First Mover: Bulls Are Back as Ether Hits All-Time High, Bitcoiners Hoard

Bitcoin (BTC) was higher for a third day, pushing on the upper end of its range over the past couple weeks, between $30,000 and $36,000. 

“Cryptocurrency has come into the realm of respectability," Scott Minerd, chief investment officer of the $310 billion money manager Guggenheim Partners, told CNN in an interview. Minerd, who in December said bitcoin should be worth $400,000, said last month that the price could drop to $20,000 in the short term. Now he says a price as high as $600,000 is conceivable.  

Ether (ETH), the second-biggest cryptocurrency, was carrying through on Wednesday after hitting a new all-time high price. (Read more about that below.)

Dogecoin (DOGE) appeared to stabilize around 3.3 cents, which is still more than four times where it changed hands a week ago. The doggie-faced meme token, which is attracting social media chatter, has been the object of price pumps at least five times since mid-2017. 

Ether breaks $1,500: All eyes are on ether (ETH), the second-biggest cryptocurrency, after its price shot above $1,500 for the first time on signs of growing activity on the Ethereum blockchain. Prices, which quintupled in 2020, have more than doubled already this year, overshadowing the better-known bitcoin's 21% year-to-date return.  

CME, the Chicago-based commodities exchange, is set to debut its new futures contracts on ether next week. That might generate additional buzz for ether, since the CME's bitcoin futures, listed in late 2017, have grown to become one of the most popular ways for big institutions to bet on the largest cryptocurrency. 

Some analysts connected the move to the turmoil in stock markets: Online brokerages including Robinhood restricted transactions to rein in volatility fueled by Reddit-based retail traders’ coordinated buying in GameStop and other out-of-favor stocks. 

"The case for cryptocurrencies only grows stronger,” Nicholas Pelecanos, head of trading at NEM Group, told CoinDesk's Omkar Godbole. 

More ether is locked: Simon Peters, an analyst for the trading platform eToro, noted that more ether are getting locked up in specific uses including staking them in Ethereum 2.0, a planned upgrade for the blockchain. The tokens are also getting socked away in decentralized finance (DeFi) protocols.

Institutional buyers might be pushing prices higher: "Either way, it's clear from the price that this diminishing supply is feeding through quickly to prices," Peters said in emailed comments. "With institutions expected to add further to their positions, we expect the price of ethereum to push higher from here."

GameStop (GME) continued its slide: The stock tumbled 60% on Tuesday in what appears to be a comedown from last week's Reddit-fueled price pump. Other "meme stocks" AMC Entertainment (AMC) and BlackBerry (BB) also fell. 

Virtual asset traders have kept a close eye on the saga. That's partly because the entire episode recalled the anything-goes culture prevalent in cryptocurrencies, but also because some of those fired-up retail traders might ultimately decide to give digital assets a try. 

"Looking at the charts today, it does seem like it's game over for GameStop," Mati Greenspan, founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, told his subscribers Tuesday. "One lesson that the world seems to have learned is that social media can be a leading indicator, and even a driving force, for future price movements."

Of course, the use of social media in trading is as relevant an issue to cryptocurrency traders as it is to the investors in traditional whose faith in stock markets might now be somewhat shaken: If the trading moves were coordinated among a huge number of individuals on a public forum, is it akin to a traditional pump-and-dump scheme?

U.S. securities regulators may find it difficult to bring a case. (Though the matter is under review by the Biden Administration, including Treasury Secretary Janet Yellen, with both the U.S. Senate and House of Representatives planning to hold hearings, as reported by CoinDesk's Nikhilesh De. Chinese regulators are also watching closely, CoinDesk's David Pan reported.)   

Mark Cuban, the "Shark Tank" investor and basketball team owner, doesn't expect the new trading phenomenon to disappear anytime soon, he told CNBC Tuesday: “I think now that they’ve recognized their power and now that they’ve learned some lessons, we’re going to get more of it, not less of it.” 

Some analysts are starting to connect the dots to cryptocurrency trading. Edward Moya, a senior analyst for the London-based foreign-exchange broker Oanda, wrote Tuesday in a market update that "panic selling across GameStop, AMC and silver is triggering a nice bid on cryptocurrencies." 

Few crypto Twitterati would deny the role social media play in newfangled digital markets.

Indeed, the Reddit forum r/SatoshiStreetBets was filled early Wednesday with posts calling to pump dogecoin – a digital token created as a joke, with the adorable dog breed Shina Inu as its ubiquitous icon – "to the moon" later this week. There's even a song.   

With bitcoin up 21% so far in 2021 and ether hitting a new all-time high, digital-asset managers are rolling out announcements to take advantage of what they see as still-growing demand among investors for cryptocurrencies.

The offerings come amid other signs of institutional demand for cryptocurrency-related investments, including the disclosure of a new $10 million bitcoin purchase by Michael Saylor's MicroStrategy (MSTR). The $441 billion California Public Employees' Retirement System, which is the largest U.S. public pension fund, disclosed Tuesday in a filing it held about 113,000 shares of the bitcoin miner Riot Blockchain (RIOT) at the end of 2020, worth some $1.9 million. 

And CoinDesk's Muyao Shen reported Tuesday that balances of the stablecoins dai (DAI) and USD coin (USDC) on cryptocurrency exchanges had reached new all-time highs in the past week. Citing the blockchain data tracker Glassnode, Shen reported the increase might be a bullish indicator if it reflects buyers’ plans to use the two stablecoins to buy cryptocurrencies.

The furor over the trading platform Robinhood's stock suspensions in the wake of the GameStop saga is generating fresh interest in decentralized finance, where entrepreneurs are building automated exchanges and lending protocols atop blockchain networks. The idea is that the computer-run systems might be fairer and less prone to ad hoc human interventions in market operations.

Yet, the fast-growing industry is still working out its kinks.

Long-term investors continue to hoard bitcoin, sucking up market supply and helping the cryptocurrency maintain its broader upward trajectory, CoinDesk's Omkar Godbole reports.

Data provided by Glassnode shows the total balance of bitcoin held in “accumulation addresses” rose to a 3.5-year high of 2,851,608 BTC on Tuesday. That amounts to 15.32% of the total circulating supply of 18,618,081 BTC. The number stood slightly below 14% three months ago.

Accumulation addresses are those that have at least two incoming non-dust transfers (tiny amounts of bitcoin) and have never spent funds. The metric excludes addresses active more than seven years ago to adjust for lost coins and those belonging to miners and exchanges.