Mine Newsletter - Bounces All Round
March 2, 2020
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Mine Newsletter – Bounces All Round

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Thomas Kuhn, CFA

Operations and Trading Manager

Bitcoin bounces this morning, leading traditional markets

Bitcoin led the recovery of the traditional markets early yesterday, barely making a low past its previous mark before getting up just over 6% so far.

It is a strong way to retrace the move lower and puts Bitcoin back above its 200 day moving average, just shy of 9000 at 8950. The turn is an almost perfect 50% retracement low to high

The state of the space after the scare in traditional markets is encouraging with most other coins also in the green today. BSV is up 11% after it had been seriously defeated, trading back to July highs late last week. There are a few coins with double digit growth, including Algorand (~20%), Cosmos (10%) and NEM (11%). Overall there is not much in the red in the top 100.

For the rest of the week we will be watching how Bitcoin and digital assets trade around the developments in traditional markets.

Key Points

  • Bitcoin has charged back through its 200 DMA
  • The digital asset space has rebounded across the board
  • Bitcoin has already done over 6% and sits under 9000

After the world-wide dump, a co-ordinated attempt of central banks to ease volatility has been talked about, with a 25 bp cut priced into Australian rates. Some commentators have said that there is not a lot that central banks can actually achieve and there are differing views on the effects that the coronavirus would have on global growth.

The buying led to the largest ever move in the DOW on points, a fact that will encourage Donald Trump who has something like the top 8 dow points losses on his record after last weeks carnage.

The role of Bitcoin in a portfolio often comes up in times like this. Although the market wants the asset to earn its title of digital Gold, it had sold off on the risk-off move. In fact it is still a highly uncorrelated asset to the rest of the market, likely because of its use as a speculative asset, the leverage available to traders as well as a large portion of its overall value being held by people who mostly hold it alone as an asset and potentially trade around in it. Some correlation may come over time, but even compared to Gold it differs by virtue of its supply schedule.

The big auditing firms are getting involved, with KPMG estimating that $9.8 billion of Crypto has been stolen since 2017 and suggesting that proper custody solutions are necessary for the industry to be capable of moving forward. The institutionalisation of the space is ongoing and veritable custody solutions have been developed, notably by Mine Digital partner BC Group, with OSL Chairman Dave Chapmans paper instructing that operation. Fidelity Investments is mentioned in the Bloomberg report, an arm of which has taken a share placement in BC Group.

A report from Cointelegraph states that Google is cracking down on crypto apps, an interesting development 2+ months after Youtube did something similar around Christmas time. Youtube of course is owned by Google.

And after Justin Sun’s failed attempt at figuratively selling Bitcoin to the ‘worlds greatest investor’ Warren Buffet – literally giving him Bitcoin – he missed the even bigger opportunity. Buffet was on record saying that if he could buy a ‘five-year put on cryptocurrencies, (he) would.’.

After spending $4.5 million on lunch, Sun missed a layup opportunity to take the other side of the worlds worst investment.

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