Wednesday, July 10, 2019

Is Bitcoin’s rise a testament to its credibility?

You have probably seen the news that Bitcoin has made a comeback.  For the Bitcoin Bears, this is a sign that Bitcoin is here to stay.  Some are deep rooted in their opinions and will never change.  Others simply want to wait and watch and their opinion depends on the price.  The higher the price, the higher the credibility of Bitcoin.  The price of Bitcoin certainly has gone up based on demand.

While many of the ICOs have fizzled and the SEC has cracked down on frauds, the Crypto “Majors” have seen a resurgence in recent months, with Bitcoin leading the way.  Also many stablecoins have been launched, once again proving that Crypto may be included in the money of the future. 

While no one knows who created Bitcoin, some have speculated with solid evidence that it was a faction inside the US Government.  The implications of this are far reaching, as it is also the US Government that implicitly backs the US Dollar which is the Global Reserve Currency used in the entire world, even in US enemy states like North Korea and Iran.

We also need to remember that as most Crypto Currencies are denominated in Bitcoin, when Bitcoin rises so does Ripple, Ethereum and other BTC denominated pairs.  The most prominent Bitcoin news agency is Coindesk, who mentions that:

Bitcoin’s break above a key price hurdle looks to have set the tone for a retest of recent highs above $13,800.  The top cryptocurrency bu market cap printed a UTC close above $12,061 on Monday, invalidating a bearish lower highs pattern created on July 4, according to Bitstamp data.  Further, with Monday’s close, BTC cemented the bullish view put forward by the strong dip demand below $10,000 observed a week ago.  More importantly, the latest breakout looks sustainable, as bitcoin’s dominance rate (percentage of the market in relation to other cryptocurrencies) has ticked up to 64 percent, the highest level since April 2017, according to data source CoinMarketCap.
Another point to note about Bitcoin is that because it is traded at a number of venues the price may vary from exchange to exchange, and trading data is provided ‘as is’ on a voluntary basis.  This isn’t necessarily a detriment, but this has been a sticking point on the SEC when denying applications for Bitcoin ETFs, due to the impossibility of market surveillance. 

But is this move up in Bitcoin proof of the credibility of the anonymous Crypto Currency or is it a flight to safety, a perception by a new generation of investors (Millennials) who have lost the trust of Wall St. ?  Or is it simply an indication that actually the US Dollar is just going down? 

Here’s a point that only Forex traders will understand, when one currency goes up another goes down.  The US Dollar has the tendency to go down due to the Federal Reserve constantly creating new electronic money.  Bitcoin goes up only by US Dollar purchases, as other fiat currencies are denominated in US Dollars (including the Euro).  So perhaps this is a flight out of fiats away from Forex and into Crypto?  That’s a likely scenario.

In any event, Global Intel Hub will be monitoring this situation closely, and as always we will continue to report on the latest analysis whenever a significant market change happens.

What we are going to be looking at in the coming months is FIX trading of Crypto which we believe will greatly impact Crypto liquidity.

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