Mine Digital Newsletter - Market Update
February 25, 2020
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Mine Digital Newsletter – Market Update

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Thomas Kuhn, CFA

Operations and Trading Manager

Market Update w/ Bitcoin, Ethereum, Coronavirus and more
The S & P 500 Express

It’s been a big start to the week in traditional markets as per our Sunday newsletter.

Bitcoin has perceptibly sold off on the developments however it is also moving the same direction as Gold, which almost got to $1,700 before retracing to around $1,660. It will be interesting to see how the digital assets respond to major risk-off events in traditional markets. Although the blueprint of digital assets is as disrupters and to perform some traditional functions, the projects are not ready to take over.

There could be other more technical issues such as financing events if the market continues to sell-off and banks become concerned about their credit or other arrangments with crypto firms, as well as a general tightening of risk that could turn the taps off for some types of digital asset investment.

Within the space, the fact that the Federal Reserve Bank has only recently stopped directly supporting markets with its liquidity program before selling off, (which JP Morgan ‘guru’ Marko Kolanovic described as a ‘bubble’) is bullish for digital assets long-term, which is gaining in confidence in being able to solve the problems faced in being recognised by traditional markets.

Since making a high around the 13th of February Bitcoin has been making lower highs, trying and failing multiple times at each attempt of new prices, its most recent attempt to get higher a twice-failed bid past the $10,000 level.

There has been some interesting price action on the other side of the equation, where Bitcoin is getting picked up aggressively at lower prices, with many instances of the market wanting and taking the liquidity offered there. All in all it looks like a market biding its time, that does not want to enter a FOMO rally but with money on the sidelines all the same.

The chart shows the asset being picked up and turned around quickly when it gets lower on the bottom side and also making a number of enquiries each time it bids for higher prices.

Bitcoin / USD 30 minute chart

Each side starts to describe a picture similarly to the below on the same chart zoomed out.

Bitcoin / USD 30 minute chart

But which could be contextualised on the daily as such. The market feels bullish and there is expectation of price strength but it is difficult to know what could happen in the broader context at the moment.

Bitcoin / USD Daily Chart

Ethereum is building a stronger technical case for higher prices with its pendant-like consolidation in the context of staking. Buyers of the second-largest digital asset have purchased from a low base into a huge technological improvement as well as staking rewards.

Ethereum / USD Daily chart

We went into the coronavirus in-depth in our Sunday newsletter.

It appears that the virus is extremely hard to contain, highly virile and particularly sneaky in being undetectable for 14-24 days, as well as potentially mutating (a ‘cured’ patient was reinfected in China). Traditional markets have responded to this as a reality, being particularly concerned with supply-chains now that countries are closing borders, quarantining people and goods and being far more careful in the potential transmission of the virus.

Harvard Epiemiologist Marc Lipsitch predicted that ‘within the coming year, some 40 to 70 percent of people around the world will be infected with the virus that causes COVID-19,” in a piece by the atlantic.

Given that they were already called a bubble, especially tech growth stocks, there can be a lot of movement to the downside. Added to this potential is the very high dollar value of daily options traded as well as a huge number of calls purchased at the high of the market

We will watch the developments there closely.

In geo-politics, Donald Trump visited India to a huge crowd and his face plastered all over the place, clearly playing to his personal ego and in a way that we have never seen before for any world leader. Modi went on to try to hug a supply-chain agreement from him on the spot to a roaring crowd of over 100,000 Indians. Trump did suggest that India would ‘soon be home to the biggest middle class in the world’.

There was huge news in global fund management and digital assets in the last week, with Fidelity International taking a share placement of BC Group of Hong Kong. BC Group have worked diligently to provide a custodial service for funds providers, laying the groundwork for digital asset funds with major and established institutional finance fund managers. More information can be found here.

And, CZ came out to directly call CSW a fraud on twitter

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