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The trend is your friend! Is this a new bubble?

By Marius-Cristian Frunza
Weekly Briefs

Bitcoin and most Altcoins began the year in the Green, fuelling hopes that the market will go back where it was in December 2017. Three years ago, Bitcoin saw its value multiplied by 10 in less than six months. Since the beginning of the year, it increased no more than 30%. However, for many reasons, 2020 is not 2017.

  • If in 2017, many neophytes to finance entered in Bitcoin’s beliefs system, the current investors are more experienced and better informed.
  • Crypto-currencies are not experiencing the same inflow of enthusiasm as they did in 2017.
  • Even the fiercest advocates of crypto-currencies think in fiat currencies. We wonder in what currency Max Keiser (the American reporter and Bitcoin pioneer) receives his wage.
  • Bitcoin and Co. are like an African third-world country. Everybody says that it represents the future, but nobody goes there to live.
    More regulatory watchdogs are overseeing the market than three years ago

Market overview

As predicted last week, Bitcoin remained in positive territory until Saturday when failed to find support at 10 000 USD. The sudden dip came as a result of the end of week technical sales from traders that wanted to lock in the gains from the last rally. There are no signs of the Bitcoin market being overbought. Both the Relative Strength Index and the Momentum indicator show that the trend is sustainable over the next two week. Ethereum, Bticoin Cash, Binance Coin and Litecoin are without a doubt the big winners of the rally that started earlier this year from the top 10 coins. The liquidity inflow on the Bitcoin market impacted the Altcoins positively, but also put them at more significant risk in the situation when the market would experience a trend reversal.

Coin of the Week

(C)Ripple

XRP, the third-largest cryptocurrency had almost doubled in value since last December, when it touched a two years minimum. When most believed it was crippled, Ripple raised from its ashes.

Ripple Labs, the software firm behind XRP commercializes solutions for payments, positioning itself as a real alternative for the current SWIFT backbone used by most of the financial institutions. In the same time, the firm controls a massive stock of XRP, which boosts its revenue from coins’ sales. Recently Ripple’s CEO claimed that IPO’s would become popular in the crypto-world, thereby igniting the imagination of those believing that Ripple Labs will go public. Moreover, it could be so as the firm had already secured a Series C financing, which leads in most case to a public offering.

The wave of XRP buyers may not be believers in crypto-currencies, just occasional speculators of the momentum created around the foreseeable IPO of the San-Francisco based company.

Meanwhile crypto start-ups raise fiat capital

Elliptic

Elliptic provides risk assessment services for over 200 crypto exchanges worldwide, covering everything from how they conduct know-your-customer (KYC) checks to their regulatory status. The start-up secured a Series B funding accounting for 28 million USD from Wells Fargo Strategic Capital. This investment is related to Wells Fargo’s initiative to expand its services in for crypto-exchanges

Amber Group

Amber Group is a start-up based in Hong Kong proposing financial services for crypto-currencies markets including crypto-based electronic market making, automated over-the-counter trading and collateralized lending. Amber secured a 28 million USD Series A funding from Paradigm,  Pantera Capital,  Polychain Capital, Blockchain.com, Coinbase Ventures and Fenbushi Capital.

BlockFi

BlockFi is a crypto lending start-up providing fiat loans with bitcoin (BTC) and ether (ETH) collateral. It also offers fiat wire transfer services. After securing a Series A financing in August 2019 representing 18.3 million USD,  Peter Thiel's Valar Ventures led a Series B funding for 30 million USD. BlockFi reported having more than 650 million USD in assets on its platform, a 160 per cent increase from the 250 million USD last year.

Market outlook

The current trend is explained mostly by an inflow of fiat liquidity in the cryptocurrency market. This liquidity will remain in the short term at least until the Bitcoin halving. Therefore, the current environment meets all the conditions needed to support Bitcoin, and the leading Altcoins have above 10 000 USD. Nevertheless, over the next week, the market may observe some intraday corrections.

General Disclaimer

The information and data published in this research were prepared by the market research department of Darqube Ltd. Publications and reports of our research department are provided for information purposes only. Market data and figures are indicative and Darqube Ltd does not trade any financial in- strument or offer investment recommendations and decision of any type. The information and analysis contained in this report has been prepared from sources that our research department believes to be objective, transparent and robust.

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