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Bitcoin Fundamentals – Briefing July 2019

Bitcoin Fundamentals – Briefing July 2019

This month cryptocurrency shows good performance and volatility, providing few good trading setups. In general, market accurately completes our plan for a month, finally starting long ago expected retracement. We’re watching on it by two reasons. First is, this is good setup for short-term trading, but second one is more important – its destination should provide “investing point”, where we could take long-term bullish position on Bitcoin.

Despite that market was behaving pretty accurately from technical point of view, fundamentally there are few big processes now stand in progress, which definitely should make impact on market’s sentiment in medium-term picture. Nowadays nobody surprises by news of hackers’ attacks, hardforks and other stuff of this kind. When Bitcoin was young and trading process was in a period of foundation – these events were important. Now investors and traders watch for different issues – regulation, institutional investments and government activity on cryptomarkets, as market’s ambitions are growing month by month, involving big companies and governments’ authorities. These news do make impact.

So let’s get started. As usual we bring most important positive and negative issues on the market and try to understand what effect it could make on market in medium-term perspective.

Happy tidings

Coinberry to Provide Bitcoin Payment Solution to City of Richmond Hill Following Recent Council Approval- Coinberry leads the way in Bitcoin adoption in Canada- announces second municipal partnership, with City of Richmond Hill, to process tax payments made in Bitcoin.

“We believe that the demand for a digital currency payment option is only going to grow in the coming years, especially amongst millennials”, said Richmond Hill Deputy Mayor Joe Di Paola who moved the motion. “Our Council was aware of Coinberry’s successful implementation of a digital currency payment service with the Town of Innisfil, and since there was no cost and no risk to the City of Richmond Hill to do the same, it made the decision that much easier for us.”

LedgerX underwrites Bitcoin Call Option with 100K strike price

The most bullish of Bitcoin backers can now bet on the largest cryptocurrency soaring to $100,000.  U.S.-regulated derivatives exchange LedgerX unveiled a call option that pays off if Bitcoin surpasses that price by December 2020. Such a move implies a 10-fold increase in the digital token from Tuesday’s price and would take Bitcoin’s market cap toward $2 trillion.

What is also interesting that by LedgerX statement – It clearly indicates interest of institutional investors, which is BTC supportive in long term. Besides, as this contract is already been approved by CFTC, it should make positive pshychological impact on the market, especially if there will be some demand on it.

“Dozens and dozens of these institutions got back to us saying we’d be interested in trading a contract like this,” Chou said. “I understand $100,000 is a large number, but a lot of us who’ve been in this space remember Bitcoin at $1, and then it hit $10 and $100 and $10,000. A $100,000 contract doesn’t even make us blink.”

Bakkt’s Bitcoin Futures Test Starts Today, Launch Imminent This Quarter

Bakkt Digital Asset Summit highlighted important developments in the launch of Bakkt Bitcoin Futures, which beta release is expected today. CFTC commissioner Dawn Stamp acknowledged the high demand for the derivative product.

“There appears to be a critical mass of adopters ready to come on board on Day 1 of the Bakkt launch, with the sales team gaining traction among brokers, market makers, prop trading desks and liquidity providers.”

Sam Doctor also said that this was his first-hand experience of attending an event having representatives from over 150 countries and institutions attend it. The Bakkt Bitcoin Futures would probably be the first U.S.-regulated vehicle with the physical token settlement. Doctor wrote:

“As we have written before, Bakkt tackles many of the barriers to adoption for traditional investors seeking to expand their mandate to include crypto.”

Earlier this month, Bakkt competitors ErisX and LedgerX secured licenses from CFTC to act as custodians of physically-settled Bitcoin Futures contracts. This could encourage more exchange to work on the Bitcoin Futures product going ahead.

Japan to lead development of SWIFT network for cryptocurrency

Japan’s government is leading a global push to set up an international network for cryptocurrency payments, similar to the SWIFT network used by banks, in an effort to fight money laundering, a person familiar with the plan said on Thursday (18th of July).

Fidelity’s Digital Assets Department Seeks New York State’s Trust License

Fidelity has recently filed to secure New York trust license which will enable the firm to serve its clients in New York in all sorts of crypto businesses. This move will put Fidelity Digital Assets Services in direct competition of popular crypto exchanges and custodian service providers such as Coinbase, Gemini and Paxos.

