Market Update 15th – 21st April 2020
Bitcoin has been trading between $10,400 and $11,500 this week. It fell 4.5% in the past 24 hours following losses on Wall Street. Overall Bitcoin is up 1.1% for the week and is trading around $11,000 at the time of writing. Today’s plunge wasn’t enough to erase Ether’s gains for the week, which are currently 10.7%. XRP (-2.3%), Bitcoin Cash (-0.6%), Bitcoin SV (-1%) all suffered minor losses for the week, Litecoin broke even while EOS (3.5%) and Stellar (3.9%) made up ground.
Blood on the street
Crypto Twitter has been fascinated by crude oil futures over the past 24 hours, which plunged 300% to -$59.27 a contract. What does it mean for markets, especially with crypto correlated to stocks? Veteran trader Peter Brandt predicted “blood on the street” from bankrupt trading firms and margin calls not being met: “This is going to be ugly. Books will be written about today.” But Oilprice.com said the crash “isn’t as bad as it seems”.
Bitcoin moves into squeeze territory
Bitcoin market volatility recently hit three-month lows, with tightening Bollinger Bands widely considered an advance indicator of an impending big move up or down. John Bollinger himself noted a few hours ago that: “BTCUSD and friends moving into Squeeze territory”, and put up a poll asking: “What time is it? Half of respondents answered it was: “Time to pay attention”. Coindesk seems to think the direction will be down due to the effects of the virus and the oil collapse. But Brave New Coin analyst Josh Olszewicz tweeted on the weekend the Bitcoin price is about to cross above the Ichimoku Cloud which is a “once in a quarter” buying opportunity. In 2019 a similar move was correlated with a 250% price rally.
Bitcoin should be in an institution
Digital asset management firm Grayscale saw record inflows in the first quarter of 2020. The company, which offers Bitcoin and other cryptocurrency funds, recorded inflows of $794 million, though they started to taper off in March. “Inflows came from institutions,” Grayscale’s Michael Sonnenshein said.
In other institutional crypto news, Renaissance Technologies – which has $118 billion in assets – will allow its Medallion Funds to begin trading Bitcoin futures on CME, and VC firm Andreessen Horowitz (which backed Libra and Coinbase) has plans for a new $700 million crypto asset fund.
Crypto regulations good for prices. Mostly.
Researchers from the Bank for International Settlements found that Bitcoin and crypto prices respond positively to clear regulations – as long as the regulations aren’t making it clear that crypto is banned. While crypto is traded internationally and technically doesn’t fall under any one jurisdiction, the researchers believe the correlation to clear regulations is because users need to rely on regulated institutions to get fiat in and out of crypto.
XRP: Bottom’s up, or falling knife?
XRP is the worst performing large cap coin so far in 2020 (having also won the 2019 end of year title too). But crypto analyst Credible Crypto posted a chart this week showing XRP had broken above the trend line downwards from the all time high which he believes is a sign “the bottom is in”.
Facebook’s Libra project remains very much alive, but it has made sweeping changes to win over regulators and central banks. It’s thrown out plans for a permissionless network and will now offer stablecoins pegged to USD, GBP and the Euro, as well as the Libra token. Monash University economist John Vaz said Libra is a big threat to Bitcoin because it is purpose built to scale as a payments network.
2020, the year of the stablecoin
Tether has minted almost half a billion worth of new USDT in the past week and there is now 54% more USDT than there was at the start of the year. Stablecoins account for 80% of the US$1.8 billion daily transfer value on the Ethereum network. In total there is US$7.6 billion parked in stablecoins. Analyst Keith Wareing believes large miners and exchanges account for most of it… however the alternative bearish explanation is that investors are sitting in stablecoins because they expect further crypto market declines.
Ethereum 2.0 bull run?
Ethereum 2.0 took a step closer to reality this week with the genesis block of a ‘feature complete’ testnet. The genesis block of the actual mainnet, which signifies a shift to Proof of Stake to allow Ethereum to scale massively, is expected mid-year. Adam Cochran, a professor of information science at Conestoga College, and involved with Dogecoin and DuckDuckGo, wrote this week that large investors will be attracted by the steady 3-5% returns on staking Ether. This could see 30% of the total supply locked up in a short space of time, which he said will send Ether to the moon.
Until next week, happy trading!
Independent Reserve Trading Desk