The Rundown

If this past Friday wasn’t enough to convince you of China’s underestimated influence on the crypto markets, then we don’t know what will. It’s not only on Bitcoin and cryptocurrency that China has an influence. The Belt and Road Initiative has ensured that the moves that China makes resonates all across the globe, and as we are currently seeing with bitcoin prices – this is reflected strongly and clearly in blockchain and crypto space.

With just 15 words uttered by Xi while addressing committee members during the 18th collective study of the Political Bureau of the Central Committee on Thursday, Bitcoin rocketed just like that.

“We must take blockchain as an important breakthrough for independent innovation of core technologies.”

china bitcoin news

Following the address Bitcoin showed a reverberating 42% price swing to the upside, defying the looming death cross. This was the third largest daily gain in price history. The last two times Bitcoin felt a >40% price gain was when it was trading at $0.40 and $5.65. This all took place following the day where BTC touched a 5-month low of $7,363 after dropping 9% in a few hours. We finally have some non-boring price action! And surprise surprise, the upside is still around the corner. To say this was a fake breakout could be a fair assessment. Most death crosses in BTC history has resulted in losses during the following weeks. BUT according to a long term outlook based on the Puell Multiple, which measures BTC’s coin issuance relative to a MA of daily issuance value (what does that mean?), BTC is neither overvalued nor undervalued relative to historical issuance.

BTC’s dominance still hovers around 68% and we know that historically wherever BTC goes, the alts will also follow suit. This past week’s altcoin action confirmed this with all major alts showing positive price movements. BCH was the winner with an 18% gain, followed by BTC’s current 16% gain. XLM showed the lowest gains only eking out a 1.65% gain.

The past week continued to show us that no matter how long you have been in the crypto space, you still can’t predict how the forces that be will affect the market. The price surge face-slapped a large handful of analysts/traders in the space who were all talking bearish rhetoric for Bitcoin in the days leading up to the price surge. They were all citing the death cross, the down trending channel, Libra continually being battered down, etc, etc,…the next thing you know, BTC shoots up as a glaring contraindication of their predictions.

puell chart

The space is still evolving. Most governments still have yet to make pivotal decisions about whether, in the direct words of Beanie Sigel, they will “either get down or lay down” with blockchain. And, despite the ban on ICOs and crypto trading China enacted in 2017, China still has a significant say on crypto markets. Take a 180 degree turn to 12 hours behind on Capitol Hill, where Mark Zuckerberg was grilled for over 5 hours about Libra as well as Facebook (read report here). Interestingly, Zuckerberg also mentioned the global progression of blockchain and crypto saying:

“While we debate these issues, the rest of the world isn’t waiting,… If America doesn’t innovate, our financial leadership isn’t guaranteed.”

Three things to know

  1. Bakkt announced this past Thursday that it would “launch the first regulated options contract for bitcoin futures,” adding a new product to its current slate of physically-settled bitcoin futures contracts launched on September 23. This will position Bakkt as a friendly foe to CME after they also announced their plans to launch bitcoin options on its futures contracts in the first quarter of 2020.
CME announcement: https://www.cmegroup.com/cme-group-futures-exchange/options-bitcoin-futures.html
Bakkt announcement: https://www.coindesk.com/bakkt-to-launch-options-on-its-bitcoin-futures-dec-9
  1. Speaking at a Vanity Fair conference, the CEO of Coinbase, Brian Armstrong stated that Coinbase has accumulated nearly $2 billion USD in trading-fee revenues since its launch back in 2012. This comes just after Coinbase Pro’s trading platform decided to increase fees yet again for its users a month ago. Meanwhile, Binance is decreasing its fees. Coinbase does have a strong market leader position in the US for now, but let’s see how long it stays that way as we see traditional online stock brokerages going almost fee free.
Coinbase trading fees increase: https://blog.coinbase.com/updates-to-coinbase-pro-fee-structure-b3d9ee586108?gi=cc1fa5bbff2b
Binance trading fees decrease: https://sludgefeed.com/binance-launches-vip-program-to-bring-on-new-traders/
  1. As the Bitcoin ETF race is prolonged, major players are taking advantage by churning out more bitcoin funds available for institutional investors. Galaxy Digital will be launching two new Bitcoin funds in November with a minimum investment requirement of $25,000.

Chart of the Week

weekly chart 28.10.19

This week’s chart shows the magnitude of BTC’s 42% price swing. The first part of Bitcoin’s 16% rally from $7,450 to $8,600 forced liquidated $150 million shorts at BitMEX. And then just a few hours later, BTC rallied past through 10k. So what’s next? If BTC can close above the 10k mark with a second candle confirmation, it would reflect a strong bullish indicator. The daily Money Flow indicator (not shown) is showing an uptrend potential at the 65 point (what’s MFI?) and the MACD is still showing strong divergence from the signal line towards positive territory (what’s a MACD?). But, all in all, this could most likely be a fake out with prices continuing down the descending wedge channel in the near term. The death cross usually doesn’t immediately precede an immediate trending upswing if we look back on past history, but you never know.