a billion dollars, toward Coinbase Prime. Galaxy Research traced part of it to recovered Bitfinex hack funds and part to previously unidentified holdings assumed to be government seizures.

The timing could not have been worse for anyone counting on a clean breakout. Coinbase's premium turned negative as the coins landed, and Bitcoin slid from the mid eighties to about $80,700, wiping out this week's case for a run at 90,000. A weekly close under $83,000 points the chart toward the 200 day moving average near $72,000.

Uncle Sam said this Bitcoin would never be sold. This week it sold anyway.

The Culture

Bitwise CIO Matt Hougan joined the show to walk through his firm's first institutional crypto report. The average institutional client takes eight to ten meetings, close to two years, before making a first Bitcoin allocation, and a 50 percent drawdown did not scare a single one of them off. Once they are in, they stay, and many are already asking about moving from 1 percent toward 5 or 10 percent.

Hougan also argued that 50 percent drawdowns, not 80 percent ones, are becoming Bitcoin's new normal as a more diverse set of buyers smooths out the swings. His price target follows gold's own ETF path from a $2 trillion asset to $30 trillion, and he called a seven figure Bitcoin within a decade "a pretty conservative bet."

Nine years ago Bitwise was begging institutions to try 1 percent. Now the ask is 10.