Market Update 8th – 14th April 2020
After the best week since 1974, US stocks fell on Monday, with the Dow closing 1.4% down and the S&P 500 down 1%. Bitcoin fell 4.5% in tandem and it’s currently trading at just under $10,800, which is 5.8% down on a week ago. Everything else was in the red: Ethereum (-6.4%), XRP (-3.75%), Bitcoin Cash (-11.3%), Bitcoin SV (-0.75%), Litecoin (-7.6%), EOS (-9.4%) and Stellar (-2.1%). With the correlation to stocks appearing to hold, it’ll be interesting to see what happens as quarterly earnings reports are released from today. Quantum Economics founder Mati Greenspan predicts the earnings season will be “probably the worst in history”.
Top Ten coins outperform stocks in 2020
Redditor Joe-M-4 Gold has been conducting his popular ‘Top Ten Cryptos’ experiment for three years now. On January 1, 2020, he bought $100 in each of the top ten cryptocurrencies and his just released March report found his overall investment was still up 7% for the year. By contrast the S&P 500 was down 23%. The top ten coins he bought in January 2018 fared badly and are down 87%, but his 2019 basket is currently up 6.5%.
The Bitcoin Cash halving this week helped push the price to $450, but it’s subsequently fallen back to $350. The hash rate plunged 80% in a day, though it’s since recovered somewhat. Bitcoin SV’s halving this week also saw its hash rate plunge. The price spiked but is now back where it was a week ago. Bitcoin’s hash rate appears to have been the beneficiary of the fork halvings (though it was increasing already) and it’s up 6% since, to 116.4 EH/s. Coinmetrics noted that after a big fall in BTC mining difficulty following the March price plunge, the difficulty level has returned to levels seen in January.
Reddit token a boost for Ethereum?
Reddit, which has 400 million users, is poised to introduce an ERC-20 token and crypto wallet on its app. Analytics firm Messari said if the rumours are true “It will introduce this massive user base to the Ethereum ecosystem” and suggested that “if a small percentage of these users begin to explore options for other uses with their new wallet, it could bring a large influx of new users into other dApps on Ethereum.”
Grayscale’s 515% Ether premium
It’s now five times more expensive to buy Ether through the Grayscale Ethereum Trust than on the open market. Institutional investors are thought to prefer the safety of the regulated trust rather than deal with exchanges and hold cryptocurrency directly. The much larger Grayscale Bitcoin Trust is a much better buy, with its 10% premium.
Rules to live by?
Former UBS and Deutsche Bank equities sales trader Marcel Pechman has adapted Denis Gartman’s famed Rules of Trading stocks for the cryptocurrency world. The rules include: ‘Never add to a losing position’, ‘Be patient with winning trades (but quickly exit losing ones)’ and ‘Be willing to switch sides quickly’. Some rules are open for debate but it’s worth a look.
Number go down
A price analysis by Silk Road founder Ross Ulbricht suggests the Bitcoin price could plunge as low as US$1200 (A$1876). The analysis relies on the Elliott Wave theory and is predicated on the idea the 2018 market still isn’t over. Meanwhile Cobra, the anonymous co-owner of Bitcoin.org, told his 25K followers that he doesn’t believe Bitcoin will emerge as a safe haven during this financial crisis: “Nobody’s going to buy BTC when they’ve lost their job, can’t afford their house, and are struggling to get by.” He predicts a price as low as US$1000 (A$1564) if the world enters a deep depression. On the subject of safe havens, this week gold hit its highest price since 2012.
Number go up
Crypto analyst Plan B observed this week that Bitcoin’s RSI indicator showed it had never been this ‘oversold‘ in the lead up to a halving. Cameron Winklevoss, CEO of Gemini, believes the coronavirus crisis will pump Bitcoin. “This pandemic will be an inflection point for Bitcoin and the Metaverse,” he tweeted. Pantera Capital co-founder and chief executive Dan Morehead agreed. “Over the next couple months, people will start refocusing on new opportunities, and I think the crypto markets will really explode about three to nine months from now… I have a very strong intuition that Bitcoin will hit a record price within the next 12 months and maybe way higher than that.” BitMEX CEO Arthur Hayes predicts Bitcoin could fall in the short term to US$2100 (A$3284) in the coming months, but will top the all time high by the end of the year.
Until next week, happy trading!
Independent Reserve Trading Desk