Crypto Weekly (Sept. 25th, 2019)
Weekly recap...
- The crypto market crashed and no one really knows why
- BTC SegWit adoption jumped to >50% = network throughput improving
- With BTC below $9.3k support level, the next key support is now $7.5-8k
Center Story
1. The Four Horseman visited crypto
The Four Horseman of a crypto flash crash seen passing through
This was a rough start to the week for crypto brought on by a confluence of "risk off" events, but it's hard to say what exactly sparked the crash.
Though, our Bitcoin Misery Index had been showing an overbought market and furthermore, our own Tom Lee has discussed the need for a a clear macro trend (S&P 500 breakout) before BTC performance improves.
These are at least four factors that we think contributed to the flash crash and destruction of the bull market that started in April (or least added fuel to the selling fire)...
1) The Bakkt launch, though a truly positive fundamental development for the space (first physically settled BTC futures contracts = improved liquidity and access to ), failed to bring a boost to the price that some may had been hoping for. This was an incorrect assumption based on the belief that institutions were simply waiting for a compliant product.
2) BitMEX marg...Reports you may have missed
How the US Could Adopt BTC as a Strategic Reserve Asset, Look for ETH to Bottom Within Next Few Trading Days
POLITICAL PREDICTION MARKETS PROVIDE PARTIAL RATIONALE FOR PAUSE IN RALLY We see the recent pause in the July rally driven by two factors:General Degrossing Across All Asset Markets: The past couple of days have seen degrossing across all asset markets, including the crypto markets. This is less crypto-specific and more of a function of the market rotating out of strategies (like the long MAG 7) that worked in the first...
BTC AS A POSSIBLE STRATEGIC RESERVE Last week, we discussed the rising political tailwinds affecting crypto. Despite events earlier in the year that might have suggested a changed stance from the Democratic Party, the political divide over the issue has grown stronger. The GOP has become the party that is undoubtedly more favorable to the industry. The attempted assassination of former President Trump, juxtaposed against a Democratic Party seemingly in...
Gox Wallet Movements Still Present a Risk, But Macro & Politics Keeps Us Allocated Here (Core Strategy Rebalance)
DISCUSSING THE SUPPLY CONCERNS On balance, macro conditions have moved in our favor thus far in early Q3. We have received soft jobs numbers and softer ISM reports, and cooler inflation figures, which have sent rates and the DXY lower. Unfortunately, the mere reveal of imminent sales from the German BKA and the solidification of the Mt. Gox disbursement timeline were not enough to put a bottom in for bitcoin....
LESSONS FROM OPEC We have witnessed a significant market panic partially related to formerly locked BTC hitting the order books. The major sources of supply include:Mt. Gox – 141,686 BTCUS Government – 8,100 BTCGerman Government – 50,000 BTC At current prices, this would equate to over $12 billion in supply. This threat, combined with an inhospitable macro backdrop (rising DXY, higher rate expectations, hawkish Fed), has brought BTC down to...