Author: marketanalysis

By Nicolas Abington | Crescent City Capital Market Analyst Intern

Low Volatility

According to calculations by Blockforce capital, Bitcoin’s price volatility has recently reached a 4 month low of 53.3%. For clarification on the calculation, volatility is being measured by multiplying the asset’s standard deviation, in this case, Bitcoin’s standard deviation, by the number of days in a trading year. While low volatility creates lulls for active investors in the crypto space, Bitcoin has a long history of consolidation phases followed by extreme price movements. As we watch Bitcoin, the question to focus on is if the bulls or the bears are going to be leading the next wave of volatility.

Binance Entrance to the US

The largest crypto exchange in the world by volume is going to be making its US debut on September 18th. The exchange Binance will be opening accounts to US citizens (except New York) as long as they provide their valid government ID and Social Security numbers upon sign up. The exchange will let US citizens trade 6 crypto assets at launch, which are BTC, ETH, XRP, BCH, LTC, and USDT. Even with Binance’s sketchy past of leveraging Binance coin to use the exchange effectively, additional exchanges being available to more potential investors is always positive in the crypto space.

“Bitcoin’s Boring Again. Is $10,000 BTC’s Yawn-Worthy New Normal?” By Will Heasman  September 11, 2019

https://www.ccn.com/bitcoins-boring-again-is-10000-btcs-yawn-worthy-new-normal/

“Binance U.S. to start accepting account registrations; will initially support 6 assets” By The Block September 11, 2019

https://cointelegraph.com/news/binance-new-interface-screenshots-appear-to-confirm-margin-trading-testing

By Nicolas Abington | Crescent City Capital Market Analyst Intern

Bitcoin dominance hits 26 month high as it achieves 71% of Crypto market capitalization, a bullish signal that was last seen when bitcoin prices were approximately $1290 per ₿1.Bitcoin has been on a steady increase in dominance since it broke a previous barrier of 69% towards the end of August.   

As momentum builds for Bitcoin, Altcoins are suffering major losses in value from -1.62% changes to as much as -18.96% over the past month. These things considered we have to realize the vast power Bitcoin is currently displaying over the crypto market and should watch Altcoins closely as this trend continues.

https://cryptopotato.com/bitcoin-dominance-crosses-70-for-the-first-time-since-march-2017/

https://coinmarketcap.com/charts/#dominance-percentage

https://www.tradingview.com/markets/cryptocurrencies/prices-all/

By Crescent City Capital Team

In the broader cryptocurrency complex, the story continues to be one of widening spreads.  The relative value of Bitcoin (BTCUSD) versus its two primary alternative counterparts, Litecoin (LTCUSD) and Ether (ETHUSD) has widened significantly over the last several months.  We first noted this trade in late July, and it has gained momentum since then.  

The Ether-Bitcoin spread (ETHBTC) fell below 0.01725 last week (~58 Ether equates the value of 1 Bitcoin).  Similarly, the Litecoin-Bitcoin spread dropped to nearly 0.0065 (~154 Litecoin equates to the value of 1 Bitcoin).  These moves can be seen in Charts 1 and 2 below (Source: Trading View). 

Since July 1^st, Ether and Litecoin has lost nearly -25.9% and -32.6% of their value relative to Bitcoin, respectively.  This is especially remarkable after LTCUSD led the advance in cryptocurrencies earlier in the year, with a year-to-date price increase 89 percentage points higher than BTCUSD, as of April 6^th.

Given the precipitous decline in the alternative cryptocurrencies, its encouraging to note that BTC has held up fairly well over the last several weeks.  The decline in total volume also suggests that heavy handed buyers and sellers might have been out of the market over the past month.  Table 1 below shows the total volume of BTCUSD traded in the month of August 2019 (adjusted to account for two days remaining), versus the last twelve months.  The month of August has seen an approximate -20% decline in volume, in USD terms, versus the three prior months, registering approximately $554 billion in trades. (Source: Coinmarket Cap).  

