Bitcoin Faces Uncertain Macro Environment But Impact From Terra Blowup Contained: What Ark Invest Said In Inaugural The Bitcoin Monthly Report

Ark Invest launched a new product over the weekend called The Bitcoin Monthly. Here’s what was covered in the first-ever issue of the online publication.

What Happened: Ark Invest launched The Bitcoin Monthly, a monthly “earnings report” that details on-chain activity and blockchain data.

“While the analysis of these reports will be focused on Bitcoin initially, we expect to expand our commentary to the broader crypto markets in the near future,” an email announcement read.

The report is authored by Ark Invest CEO Cathie Wood, Ark analyst Yassine Elmandjra and Ark Research Associate David Puell.

Here are the key areas covered in the inaugural issue.

Bitcoin Market Summary: The issue pointed to the overall outlook on Bitcoin BTC/USD, which faces macro uncertainty. Ark said the macro outlook on Bitcoin in bearish, the on-chain outlook is neutral and market sentiment is bullish.

“Bitcoin still faces an uncertain macro environment, as the global economy shows signs of a recession,” the report said.

For the first time ever, Bitcoin ended the month of May with nine negative weekly closes in a row going from $46,824 in March to $31,835 in May.

Bitcoin is down 57% from its all-time high in November 2021 and closed the month of May down 17.2%.

The report highlighted the correlation between Bitcoin and the S&P 500 hit an all-time high of 80% in May, suggesting Bitcoin is viewed as a risk-on asset.

Related Link: Here's How Much $100 In Bitcoin Could Be Worth In 2030 If Cathie Wood's Price Prediction Comes True 

Terra Blowup: The sharp decline in the price of Terra LUNA/USD and its stablecoin TerraUSD UST/USD

“The largest algorithmic stablecoin, UST, broke its peg to the dollar, triggering a death spiral that led to its collapse,” the report said.

The monthly report labels Terra as the largest layer-1 blockchain failure in cryptocurrency history with an estimated $60 billion of market capitalization wiped out. Terra’s collapse represented around 2.7% of the total market capitalization of the cryptocurrency market.

The Mt. Gox hack stole around 5.7% of the total cryptocurrency market capitalization in 2014.

“As a result of Terra’s collapse, exchanges recorded net inflows of 52,000 bitcoin, the largest daily inflow in BTC terms since November 2017 and the largest inflow ever in USD terms.”

Large inflows were helped by the sale of 80,000 Bitcoin reserves held by The Luna Foundation Guard.

“While the systematic impacts of Terra’s collapse should not be underestimated, its impact on Bitcoin appears to have been contained.”

Ark sees more crypto regulation being prompted by the Terra blowup, which could help Bitcoin gain market share.

Why It’s Important: Ark Invest remains bullish on the long-term outlook of Bitcoin and has invested in several companies related to the crypto market including Coinbase Global Inc COIN.

Wood gave a target price of $500,000 for Bitcoin over the next five years. The crypto could hit $1 million by 2030 if it gains share versus gold, the firm also said.

The Bitcoin Monthly Report showed that fundamentals for Bitcoin remain strong with holders more long-term focused than short-term. A total of 66% of the Bitcoin supply hasn’t moved in a year or more, hitting an all-time high in the month of May.

BTC Price Action: Bitcoin traded up 4.67% at $31,405.89 at publication Monday afternoon.

Photo: Sittipong Phokawattana via Shutterstock