8th OCTOBER 2019
BITCOIN OUTPERFORMS … EVERYTHING
The proof is in the numbers. Bitcoin is currently 2019’s best performing asset, even after the recent pullback to $8.2K USD from the high just shy of $13K USD achieved in June. Goldman Sachs deems Bitcoin “the best performing asset class of the year-to-date …(where)… prices have more than doubled in 2019, far outpacing the 31 percent return for the U.S. tech stocks.”
Key numbers from MarketWatch to date:
- Gold 17%
- S&P 500 21%
- 10-year U.S. Bond 1.6% yield (close to historic lows)
- S&P 200 ASX 16%
- NASDAQ 20%
- DOW 0.5%
- Oil up 15
Based this on buying Bitcoin on the last day in 2018, Bitcoin has posted 115% gains so far. Obviously this figure fluctuates, so let’s call it 100% or double your money so far this year. Given that, it’s no surprise the out performance of Bitcoin over traditional investment platforms has fueled much interest in the asset. Coindesk reported Paul Brodsky from Pantera Capital as witnessing a large increase in interest towards the space;
“There’s a lot of drama around it all, there’s a lot of energy, there’s a lot of press … We’re getting interest from significant institutional investors of all types.”
Compare that with the New York Stock exchange where Bakkt is totalling just 5 million USD in volume for the week and the overall corporate bond market turns over 26.5 billion USD each day. Just imagine the increased demand and price appreciation when that interest in Bitcoin is realised in volume and price appreciation.
SO WHY THE SLOWNESS ON INSTITUTIONAL MONEY?
I took a very basic pro-institutional approach in the last story, let’s flip that for a second and see why the big money isn’t yet in the market. Tom Lee, Managing Partner and Head of Research at Fundstrat Global, told The Block,
“There’s a mechanical issue for crypto in terms of infrastructure that’s needed but there’s probably also a size of market issue”. Fundamentally Lee believes that the cryptocurrency space is “…too small for the institutional world”.
Lee goes on to explain that;
“Gold is 9 trillion. The stock market is 66 trillion the bond market is 86 trillion, bitcoin is not even half a percent of the total assets … if you’re asking someone to allocate 1% to bitcoin — that’s like triple the market weighting, like you’re asking someone to make a massive bet even though it’s 1% of their assets because bitcoin is that small.”
Lee makes a solid point here and it goes a long way to explaining why we have seen such slow volume on the Bakkt platform compared to established markets. Lee went on to say:
“Another barrier preventing institutional investors from entering the cryptocurrency space is a lack of infrastructure …There’s not enough legal and regulatory protection for bitcoin in the U.S. to prevent a White House executive order banning bitcoin”
And at the end of the day institutional investors would feel they are taking on “…reputational risk” for “extending it to a market that has no regulatory protection.”
Time is still needed for the crypto market to mature. Platforms and infrastructure like Bakkt are absolutely needed but above all else, regulatory certainty and direction from governments are what will enable the next growth phase.
PAYPAL UNFRIENDS LIBRA
PayPal has withdrawn its support from Facebook’s Libra cryptocurrency and has pulled out of the 28 member non-profit organisation formed to oversee Libra’s creation, according to The Verge. PayPal claim to be “…remain(ing) supportive of Libra’s aspiration “ however, The Financial Times have reported that PayPal was “…concerned about the growing Libra backlash”.
The Wall Street Journal reported that Mastercard, Visa and Stripe were also considering withdrawing from the Libra project citing money laundering concerns. It has yet to be confirmed if eBay, who is also connected with PayPal, will continue to participate in the Libra project.
If Facebook’s chief David Marcus is concerned he sure hasn’t shown it, his statement was grounded in the future and viability of the Libra project (but really, what else was he going to say?);
“Building a modern, low-friction, high-security payment network that can empower billions of financially undeserved people is a journey, not a destination. This journey to build a generational payment network like the Libra project is not an easy path. We recognize that change is hard, and that each organization that started this journey will have to make its own assessment of risks and rewards of being committed to seeing through the change that Libra promises.”
