Bitcoin (BTCUSD) has bounced back above 10k in the past few days after dipping below the psychologically key whole figure level last week. Although the weekly RSI and Stochastics are turning down from overbought levels, which when combined with the weekly MACD trying to negatively cross seemingly suggest bearish momentum, any further downside this week will likely remain a part of the consolidation seen in July. Bulls will largely interpret the current monthly Doji (pull up a monthly chart from tradingview.com) and positively crossing monthly MACD as hinting at further upside in the next several months once the current consolidation in the 10k-14k range completes.
Bitcoin Fundamentals
BTCUSD bulls are anticipating the third Bitcoin block reward halving (which will reduce the amount of new BTC supply) May 2020 but which has historically (for the 2 other halving events) seen bull runs begin roughly 1 year in advance of the halving date. The Bitcoin blockchain itself continues to benefit from Lightning Network-related scalability improvements.
Industry Fundamentals
The Facebook Libra stablecoin whitepaper release (targeting a launch the first half of 2020) continued this week to fuel mainstream media coverage, and robust pushback from regulators, central banks and politicians. Crypto purists are critical of Libra’s centralized nature, which paves the way for censorship and potential abuse of user information. Problematic for Facebook is that much of the unbanked resides in countries where either Facebook or crypto is currently banned. Key investors like Visa, Mastercard, Paypal and Uber have injected USD 10M each to become members of the Libra Association and to manage their own node. The objective is to have 100 investors (from a variety of industries, including telecom, media and e-commerce) with 27 names already on the list. Banks have passed on the project so far.
Longer-term industry bulls are also increasingly buying on dips as the sector overall gains interest from IBM’s use of the Stellar blockchain for its payment network – the World Wire. Banks will be able to launch stablecoins on World Wire, or to use Stellar Lumens directly as a bridge currency between different fiat currencies. Ongoing anticipation is building for the coins being developed by other leading messenger apps (i.e. Line, Kakao) and banks (i.e. JP Morgan, Mizuho, Bank of Tokyo-Mitsubishi UFJ).
The demand to trade Bitcoin futures should continue to grow as TP ICAP – the world’s largest interdealer broker – has in the past month announced their intent to launch a digital assets desk, with the service limited to Bitcoin futures initially. Fidelity’s institutional crypto trading offering meanwhile is available (or in testing) for select clients, with retail brokerage giants Etrade and TD Ameritrade also preparing to launch trading in a few top coins.
The market is increasingly shrugging off the fears around Bitfinex covering up losses with funds earmarked for backing Tether (USDT), especially as it has apparently already received commitments for USD 1B in its current raise to offset funds frozen by US, Polish and Portuguese authorities. With liquidity on USDT significantly higher than newer, competing USD-backed, audited stable coins due not in small part to USDT enjoying first-mover advantage and the network effects from having the longest established history, the market appears to be largely sticking with using USDT which is listed on more crypto exchanges and offers superior liquidity.
The launch of BAKKT has been delayed multiple times with no announced target go-live date. A race continues to launch STO exchanges and consultancies ahead of increasing regulatory clarity on STOs.