Currently, the company is offering crypto-custodian services in a few states and if the application will be approved, the State of New York will be added to its list of states in which Fidelity operates. The company is also planning to expand its storage business with crypto trading solutions and investment options as reported in May. The firm may go even beyond to offer broker services to trade on behalf of institutional clients.

Binance Launches Margin Trading Service for Evolving Cryptocurrency Traders

Binance Margin Trading allows users to leverage their digital assets as collateral to borrow funds from the Binance exchange to help them create leveraged trading by a margin and provide potential amplified gains within the cryptocurrency’s bear and bull markets.

“This is another step in providing an inclusive cryptocurrency trading platform catering to the needs of both advanced institutional traders and retail traders under the same roof,” said CEO of Binance, CZ

Iranian government moves to authorize cryptrocurrency mining

The governor of the Central Bank of Iran (CBI) has announced that the government is planning to authorize cryptocurrency mining despite the fact that there is no rule allowing its legal trade in the country.

“Mining of the international digital currencies should be done based on the price of electricity for export,” said Hemmati, adding, “What’s more important is that these mined currencies should be fed back to the national economic cycle.”

However, some believe Iran could use its abundant sources of off-peak electricity to feed such farms as it could generate wealth for the country at a time of increased economic pressure by the United States.

German Central Bank  – “Crypto-tokens currently do not pose a risk to monetary or financial stability. Yet gaps may occur where they fall outside the scope of regulators’ authority or where there is an absence of international standards.”

Cyprus’ Finance Minister: Blockchain Draft Bill to be Ready This Year

The finance minister of Cyprus, Harris Georgiades, has said that the country’s blockchain regulation draft will be ready this year. English-language local finance news outlet FinancialMirror reported the news on July 4.

“Full implementation of this technology across the public and private sector is expected to radically change the structures of modern societies, the way they are organized and their operation.”

Singapore’s Tax Agency Proposes to Exempt Cryptos From GST

The Singaporean government’s taxation agency is proposing to remove goods and services tax (GST) from cryptocurrency transactions that function or are aimed to function as a medium of exchange.

If the draft guide passes into legislation, starting from Jan. 1, 2020, the following changes will take effect to “better reflect the characteristics of digital payment tokens:”

Bearish news come side by side

G7 urges tough Libra regulation, agrees to tax digital giants – 

Digital currencies such as Facebook’s planned Libra raise serious concerns and must be regulated as tightly as possible to ensure they do not upset the world’s financial system, Group of Seven finance ministers and central bankers said on Thursday,  18th of July.

Libra — has been heavily criticized by policymakers around the world, including U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell

Finance Minister Bruno Le Maire of France, which holds the rotating presidency of the G7 top world economies, told a news conference the group opposed the idea that companies could have the same privilege as nations in creating means of payment – but without the control and obligations that go with it.

“We cannot accept private companies issuing their own currencies without democratic control,” Le Maire said.

In a summary of the informal G7 talks in Chantilly, north of Paris, the French presidency said the ministers and governors had agreed that

“stablecoins and other various new products currently being developed, including projects with global and potentially systemic footprint such as Libra, raise serious regulatory and systemic concerns”.

US Treasury Chief Says Crypto Is A “National Security Risk”

The Secretary warns that Bitcoin, as well as, Facebook’s plans for Libra, pose a “national security issue” for the United States.

“This is indeed a national security issue,” Mnuchin told reporters at a press conference yesterday. “Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking,” adding that Facebook’s Libra “could be misused by money launderers and terrorist financiers.”

Mnuchin echoed other politicians stance on Facebook’s Libra venture and said that he was “not comfortable” by the idea of it.

D. Trump keeps the same position in relation to cryptocurrencies

Trump said cryptocurrencies are not money, and

“Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.”

“If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations,” said the president.

CFTC investigating crypto derivatives exchange BitMEX over US trading breach

The U.S. Commodity Futures Trading Commission (CFTC) is reportedly probing crypto derivatives exchange BitMEX to determine whether it broke rules by allowing U.S traders onto its platform.

