Market Update 16th – 22nd October 2019

Welcome back to another Australian crypto market update.

In Markets

Bitcoin headed south from a high around $12,400 early in the week to bottom out at $11,500 a few days ago. However a 4.4% recovery on Sunday put it back above $12,000. It’s currently at $11,933 to end the week down 1.5%. Two of the top ten broke even by week’s end: XRP (0.5%) and Stellar (0.2%). Bitcoin Cash increased 1.6%, but the rest fell: Ethereum (-6%), Litecoin (-4%) and EOS (-7.4%).

22 October 2019 Market update
Source: Independent Reserve Bitcoin/AUD chart on Bloomberg

In Headlines

18 million Bitcoins

This week the 18 millionth Bitcoin was mined, which is about 85% of the total supply. Just 3 million more will ever be mined. While Bitcoin is down a third since its yearly high, the coin has retraced 40% on a number of occasions in the past before doubling. Many believe the catalyst for such a price surge will be the block reward halving, which is now just six months away. Analyst Plan B (who is a major proponent of the theory) tweeted: “In 2012 BTC jumped from $5 to $12 (2.3x) in those 6 months before the halving. In 2016 BTC jumped from $350 to $650 (1.7x).

Bitcoin middle aged

Bitcoin has already reached 40% of the life expectancy of the average fiat currency – which is 27 years according to a study of 775 fiat currencies by The longest lasting is the British Pound, which has lost 99.5% of its value since 1694.

Grayscale’s best quarter ever

More than a quarter of a billion dollars flowed into institutional grade Grayscale products in the third quarter – the strongest demand since inception. They now have $2.9 billion worth of Bitcoin in their Bitcoin Trust and are adding an average of $19.2 million a week.

Ethereum stakeholders increase

There are now 109,000 Ethereum wallets holding more than 32 ETH – up from around 100,000 at the start of the year. Why is is 32 ETH important? This will be the minimum amount required to stake on Ethereum 2.0.

ETF rejection’s implications

The SEC rejected Bitwise’s Bitcoin ETF. An ETF seems unlikely to be approved in the next year or more, but there’s now a detailed roadmap to follow to address the SEC’s concerns.

G7 has lots of concerns

Facebook’s Libra and other global stablecoin projects won’t be allowed to launch in the world’s most most advanced economies until all the risks have been identified and addressed by regulation, according to a new G7 report. Commissioned by G7 finance ministers and central bank governors, the report suggests stablecoins present significant risks to the stability of the global financial system. However it conceded they do have potential for payments.

Dollar Cost Averaging vs Lump Sum investing

Debate raged this week as to whether Dollar Cost Averaging is better than Lump Sum investing. DCA is when you invest amounts over time to smooth out price volatility or lower your entry price. DCA proponents argue that it’s the better strategy and point to a calculator showing you would have made lots of money in Bitcoin that way. However more comprehensive research that backtested both against ten years of crypto market data concluded that Lump Sum is the smarter move 67.9% of the time. A 2012 study of traditional markets by Vanguard research came up with very similar figure in favour of Lump Sum.

Ripple roaring, not dumping

Ripple CEO Brad Garlinghouse revealed the company has more than $443 million in cash in the bank and owns $22 billion worth of XRP. He also said “Ripple … is striking more than 30 deals a quarter with financial institutions”. According to its third quarter report it only dumped $96.3 million worth of XRP onto the market, which sounds like a lot but is actually 73.66% less than the previous quarter… It argues its ‘distribution’ rate is now similar to the inflation rate of BTC.

Until next week, Happy Trading!

Independent Reserve Trading Desk