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Trading analysis №3 by Darren Chu, CFA

Bitcoin (BTC/USD) Consolidating After Massive 1st Half 2019 Rally

Bitcoin (BTCUSD) continues consolidating as H219 nears completion, with BTCUSD still a bit overbought on the weekly and daily charts after its massive H119 rally.   Now that BTCUSD bulls have reclaimed the key 8k whole figure level (which it briefly broke above 2 weeks back), they are undoubtedly eyeing the next major upside targets of 9k and the psychologically key 10k whole figure.  The weekly MACD is still sloping up, suggesting the overbought weekly RSI and Stochastics are more likely a reflection of ongoing consolidation.

Industry Fundamentals

Facebook is accelerating its discussions with regulators, the largest US crypto exchanges, and some of the world's largest marketmakers - Jump and DRW - as it looks to raising USD 1B for its stablecoin "Globalcoin" project.  Fidelity's institutional crypto trading offering is expected to be live in the next few weeks, with retail brokerage giants Etrade and TD Ameritrade also preparing to launch trading in a few top coins.  The market is increasingly shrugging off the fears around Bitfinex covering up losses with funds earmarked for backing Tether (USDT), especially as it has apparently already received commitments for USD 1B in its current raise to offset funds frozen by US, Polish and Portuguese authorities.  With liquidity on USDT significantly higher than newer, competing USD-backed, audited stable coins due not in small part to USDT enjoying first mover advantage and the network effects from having the longest established history, the market appears to be largely sticking with using USDT which is listed on more crypto exchanges and offers superior liquidity.  Longer term industry bulls are increasingly buying on dips as the sector overall gains interest from IBM's use of Stellar Lumens and a USD stablecoin as part of the World Wire blockchain network for regulated financial institutions (announced in March).  Ongoing anticipation is building for the coins being developed by leading messenger apps (i.e. Facebook/Whatsapp/Instagram, Line, Kakao) and banks (i.e. JP Morgan, Mizuho, Bank of Tokyo-Mitsubishi UFJ).  The launch of BAKKT has been delayed multiple times with no announced target go live date.  A race continues to launch STO exchanges and consultancies ahead of increasingly regulatory clarity on STOs.

Bitcoin Fundamentals

BTCUSD bulls are anticipating the third Bitcoin block reward halving (which will reduce the amount of new BTC supply) May 2020 but which has historically (for the 2 other halving events) seen bull runs begin roughly 1 year in advance of the halving date.  The Bitcoin blockchain itself continues to benefit from Lightning Network-related scalability improvements.

Bitcoin (BTC/USD) Weekly/Daily

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As seen on BloombergRefinitiv (Thomson Reuters), Factset, Interactive BrokersInside Futures, Amazon, Liquid (Quoine) and  Zerohedge.

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