Fed chief calls for Facebook to halt Libra project until concerns addressed

The strong comments from the most powerful U.S. financial regulator underscored the growing regulatory hurdles facing the proposed cryptocurrency, which has drawn scrutiny from policymakers globally.

“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” Powell said during his semi-annual testimony on monetary policy before the U.S. House of Representatives Financial Services Committee.

“I don’t think the project can go forward” without addressing those concerns, he added later.

Powell said any regulatory review of the project should be “patient and careful.” He noted that existing rules do not fit digital currencies.

Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief Economist at the Roosevelt Institute. 

“Only a fool would trust Facebook with his or her financial wellbeing. But maybe that’s the point: with so much personal data on some 2.4 billion monthly active users, who knows better than Facebook just how many suckers are born every minute?”

Here is also some headline news:

As usual, at the end of report our

Graphic and technical rubric

Expert Opinion: Is Bitcoins’ Increasing Correlation with Gold Backed by Common Cause?

Until now, Bitcoin has moved independently of any other asset class. This is primarily because of its ambiguous nature. However, we can see the price of gold (yellow) against bitcoin (blue) have been moving very similarly since the beginning of May.

Bitcoin Price Report: Retail Investor Enthusiasm Has Returned

The latest report from Delphi Digital notes that June was bitcoin’s fifth straight month of positive returns, which is the longest streak in nearly two years.

In terms of the new report from Delphi Digital, increased Google searches for “bitcoin” and a higher premium on Grayscale’s Bitcoin Investment Trust (GBTC) were provided as examples of retail investors’ renewed enthusiasm for bitcoin.

‘The recent parabolic price moves have given us an eerie flashback to 2017, albeit sentiment is not nearly as dramatic,” notes the report.’

Source: Forbes.com, Delphi Digital

As a bottom line

At first glance it seems that we provide some separate links on news that do not have any relation to each other. But this is not quite so. As we make month by month analysis of cryptocurrency market, we see giant shifts in sentiment.

Who could think a year ago that US CFTC, NFA, FED, SEC and Ministry of Finance government authorities will take all lead headlines in cryptocurrency topic. Who could suggest that such a whales as Fidelity, JP Morgan and others will take a course on cryptocurrency market, or Bitcoin futures start to trade on CME, ICE and other world largest exchanges and J. Powell and S. Mnuchin will discuss and argue on Bitcoin and Libra adoption.

Recent events on cryptocurrency market shows that it takes definite direction and it gradually shifts from local or underground scale into government and global scale. Now it is like a boiling pot – everything stands in tight space, but pressure is growing. Market, in current scale, current size just can’t hold all the power of big international funds and institutional investors’ authorities. It should show explosive extension and relatively soon. The lid of this boiling pot now that keeps content and doesn’t let’im to expand is regulation authorities of different kind.

Sooner or later but regulators will adopt rules for cryptocurrencies under the pressure of big international funds and companies and this will be the moment of major breakout.  The first sign is Bakkt in IIIQ of 2019.

In general this rising degree on the market corresponds to our long term view. While fruit will continue to ripe – our retracement on BTC market stands under way, but later  – major upside trend will start and it could happen as soon as within 6 months.

Author Profile

Sive Morten

Sive Morten

By day Sive Morten works for the large European bank. In that roll he evaluates the markets including currencies market managing bank risks and evaluating the bank portfolio.

At the Forex Peace Army, he is known as an author of Forex Military School, which quite unique free forex trading course. We do not know of any other free forex trading education covering such a broad spectrum of forex market concepts in such details while keeping it easy to understand and practically use.

As if that wasn't enough, he is the part of the Shoulders of Giants Program. He shares with his fellow traders at FPA his view and forcast of the Gold Market, Currency Market, and Crypto Market in form of weekly analytics and daily video updates.

* Complete Forex Trading Course by Sive Morten >>

* Sive Morten Forex , Gold , and Crypto Analysis >>

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Comments

INVESTOR
23 days ago,
Registered user
Thank you very much Sive for all that you do for us...

:-)
ED SCHAFFER
23 days ago,
Registered user
I concur with the above comments from "INVESTOR". Just keeping up with all the current developments in the BTC market from disparate sources is enough to make one's head spin. Thank you SIVE for aggregating all these news developments into one space is appreciated by readers like me who operate under severe time limitations. Please do keep up this important work.