Market Update 12th – 18th February 2020

In Markets

Bitcoin’s bullish momentum eased over the weekend, with the price dipping once again below the psychological US$10,000 level (A$14,900). At the time of writing it was 1.6% down on a week ago to trade above A$14,600. But to put the current pullback into perspective, just six weeks ago Bitcoin was trading around $10,250. Ethereum’s price run continued and was up 19% this week, and 51% for the month. XRP gained 5.1%. The other coins in the top ten didn’t fare as well: Bitcoin Cash lost 9.1%, Bitcoin SV (-13.2%), Litecoin (-1.3%) and EOS (-10.4%). Stellar, at No.15, increased slightly by 1.1%.

Source: Independent Reserve Bitcoin/AUD chart

In Headlines

Should you buy on Fridays and sell on Mondays?

It wouldn’t have worked this week, but an analysis of two years’ worth of buying and selling data found that generally speaking you’re best off buying on Fridays and selling on Mondays. The Longhash study looked at the hourly price data across the week and determined that on average, the lowest price was at 5pm on Friday (AEST). The highest price was around 11am on Mondays (and Tuesdays) which averaged $250 higher than Friday afternoon.

Ethereum seems to be having its moment right now.

Transactions on the Ethereum network have almost doubled since January along with the price. A new study found Ethereum is a hedge and safe haven asset like Bitcoin and institutional investors have been paying more than a 220% premium to buy it through the Grayscale Ethereum Trust. Ethereum browser wallet Metamask has just surpassed one million users. Ether has increased its share of the overall market from 7.4% to 10% (while Bitcoin’s dominance fell to 62.5%). However Bloomberg reported earlier this week that Ether’s General Strength Indicator (GSI) was at 92 suggesting it’s “overbought”.

Stick to your guns

Quantum Economics market analyst Mati Greenspan has dismissed the idea that events in China have been pushing up the price of Bitcoin recently, or that impending regulation in the US caused the current dip. “My feeling is that this is still within the boundaries of a normal correction after the huge rally that we’ve seen this year. In fact, if we take a look at the upward channel we’ve been tracking, we’re just at the bottom of it now.” His advice is to stick with your strategy, whether hodling, buying the dips or dollar cost averaging. Day traders will have to make their own judgements he said.

Another Bitcoin Cash fork?

The Bitcoin Cash community is starkly divided over the proposed ‘mining tax’ to fund development, raising the possibility of another damaging fork. That’s despite an amended proposal dropping the ‘tax’ from 12.5% to 5% and only going into effect with the support of 2/3rds of miners. Roger Ver said won’t support the proposal until the chances of a fork are negligible.

Crypto trading undermines adoption

Bank of England Senior Economist Peter Zimmerman believes speculation on cryptocurrency is undermining crypto’s ability to function as a means of payment. He says speculation clogs up blockchains, and encourages users to hold it rather than spend it, in expectation of price gains. Zimmerman believes that moving speculative activity to cash settled derivatives or layer 2 scaling protocols like Lightning could be the answer.

Everyone is making bullish predictions (in US dollars)

Galaxy Digital CEO Mike Novogratz thinks we’ll surpass Bitcoin’s all time high by the end of the year, if not after the halving. The Keiser Report’s Max Keiser has upped his US$100,000 target to $400,000. Bobby Lee says it’ll hit $1 million. One interesting analysis came from Charles Edwards, founder of Capriole Investments, who is tipping a $100,000 price by 2025 based on the cost of the energy used to produce it. In a similar vein, a report by Tradeblock estimates the cost of mining Bitcoin will rise to $12,000 – $15,000 following the halving in May. But the report says the increasing hash rate suggests miners firmly believe the Bitcoin price will be even higher.

Until next week, happy trading!

Independent Reserve Trading Desk