Although things had been heating up in 2019, almost every day has been fantastic in 2020.
From the CoronaVirus to the Crypto rally, from $500 billion dollars of liquidity injections, the US including assassinations in its foreign policy, other conflict in the middle-east, a trade-deal after a trade war and Bitcoin dominance hitting a high, 2020 is keeping us on the edge of our seats all around.
Bitcoin has been whipsawing since making its high, spending the last 3 days creeping back slowly and minimally. In fact it looks primed for a stop-hunt to the downside, currently putting 17 days of new long positions out of the money and with room to fall in the sense of the new leveraged positions reported in exchanges and in new bullish hysteria while – still capable of falling and maintaining a long-term bullish view.
Volumes over the time period are consistent with that narrative, with the lowest volume in a month done yesterday, a collapse from its high
The fear and greed index is bullish or bearish depending on who you believe. It’s not blood in the streets of exuberance.
On the monthly Bitcoin/USD chart, one bullish scenario would potentially have seen the move as a flag.
The hammer candle this month gives us a more bearish proposition at this point, something that would take out the lows and shape up to the long term trend-line. We have just under a week that would make or break the market from a technical perspective.
However there is a lot going on around the world that has changed the story for cryptocurrencies, and there is a renewed vigor and confidence in the industry from within itself. The more chaotic and disjointed things are outside, the more out of control, reckless and unsystematic, the more that authoritative hierarchies fail – the stronger the type of thinking that has developed cryptocurrency – the systematic, open-system way of solving problems, looks and feels.
We have a feeling that we are onto something in here.
Ethereum has a huge year coming up, as it begins to compete with other later protocols as they enter their final development stages. Ethereum has its major Caspar upgrades planned for the near-term to deliver its proof of stake, Ethereum 2.0. Staking fundamentally changes the economics of the project and the prospect of holding the tokens as an asset. Returns are compounded into that evolving technology.
So, the current state of Ethereum shown on the chart shows an asset that has been strong this year.
While the Ethereum on Bitcoin chart looks significantly more bullish, and the relationship between the two may continue to favour Ethereum as institutional Bitcoin holders feeling familiar in the space become institutional Ethereum holders.
This thing is going to be significant in the upcoming fortnight, especially in the context of being unable to control it.
South Korea (229 new cases Saturday with 430 total) and Iran now have sizable outbreaks of the coronavirus (6 confirmed dead implies at least 200 cases, one report suggests 800) and Italy has declared a ‘state of emergency’ with 15 towns on lockdown in the north of the country.
This video conceptualises the virility of the coronavirus well
Cases outside of China have begun to go parabolic, a phenomenon crypto traders will be familiar with. We know what this represents – hysteria, exponential growth and chaos. A spokesperson from the WHO has also said that the window for confronting the virus is tightening, where global medical resources will be overwhelmed in a very short space of time. A comment on twitter even suggested controlled infections of populations like controlled backburning during forest fires- but in China a recovered patient re-contracted the virus, apparently signalling the rate at which it is mutating. A revised incubation period also sees the virus go from 14 days to almost a month.
The mortality rate of the virus has been creeping upwards, with the figure currently settling at 3%. In a study published in the Lancet 3 days ago, the very old, very young and those with other conditions are less likely to survive corona virus compared to SARS.
The Japanese Summer Olympics could be in doubt, with the London Mayor Khan and a conservative Mayoral candidate suggesting they could step in to hold the Olympics, slated for July. The Tokyo governor said the comments were ‘inappropriate’. Japanese cases tripled during the week to 121.
For its potential economic effects, flight cancellations in China have topped 200,000 on the Coronavirus (new car sales down 92% February). NY Times interactive page here.
January 23 (12,814 flights)
February 13 (1,662 flights)
US Equities had moved the same way as gold and fixed interest Thursday and options traders had an epochal record high level of call buying at all-time price highs.
The leveraged positions and assumption of low, reduced or controlled volatility seems extremely dangerous in the circumstances worldwide. The assumption that a dip would be bought to recover seems prime for a continuation of any price weakness, as gold is now decidedly over $1600 USD ($1648 USD) pointing towards a shift in the accepted paradigmatic reality. With the S&P 500 yields at historical lows, a dramatic repricing lower is historical reversion to the mean. With so much liquidity for banks to pump asset prices, with so many positions onside, volatility compressed and the US Fed’s now explicit support of markets rather than the economy it could be the case that the market is severely out of position in the event of a selloff. But the fed gaming of markets – especially the short-circuit of the relationship between investor with the company, the company with the economy and the economy with physical events in the real world and the ability to analyse and price assets for their context in the global set of investments will continue to work until it doesn’t.
A lot of Chinese debt is reportedly to be due in this year of economic crunch. Luckily the Chinese goverment has banned short-selling, a strategy that never fails to fail in assuring markets
US Presidential Race
In the United States presidential race, was Michael Bloomberg, one of the richest and most powerful men in the world – a person of low melanin to boot – really ever seriously considered to be a presidential contender? Some are suggesting that Democrats believe that they can perform an exorcism of the widely held perceptions of their globalist establishment connections by setting up Michael Bloomberg as a straw-man. In any case, the Communist Bernie Sanders continues to storm through voting on the Democrat Nominee; even tweeting
‘I’ve got news for the Republican establishment. I’ve got news for the Democratic establishment. They can’t stop us.’
In response, and although nobody would believe it – could believe the chutzpah, could only imagine the serious contempt and cynicism towards democracy and the common man involved in such a report, the Washington Post reported Friday….. A Russian influence promoting the Bernie Sanders campaign. Slow learners.
If it was ever in doubt, the managerial class has been perceived to have utterly failed at delivering civilisation to the Western world. With the competition between Donald Trump the populist candidate and Bernie Sanders the Communist candidate, the social mechanism of democracy is kicking in to remove the problem of money and power in spite of attempts to control the narrative. The most cynical political dynasties are finally rejected after Bush Jr. trashed Nationalism for the last time and female Clinton trashed leftist sympathies for the last time.
Potentially freudian spelling slip intended, we are a little Untied indeed.
One significant aspect of the problem realising itself is highlighted in a case from this week, where ‘Twitter is experimenting with adding brightly colored labels directly beneath lies and misinformation posted by politicians and other public figures‘. Similarly to the Chinese banning of short-selling, the resentment towards being told what to think will backfire significantly on the technology companies devoted campaign to control wrongthink.
With upto a million people trying to get out of the Syria / Turkey / Russia catastrophe that the United States escaped only recently, the Turkish hard-man president Erdogan might have encountered the age-old problem of imperial powers preferring puppet regimes with Russia frustrating their plans supporting Assad.
It was reported recently that Erdogan has become more interested in Turkeys NATO participation and the possibility of American support. Similarly, Libya has even requested a US base in the country, barely months after it was reported that Russian troops were headed there. Say it aint so – that Russian interference is less nuanced than entertaining US forces.
WTI Oil has had some support in its price in the high 40’s, but is unlikely to do a great deal without a tangible supply shock.
All in all, we have a big couple of weeks and months ahead of us on many fronts.