A Pivotal Time for Bitcoin (Free)

Week 37: September 10, 2019

Every Tuesday we review BTC price drivers from last week and perform both sentiment and technical analysis to help forecast the future.

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Week 37: September 3, 2019 - September 10, 2019

Bitcoin performance this week underperformed that of altcoins including Ethereum (1.2%), Litecoin (5.5%), and EOS (12.92%). This week we issue a SELL on Bitcoin for the following reasons:

Rating: SELL

BTC Market Cap: $183.75B

BTC Price: -3.5% ($10,623.54 to $10,253.30)

BTC Active Addresses: -3.7% (799.53k to 769.57k)

BTC On-chain Transactions: -14.6% (371.00k to 316.63k)

Technical & Sentiment:

  • After price trading sideways for weeks, we have entered a new directional trend to the downside

  • Sentiment continues to decline with price, expect the trend to continue and wait for a bottom to long

Positive Price Drivers:

  • Bitcoin network hashrate continues to hit all time high, a metric typically correlated to price

  • Bitcoin Futures institutional volume continues to grow, showing increased demand as a hedge and trading vehicle

Negative Price Drivers:

  • Declining on-chain transactions and active addresses show less network use and thus less utility and derived price of Bitcoin

  • Bitcoin price has been range bounce for 76 days, boring many traders and speculators

BTC Price Analysis:

On a macro level:

IF this happens, then we buy:

  • The US Federal government outlines productive regulation surrounding cryptocurrency transactions and adds guidance for state regulators

  • Project Libra gains increased traction as discussions continue, giving speculators hope about a future inflow of capital

IF this happens, then we sell:

  • Local Bitcoin nodes start getting shut down by governments seeking to block capital outflow

  • Bitcoin active address and on-chain transactions continue to significantly decline even if price remains stable

BTC Sentiment:

Price Drivers This Week

Over the past week, the backdrop for Bitcoin has been favorable as new institutional products and increasing demand pave the way to a bright future for Bitcoin. Across the world the use cases of Bitcoin vary as a speculative trading instrument to an alternative to local currency.

Bringing South America Online

Capital Restrictions in Argentina

The tensions in many South American countries are high right now as capital restrictions in Argentina is driving away as much capital as quickly as possible. The Argentinian Peso has lost over 25% of it’s value since last month and the decline doesn’t look to be stopping. As citizens have been dumping the Peso for the US Dollar, a $10,000 monthly limit has been enacted. As these citizens realize they can sell their local currency for Bitcoin without capital restrictions, the premium at local exchange Buenbit increase $2,250 over the price at major global exchange Bitfinex.

Crypto ATMs Try to Become Popular

A recent survey by Paxful of 1,000 Colombian citizens found that 80% of them were interested in cryptocurrency. With the Colombian Peso losing nearly 20% to the US Dollar over the past year, citizens are looking for safe investments to secure their wealth.

Local regulators however have not be conducive to cryptocurrency. Top offices have said that cryptos are not legal tender, and they have prevented companies from being brokerages. This however has not stopped crypto exchange Paxful from partnering crypto ATM company CoinLogiq to add 50% more ATMs in Columbia. They plan on continuing coverage into Peru with 25 more machines places in high traffic areas like malls. Should this strategy become effective, this drives a continued grass roots effort to drive the global adoption of the social currency.

Increased Institutional Access

A slew of regulated financial products have entered the markets this past week as Futures clearing hour Bakkt launched their warehouse, VanEck SolidX launches an institutional ETF and CME futures volume suggests a new bigger wave of institutional money is coming.

Clearing Futures

The Bakkt Warehouse launched this past week, allowing for third parties to host their Bitcoin derivative products with a fully certified and regulated clearing house and storage facility. The development of this service by Bakkt will aid in the natural growth and volume of the institutional Bitcoin market expanding it beyond the daily 7,000 contracts the CME registers. Physically settled futures, such as those soon to be launched by Bakkt, and LedgerX, aid in the accurate of price discovery and the reduction of price manipulation. With more regulated products, the SEC may eventually consider launching a real Bitcoin ETF to retail if they clear up nonsense around exchange trade data.

Is the New “Bitcoin ETF” Necessary?

The SEC’s recently approved launch of VanEck SolidX to institutions temporarily rose Bitcoins price, but many are skeptical as to the effectiveness or need for the product. The existing Grayscale Bitcoin Investment Trust owns over 1% of all BTC in circulation, and is currently available to both retail and institutions with similar fees. The existing market availability across a slew of brokers makes GBTC the optimal choice for any equity investor looking to buy Bitcoin for their brokerage account. The only different is the continuous premium that GBTC and the like trade over spot exchanges due to their high demand product related to the underlying asset.

A BTC transaction valued over $1B happened last Thursday, overpaying transaction fees ($700)

Burger King Germany Starts Accepting Bitcoin for Online Orders

Bitcoin Hit Record Inverse Correlation to Chinese Yuan

What the top personalities on Twitter are saying:

That’s it for the BTC weekly report from September 3 - September 10, 2019. Come back tomorrow for our Industry Special report.