Market Update 1st – 7th April 2020
It’s been a positive week in crypto markets with Bitcoin up 14% on seven days ago to trade above $12,000 at the time of writing. It remains 8.1% down for the month. Ethereum surged 20% in the past day and is up 30% for the week. Everything else was green including EOS (24%), XRP (14.9%), Bitcoin Cash (16.6%), Bitcoin SV (15.3%), Litecoin (15.8%) and Stellar (24.9%). The rise in the past day coincided with a 7% increase in the S&P 500. While JP Morgan thinks the worst is over for markets, Guggenheim predicts a 40% slide for stocks when unemployment, growth, and earnings data comes out. Let’s hope Bitcoin treads its own path.
Source: Independent Reserve Bitcoin/AUD chart
That darn correlation…
Hodlbot founder Anthony Xie conducted a deep dive into the correlation between Bitcoin and various financial assets, including stocks, real estate, oil, gold and bonds throughout 2020. “A 21-day rolling correlation graph shows that Bitcoin has recently become increasingly correlated with other global financial assets,” he concluded. Interestingly the top 30 coins by market cap have a significantly lower correlation with stocks than Bitcoin does at present. The good news from his analysis is that a portfolio with 80% stocks and 20% Bitcoin would have outperformed a portfolio with 100% stocks over the past three months, and over the past 12 months.
Halvings for all
The Bitcoin Cash block reward halving is just a day and a half away and Bitcoin SV’s halving happens later this week. It remains to be seen what it will mean for prices, however pundits including Arcane Research have suggested miners may jump ship from the forks temporarily to mine the more profitable BTC (which undergoes its own halving in 36 days). That said, BCH and BSV miners have other motivations than pure profit, as it is already more profitable to mine BTC. If the BCH and BSV hash rates fall too far, that could potentially leave them exposed to a 51% attack. The BTC hash rate meanwhile has increased by a third to 121 TH/s in the past two days.
Institutional money drying up (or not)
According to a new report by PwC, the value of mergers and acquisitions in the crypto industry declined by over 75% from around $3.1 billion in 2018 to $738 million last year. PwCs global crypto leader, Henri Arslanian said the crypto industry “is not immune to the global headwinds” and that institutional money flowing into crypto was likely to be affected this year as well. Acuiti’s Adoption of Digital Asset Trading report, also published this week, had a more positive spin and found 97% of traditional trading firms are considering trading digital assets within the next two years.
Everything is actually wonderful
Morgan Creek co-founder Jason Williams is tipping a new all time high in September. Glassnode released a variety of charts this week suggesting chain metrics – including percentage of supply in profit, the MVRV-Z score and the Puell Multiple – all indicate a positive shift in sentiment. “In the weeks after $BTC’s price drop, most have bounced out of, or sit in zones that have historically signaled bottoms and good entry points,” Glassnode tweeted. On chain analyst Willy Woo also thinks the bottom is in, citing the ‘hash ribbons’ (moving averages of the hash rate) and the ‘miners energy ratio’ (the ratio between Bitcoin’s market cap to its energy consumption). Trader Nik Patel shared screenshots from three prominent retail crypto brokerages in the UK suggesting 78% of accounts are long on Bitcoin. And finally Robert Kiyosaki , author of Rich Dad Poor Dad, said this week the US dollar is dying and encouraged people to invest in gold and Bitcoin.
Until next week, happy trading!
Independent Reserve Trading Desk