Commentary
Digital Assets +4% this week to recover back above the 20 day moving average and the US$250B market cap level. Volume was a bit lighter this week, -8% WoW.
BTC price movement this week was largely macro led with the US fed cutting rates, 10 year T Bills falling below 1% for the first time ever, many parts of China returning to work and gold and Chinese equities rallying. In many ways the way the broader macro environment is unfolding going into the May halving of BTC issuance really couldn’t be scripted any better.
In terms of industry specific news, the top stories this week included: 1) India’s supreme court striking down a Central Bank decision to ban digital asset businesses access to banking services, 2) South Korea passing a framework for the regulation and legalization of crytpo, 3) the SEC making efforts to clarify crypto fund raising rules, 4) BTC hashrate hitting a new all time high as parts of China go back to work, 5) HTC launching a privacy focused 5G router that doubles as a BTC node, 6) Tron attempting the first hostile takeover of a public blockchain and 7) the US Treasury sanctioning 113 BTC addresses tied to North Korean hackers.
In a nutshell, news this week was again largely regulatory focused. The overall regulatory trend seems to be generally positive. I wonder with a number of economic stimulus plans rolled out globally recently (Taiwan $2B, Korea $14B, Italy $4B, China $500B) and a recession looming, if lawmakers and regulators globally will be reluctant to curtail economic activity — even crypto based economic activity. Perhaps this could drive a greater degree of regulatory acceptance — particularly in smaller economies with fewer economic levers to pull.
In terms of price action, BTC’s cross back above the 200D MAVG and bounce off the 20W MAVG are tentatively positive moves. The 50D MAVG at $9,300 looks like an important near term level of resistance — especially given how much volume has traded here over the past few months. Failure to break above this level would probably also raise worries of a potential head and shoulders pattern.
Non BTC Crypto also looks interesting, with an ascending triangle pattern playing out just under the 50D MAVG. Given that ascending triangles tend to break higher and generally robust sentiment this week in smaller, higher beta coins and tokens — I think there’s a good chance this breaks higher, which would be near term positive for BTC price action as well.
Coronavirus, Gold and Bitcoin
The Federal Reserve pulled the trigger this week on a weapon that it hasn’t used since 2008 — the emergency rate cut. Previously used during the September 11 terror attacks, the collapse of Lehman Brothers and the the dotcom bubble, this emergency rate cut is targeted at offsetting the economic impacts of the coronavirus.
JP Morgan said this week that there’s a 50% chance we’ll return to 0 this year.
Historically, emergency cuts have been positive for gold. Lower interest rates and, therefore, lower bond yields increase the attraction of holding gold and decrease interest in other safe have assets like US Treasuries. With 10 year yields falling below 1% for the first time ever, the environment looks very supportive of gold.
The timing on this could be very interesting with BTC’s supply issuance set to halve in just 2.5 months. One can imagine a scenario where increased interest in gold could easily spill over into BTC just as the supply of BTC becomes scarcer than ever before. With a current market cap of just US$165B, the price of BTC could be easily influenced by even a small reallocation of assets from the $8T gold or $50T sovereign debt markets.
Media
- Great interview with Raoul Pal of Real Vision
– Provides a lot of color around the current macro environment
– And the value proposition of BTC against this backdrop
News
- India’s top court strikes down crypto ban
– Follows ‘18 decision by the central bank block access to banking services
– Supreme court is separately hearing another case on crypto regulations
– This decision is thought to weaken the case for stricter rules
– WazirX’s (Indian crypto exchange) platform token WRX +94% this week - US cuts rates, Trump wants more
– Marks the first emergency rate cut since 2008
– Caused the 10Y Treasury yield to drop below 1% for the 1st time ever
– David Kelly, JPM strategist: “I would not be surprised if within the next few months the Fed went back down to zero”
– How low would rates have to go to get you on a cruise ship? - Steem users pushback after first hostile takeover of a public blockchain
– Allegations that Tron teamed up with Binance, Huobi, and Poloniex to stake custodial Steem (i.e. users’ funds) and replace elected DPoS witnesses on the Steem blockchain with their own
– Earlier, Tron acquired the Steem powered social media company, Steemit - Hashrate rips as China goes back to work
– Bitmain and MicroBT said to have resumed shipments
– F2Pool says many locations still won’t allow maintenance teams in
– 7 day average hashrate hit a record 116 PH/S this week - Digital Asset trading desk, OSL launches single platform login
– Allows users to access OTC, exchange and custody from single platform
– Follows a $36m placement by the company’s parent BC Group
– The placement included a $14m investment by Fidelity - HTC plans 5G router that runs a BTC node
– Will run the privacy focused Brave Browser
– Great for BTC decentralization, making it easier for users to run nodes - US Treasury sanctions 113 BTC addresses linked to N Korean hackers
– 2 Chinese nationals allegedly helped was hacked crypto from exchanges
– Involved dispersing crypto assets into Chinese banks and iTunes gift cards - SEC hopes to simplify exempt offering rules
– Exemptions in the crypto space fall mostly under Rule 504 of Reg D
– Proposed changes include larger offering limits and larger limits for non accredited investors - Estonia grants license to Chilean crypto exchange
– Allows it to provide services for the purchase and sale of crypto assets
– The exchange has 150k users in Chile, Brazil, Argentina, and Europe - Binance shuts down for system maintenance — 2nd time in 2 weeks
– Saw a bit of criticism on social media about platformm stability
– Users are always worried that unscheduled maintenance is hack related - Walmart joins Hyperledger
– In 2016, Walmart partnered with IBM and China’s Tsinghua University to conduct a pilot program using Hyperledger to track the Chinese pork market - Binance P2P launches support for Nigerian Naira
– Will introduce NGN pairs with zero fees starting from March 4. - Matrixport seeks to raise $140M at a $300M post money valuation
– Matrixport is a Singapore based trading platform
– Backed by Bitmain founder Jihan Wu
– 2019 revenue is thought to be $7M to $8M - Report questions Canaan’s 2020 revenue projections
– Report suggests an a $150M equipment order is unlikely to be fulfilled
– Order represents ~ 85% of the company’s trailing 12M revenue
Charts
- Chart 1. Weekly % Change — Top 20 by Volume
– Big moves this week in a lot of smaller, high beta names
- Chart 2. % vs 50D MAVG— Top 20 by Volume
– Most major coins and tokens are still below the 50 Day MAVG
– BTC only about 2% below
- Chart 3. Position in 52 Week Range— Top 20 by Volume
– Most coins and tokens still < halfway mark
- Chart 4. YTD % Change — Top 20 by Volume
– BTC +26% YTD
- Chart 5. BTC
– BTC back above the 200D MAVG this week
– Both the 50D MAVG and a big volume peak at ~ $9,300
– Failure at $9,300 could create a head and shoulders pattern
- Chart 6. Altcoins — Ascending Triangle
– Higher lows as Altcoins test the 50D MAVG
– Ascending triangles tend to resolve upwards
- Chart 7. BTC vs Gold
– The long term drivers for gold are also the long term drivers for BTC
– Think demand for gold could spill over into BTC
- Chart 8. Assets YTD
– BTC and Gold up YTD
– Global equities and commodities all lower
