Market Update 22nd – 28th April 2020

In Markets

Lockdowns are easing, searches for the ‘Bitcoin halving’ have surged past their 2016 peak and the Crypto Fear and Greed Index has finally emerged from ‘extreme fear after seven weeks’ (it hit 28/100 yesterday which is just ‘fear’). Bitcoin is up 12.7 percent this week and was trading under $12,000 at the time of writing. That’s 100% up on the price it crashed to on Black Thursday… but is it showing signs of a classic bull trap? It’s happy days too for Ethereum, which gained 13.6%, XRP (7.24%), Bitcoin Cash (9.3%), Bitcoin SV (4.4%), Litecoin (9.2%) and EOS (8.3%). Stellar outperformed the lot, up 34% on a week ago.


Source: Independent Reserve Bitcoin/AUD chart

In Headlines

12th fastest in APAC

The Financial Times released their top 500 APAC High-Growth Companies list for 2020, with Independent Reserve finishing an impressive 12th. The FT compiled the list with Statista, a research company, and ranks entrants from across the Asia-Pacific by compound annual growth rate (CAGR) in revenue. Top 3 cities with the fastest growing companies include: Singapore (74), Tokyo (69) and Sydney (34). A warm thank you to all our customers and supporters across the community for making this possible.

51% attain

Bitcoin is up 8% year to date – which isn’t bad considering the financial turmoil. But Ether is up 51% on the price it recorded on January 1. Chris Thomas, head of digital assets at Swissquote Bank, says the reasons for the increase are obvious: “They’re drivers that we all know – DeFi, Ethereum 2.0 and more decentralized apps,” Thomas said. The Grayscale Ethereum Trust is partly responsible for the price pressure, having snapped up half of all Ether mined in 2020 so far, or 756,000 ETH to be precise. In other bullish news, data from Arcane Research and Dune Analytics shows that 1.97 million smart contracts were deployed on Ethereum in March, 75% higher than the previous record month in October last year.

Crypto derivatives up 300%

Derivatives volume in the first quarter surpassed A$3.1 trillion, with the average daily derivatives volume $36.1 billion. That’s more than 300% higher than the average for 2019 according to TokenInsight. Spot trading volume was reported as $10 trillion – though Token Insight said that if you take out wash trading the real figure was probably between $6 trillion to $7.13 trillion.

Pundits tip deflation

The US Federal Reserve’s announcement it would print an unlimited amount of USD to help alleviate the financial crisis, has led to wide expectations of rampant inflation. If that occurs, Bitcoin’s fixed supply should see it benefit. But the Reserve Bank of Australia, ING Bank, The New York Times, The Financial Times and UBS are all tipping deflation, due to falling energy prices, a slump in demand and a glut of products. On the flip side, CoinDesk believes deflation will also be good for Bitcoin, if it’s used as a medium of exchange and as a safe haven.

Forbes and Bloomberg are bullish

Forbes and Mati Greenspan from Quantum Economics aren’t buying the deflation thesis. In an article this week asking if 2020 was the new 2017, Forbes cited potential inflation, the Bitcoin halving and the crash in commodities and equities as reasons Bitcoin would outperform. “Bitcoin has been the best performing asset by far over the last year and over the last decade. With all the money being injected into the system at this time and the upcoming halving, I don’t see any reason it wouldn’t continue to outperform,” said Greenspan. Bloomberg’s Crypto Outlook concluded that increasing futures open interest, declining volatility and BTC’s outperformance compared with stocks, as well as its record correlation to gold, suggest Bitcoin is turning into digital gold: “This year will confirm Bitcoin’s transition from a risk-on speculative asset to the crypto market’s version of gold.”

Stock market bull trap

Veteran trader Peter Brandt thinks current uptrend on US stocks looks similar on the chart to the uptick at the beginning of the Great Depression in 1929, before stocks plunged much further. If the wedge pattern he identified plays out in a similar way, expect further pain in May. Fortunately, this week’s price action suggests Bitcoin’s correlation to stocks may be waning. Brandt is getting out of Bitcoin commentary however – he said yesterday he’ll no longer tweet about Bitcoin as there are ‘too many disrespectful trolls”.

Just 14 sleeps until the halving

The Bitcoin halving is just two weeks from today and Kenetic Capital co-founder Jehan Chu believes it was responsible for this week’s price rise. “The rally is being sustained by the rapidly approaching halving,” he said. The halving will see the reward per block mined drop to 6.25 BTC from 12.5 BTC. Searches for the term are at record highs and the topic is becoming more and more popular on social media and in crypto media coverage. Glassnode data shows hodlers are accumulating 75,000 BTC each day. But experts are divided: some say the effects are already priced in and it will be a non-event while others think the decrease in Bitcoin sold by miners will result in a significant price rise. On the insanely optimistic end of the spectrum, Coindesk cited historical data from Rekt Capital data which suggests we could hit a price above A$21,000 in the next two weeks, while Forbes thinks we’ll all become millionaires. In other halving news, PlanB released his 3rd article about stock to flow (S2FX) correlating it against gold and silver, with a new prediction of $288k per bitcoin. Let’s hope he’s right!

Until next week, happy trading!

Independent Reserve Trading Desk