Market Update 26th February – 3rd March 2020

In Markets

This week has been a rollercoaster ride. The Bitcoin price crashed along with global stocks (leaving the ‘safe haven’ narrative worse for wear) but both staged a comeback in the past 24 hours. A few hours ago, the Dow Jones closed 1284 points up for its biggest gain in history, in the wake of reports that central banks will take action to combat the coronavirus induced slowdown. Bitcoin has also surged 4.2% on yesterday. Sure, it’s still down 7.4% on a week ago, but things are no longer looking so grim. The top 10 are recovering, but remain down on a week ago: Ethereum lost 12.4%, XRP (-11.3%), Bitcoin Cash (-10%), Bitcoin SV (-7.9%), Litecoin (-18.2%), EOS (-9.2%) and Stellar (-14.8%).


Source: Independent Reserve Bitcoin/AUD chart

In Headlines

Bitcoin hashrate hits new ATH

Bitcoin’s hashrate has continued to climb hit a new all time high above 130 EH/s, which suggests miners are banking on a price rise post halving. Alex de Vries, blockchain specialist at PwC, pointed out the curious fact this week that 98 percent of bitcoin mining machines will NEVER produce a block during their average lifespan of 1.5 years. Around 4 million machines are currently active, producing 75,000 blocks every 1.5 years, meaning just 2% actually produce a block.

Veteran trader flips the script

Veteran trader Peter Brandt, who predicted the 2018 crash, has changed his mind on Bitcoin’s parabolic uptrend and now believes the bear market is still in play. “I am constructive on BTC, but let’s look at facts. BTC has been in bear market for 26 months – not exactly a bull trend.” He added that changing his mind is a sign of strength: “I take my willingness and ability to change my mind quickly as a point of survival and pride as a trader.”

Ethereum volume through the roof

According to analyst Alex Kruger, the average trading volume for Ether is now four times higher than it was in the second half of 2019. DTC Capital head of crypto investments Spencer Noon claims that since February 9 Ethereum miners have stopped accumulating the cryptocurrency and have offloaded more than 30,000 Ether.

Bitcoin recognised by the courts

A judge in New South Wales has recognised Bitcoin as a legitimate investment vehicle. As part of a defamation case Judge Judith Gibson allowed the plaintiff to use the cryptocurrency as collateral against the court awarding costs. “This is a recognised form of investment,” Gibson said. However the plaintiff is required to report to the court immediately if the price tanks.

Bitcoin price predicted to hit $385,000

If you thought the current price dip meant the “halving to the moon” narrative was over, think again Rekt Capital has researched previous halving events and discovered that a price decrease before the block reward halving is perfectly normal. In fact, it’s a positive sign, because historically speaking, if BTC goes up less prior to the halving it will increase more after. Bitcoin retraced 50% around 100 days prior to the first halving and it retraced 38% around 20 days prior to the second halving. They suggest the new time high of 12,000% higher will come many months after the halving. Which would equate to a Bitcoin price of $385,000. Stock to flow proponent Plan B, also says the current price movements are in line with expectations.

Happy leap year!

According to history, leap years are associated with a big surge in the Bitcoin price. Bitcoin surged 87 times from 2012 and was up 20 times from 2016. How much will it grow from 2020? In related hopium, Binance founder CZ this week pointed out that Bitcoin was created in the wake of the Global Financial Crisis and had risen 9 million percent since. “How do you think it will do in the next financial crisis?” he asked.

Until next week, happy trading!

Independent Reserve Trading Desk