20th February 2020
Bitcoin has had a 9% price retraction this morning at its extremes in the strongest rejection of higher prices since making the high a week ago. The solid rejection of higher prices is more likely to mean a reversal in the short to medium term. Considering the strength and size of the rally, it will embolden those looking for an indication that it is time to squeeze longs.
Naturally, the rest of the market has followed suit. We expect that the next week brings a bit of action in the pocket between the down-trend and resistance level. The stop-hunting bearish trade will be through the resistance level from July and the unbroken uptrend from late last year. A stop-hunting bullish trade could develop as positions build in the pocket. Anecdotally, there is talk of buying the dip but we will see how many dollars are behind the idea given the move already this year.
Ethereum has had a good run so far in 2020, up over 100% at its highest levels. The market is currently framing it as shown in the chart, but the protocol has a big year ahead with its 2.0 Caspar implementation that includes conversion to a Proof of Stake (PoS) system. It would be interesting to watch if Bitcoin has another leg up. BC Group has identified staking as a major theme in 2020 for the industry.
The SEC took the Enigma ICO to task, ordering a refund, registration and a fine after labelling their $45 million ICO an unregistered securities offering. Enigma is a de-centralised, open-source protocol that allows the computation of encrypted data to ‘bring privacy to smart contracts and public blockchains’.
HSBC is embracing blockchain, speaking about continuing to invest in digital systems. They are moving $20 billion of assets to a digital asset platform called ‘Digital Vault’ that they plan to implement next month. The move comes at the end of a 3-year project to discover how they could use blockchain.
In traditional markets, Gold and Stocks are moving the same direction, with Gold well through its $1600 level, sitting at $1615 this morning. The S&P 500 is at an all-time high and oil has had a small bounce-back into the $50+ pricing levels. In the presidential campaign, Michael Bloomberg has said he would sell his media empire if elected president, putting Warren Buffet in his sites as a potential buyer. It will be very interesting to see the approach taken by such a well-connected magnate reportedly willing to spend upto $2 billion at this last-chance saloon election for the establishment against a Communist Democrat front-runner and the populist candidate Donald Trump.
One interesting chart below shows the growth in US Government Debt, especially debt held by Banks that has perceptibly doubled in the last 6 years.