IKEA TRANSACTS IN SMART CONTRACTS AND E-MONEY
According to Coindesk, IKEA has taken part in a commercial transaction using Ethereum. Taking advantage of smart contracts and licensed e-money to settle an order from a local retailer (Nordic Store), the transaction was completed on the Tradeshift platform using Monerium’s programmable digital cash. The transaction used a tokenised Icelandic Krona to enable The Nordic store to settle an e-invoice from IKEA.
It’s a great utility approach for the space, where remittance can be settled on blockchain via smart contracts and remitted in a digitalised token for that specific currency. Tradeshift, who produced the invoice for the transaction, was backed by Goldman Sachs last May with a $250 million USD funding round valuing Tradeshift at $1.1 billion USD and marked interest in Blockchain by the large financial players.
“A programmable financial supply chain, where trading partners can connect information flows to money flows through smart contracts, will transform how suppliers and customers interact.”
BITCOIN TECHNICAL ANALYSIS
BTC MACRO VIEW
Back in July of this year when Bitcoin broke the $9500 USD mark this was the first confirmation that a bull run was about to occur. The market followed suit with this and we saw Bitcoin reach its highest price since 2018, $14000 USD. Since this breakthrough, there has a been a lot of speculation as to whether Bitcoin would push to all-time highs or whether the market would pull back before testing all-time highs again.
On the 24th of September, it was confirmed when Bitcoin broke its breakthrough price at $9500 USD that we would see a pullback before retesting all-time highs.
SO WHERE DOES THAT LEAVE BITCOIN NOW?
To put Bitcoins price into perspective, let’s have a look at the key price levels that were created during the 2018 bear market. In the chart above you can see:
- Bitcoins top-end price/ resistance line in 2018
- Bitcoins midpoint price in 2018
- Bitcoins lowest support price in 2018 before the market crashed
Over the next couple of months, these price levels should determine the macro support and resistance lines for traders. Long term traders should watch these price levels and use them to determine their entry points.
LONG TERM TRADING STRATEGY
Many traders, particularly traders in the Mining Store community, when BTC was above $9500 USD were hoping for BTC to pull back so they could increase their position sizes. So make sure if you were one of those traders that you stick to your strategy.
Long term traders could look to pick up BTC between $7400 and $8400, and if BTC does break the $7400 mark then traders should look to dollar cost average their portfolio and pick up BTC between $5700 -$7400.
Of course, nobody really knows whether BTC will reach as low as $7400 or $5700, it is possible that BTC shoots straight back above $9500 mark from here. So be sure if you are looking to enter BTC that you start to consider some exposure and be aware of the key price levels.
MINING STORE CELEBRATES A LONG HOLD!
The Mining Store community have supported Loki (Melbourne based Project) since it launched back in May 2018. When Loki launched its Service Node’s Mining Store was hosting a large portion of the nodes on the Loki network and we have become a respected and knowledgeable node operator within the Loki network.
Since September 2019 Loki has soared from 12c USD all the way to 32c USD which has been a 260% price increase. The Mining Store community has celebrated this substantial capital gain and some members shared they have made over $10,000 from their initial investment into Loki.
WHAT COINS ARE MINING STORE WATCHING NOW?
We are currently watching a range of coins which the community believes could be the next biggest projects in the cryptocurrency space. Come and join our discord community to engage in our discussion and be privy to our community knowledge.
FEAR, GREED AND MENTALITY
The Alternative.me Fear and Greed index has spent another week range-bound in the 30s, nothing too interesting to report here. Just try to keep on track with whatever your investment plan is and don’t be swayed by what people are saying in the market, but rather by what people’s actions are. If you are reading “fear” and “sell, sell, sell” everywhere, be sure to back up this sentiment with research – almost always you will find the people screaming sell are actually buying behind play.