MaiCoin Digital Asset Weekly, Feb 7 – MAX Institutional Sales & Marketing
Commentary
Digital Assets followed through on last week’s strength to end +8% . The space looks set to post the 7th green weekly candle in a row and to end the week just shy of a 6 month high. Turnover increased to $117B, +14% WoW. Gains were broad based with 78% of the top 120 coins and tokens ending the week higher. Alt Coins +15% outperformed BTC +5% led by gains in ICX +40%, TRX +18% and ETH +16%.
News flow this week was a mixed bag, top stories included: 1. Coronavirus hitting Chinese miners, 2. Warren Buffett getting his first BTC, 3. IOTA and XRP hit with high profile criticisms, 4. US lawmakers looking to ban encryption, and 5. BTC processing its 500 millionth transaction.
Risk appetite continued to improve with further outperformance in Alt Coins. Would expect continued follow through here given improving volume and with the 50 Day Moving Average likely to cross above the 200 Day Moving Average next week. As a group, Alts don’t look overbought yet — but there are definitely hotspots with ~ 80 RSIs in ETH, QTUM and TRX.
With BTC’s 20 Day Moving Average crossing above the 200 Day Moving Average this week and relatively little volume north of the current price, $10,000 remains in play. As Peter Brandt pointed out last week, given the 2 year symmetrical triangle pattern forming — things will get very interesting if BTC can break north of the $11,000 resistance level. A break above $11,000 would imply a target price based on the symmetrical triangle pattern of $28,000. A target price roughly inline with the Stock to Flow model’s predicted year end price of $33,000.
Thoughts
- Peter Brandt’s Symmetrical Triangle Pattern
Peter Brant released a good presentation outlining his long term view for BTC trading last week. One of the points he highlighted was that BTC looks to entering the tail end of a symmetrical triangle pattern that started with BTC’s all time high in 4Q17. Brandt thinks this is a continuation pattern of BTC’s long term bull trend.
A common way for establishing a target price off a symmetrical triangle pattern is: (high-low) +(break out price). It looks like the potential breakout point for BTC should be around $11,000. Applying the formula we get a potential target price of $28,000 — which, interestingly, is inline with the Stock to Flow model’s predicted $33,000 2020 year end price.
News
- Coronavirus hits China based BTC miners
– BTC.top’s CEO posted that 1 of the company’s farms has been shut down
– Bitmain, Canaan and MicroBT have suspended after sale services
– Unconfirmed reports today that Shenzhen has also been placed under quarantine — if true this will significantly impact Chinese miners ability to produce and ship machines in the coming weeks - Warren Buffet owns BTC — meets with TRON, LTC, Binance and EToro
– Justin Sun, founder of TRON, won the Buffett dinner auction last year
– Made a record US$4.57M bid
– Gifted Buffett a Samsung crypto phone loaded with 1 BTC & TRX tokens - Novo: Ripple will underperform immensely again this year
– Says that XRPs’ problems stem from Ripples’ actions
– Cites Ripples massive holding and constant selling as an overhang
– Really hard to see how the company can IPO given the bulk of its revenue seems to come from selling of XRP to retail investors
– Novogratz’s Galaxy Digital is a significant investor in Ripple and Novo later walked backed his criticism on Twitter - Coinbase and Ripple push for regulator framework
– New working group will advise regulators on crypto-friendly policies
– Co Chairs previously held positions at Goldman Sachs and JPM
– Sounds inline with Andrew Yang’s call for national regulation - IOTA dev threatens foundation director with $8M law suite
– Claims ownership of a significant chunk of the foundation’s tokens - BitGo now allows clients to trade directly from custody accounts
– Supports BTC, ETH and USD
– Eliminates necessity of having to move assets onto exchanges for trading - BitMEX launches XRP contracts
– Will offer XRP perpetual swaps at up to 50x leverage
– Product has existed on other exchanges for some time already, Delta has had a USDC settled XRP contract at 50x for about a year already - Lightning Labs raises $10M — aims to become the VISA of BTC
– Lightning Labs sees implementation of the Lightning Network as offering a 2nd layer to BTC transactions, in the same way VISA works with banks
– Also announced its first paid product: Lightning Loop
– Loop aims to help merchants manage payment channels - BSV upgrade results in chain split
– Looks like a relatively miner issue (see what I did there?) as a small number of miners failed to upgrade software
– Did not result in a persistent chain split - BTC blockchain hits 500 million transactions
- Draft law threatens to ban encryption in the US
– Bill reportedly seeks to stop end-to-end encryption which they see as “…enabling human trafficking via closed networks…”
– The bill also “demands a back-door entry for Government officials into the privacy of all individuals”
– This is part of a broader ‘Crypto War’ that’s been ongoing since the mide 1970’s. Crypto Wars is an unofficial name for the U.S. and allied governments’ attempts to limit public and foreign nation access to cryptography - Sony invests in STO platform securitize
– Other investors include Blockchain Capital, Coinbase Ventures, Ripple’s Xpring fund and SBI Holdings - Binance links Russian banking cards for instant crypto purchases
– Allows instant buys of BTC, ETH, XRP and BNB
– Binance has been very active in supporting new fiat currencies - Consensys cuts headcount (again), splits company in two
– Will cut headcount by 14% after previously cutting 13% in Jan 2019
– The company will split into 2 units, one to continue software building, and the other to work on venture investments - HK based Bitspark shuts down in wake of protests, coronavirus
– The HK based remittance company will shut down early March - Chart 1. BTC vs Other Assets
– Crypto, especially small mid caps, is significantly outperforming this year
- Table 1. BTC Seasonality
– BTC on pace for +4.1% gain in FEB
– FEB has been an up month 5 of the previous 5 years
– Median FEB gain is +17%
- Chart 3. BTC vs Alt Coins
– Alts closing the gap on BTC’s outperformance over the past 1 year
- Chart 4. Alt Coins — Still in Goldilocks Zone
– Alt Coins are hot…but not too hot
– 50D MAVG is about to cross > 200D and volume is building
– But 20 day rate of change % and 50 day Z Score are still pretty mild
- Chart 5 — Top RSIs by volume
– Alt coins as a group don’t look to be overheating…but there are hotspots
– That said…ETH, QTUM and TRX are all trading ~ 80 RSIs
- Chart 6. % > 50D MAVG
– ICX a notable standout. Now trading +152% north of its 50D MAVG
- Chart 7. Position in 52 Week Range
– Most major crypto now north of their 52 week midpoints
– XTZ and ETC both trading just off 52 week highs
- Chart 7. Crypto Fear and Greed
– Index only modestly greedy…still far from overheating
Published at Fri, 07 Feb 2020 09:09:10 +0000
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