It is not unusual for markets of any variety, crypto or otherwise, to consolidate and retrace after significant run-ups, such as that seen in the first six months of 2019; whether the moderately soft performance of BTCUSD since July 1^st, and significant declines in alternative cryptos, extends into the future remains to be seen.  Market dynamics are constantly changing, and some analysts have suggested that the loss in value of ETHUSD and LTCUSD relative to Bitcoin will extend.  Regardless, with August’s global BTCUSD volume up 160% versus the average seen in January through March of this year, the theme of the market continuing to develop and attract new capital is intact.

By Jing Zhu | Crescent City Capital Market Analyst Intern

Chinese Yuan Falls[1]

Last Monday, China let the value of the yuan drop sending the currency above 7 CNH per USD. This decade-low marked a significant point in the US-China Trade War, resulting in a tumultuous stock market and a spike in US government bonds. Investors fear immense market volatility, especially because China may use the yuan as a trade-war weapon by manipulating its price.

Chinese-Issued Cryptocurrency[2]

According to Bloomberg, China is planning on releasing its own nationally-issued cryptocurrency. This digital currency would replace cash in circulation and support the internationalization of the yuan. China intends for this currency to give it more control over its financial system. Another point of interest is that the timing of this event occurs subsequently after the Libra release. Sun Tianqi, an official from China’s State Administration of Foreign Exchange, states that “Libra must be seen as a foreign currency and be put under China’s framework of forex management”.

Effect of Yuan on Bitcoin

Bitcoin has earned a reputation of “digital gold” because it has store of value. Many consider it to be an asset to invest in when the markets are unstable because it acts as a hedge. Given the market volatility caused by the fluctuating price of the yuan, as well as increased animosity between US and China, investors turn to Bitcoin to protect their wealth. Although Bitcoin itself can be unpredictable, people may flock to it when financial institutions and governments prove to be even more unpredictable. As a result, Bitcoin price may increase during this trade war, which Goldman Sachs predicts will continue through the 2020 Presidential Election.

Effect of Digital Coin on Bitcoin

As for the impending launch of China’s new digital coin, it is clear that China wants as much control as possible. Physical fiat money like cash, by nature, can be difficult to track down and manage, especially involving peer-to-peer transactions. By replacing cash in circulation with digital currency, the Chinese government can oversee all transactions. One can argue that this new currency should not be considered cryptocurrency because there is no decentralized network. The money eventually passes through one entity, and that is the Chinese government, which has had strict capital controls in place for many years. With Bitcoin, although there is regulation, there are no such government capital controls. This may make it even more attractive to investors.  

[1] “As Yuan Takes a Hit, Bitcoin Rises Up to Shine” by Jet Encila for Business Times published 8/12/19

[2] “China’s PBOC Says Its Own Cryptocurrency Is ‘Close’ to Release” by Yinan Zhao and Eric Lam for Bloomberg published 8/12/19

By Jing Zhu| Crescent City Capital Market Analyst Intern

Bitcoin Needs Weekly Close Above $12,000[1]

Compared to last week, Bitcoin price has definitely made a short-term recovery. It is currently trading at $11,615. However, it needs to close above $12,000 this week if traders want to revive the bullish momentum. The repeated failure to do so indicates that bullish momentum is weakening. Key support is found at $11,200. A drop below that level in the next day or so decreases the chance of Bitcoin closing above $12,000. However, if it does achieve that breakthrough, then it may be possible to see another level of resistance at $15,00 (which was the January 2018 high).

Ethereum Setting Up for Price Rally[2]

Ethereum is currently trading at $225.835, which is 4.2% lower than the $235.747 on August 6, 2019. Although the bulls regained momentum in the beginning of August, the bears are still making their presence known in the market. The bulls are fighting for control to break the next level of resistance at $230. The performance of Ethereum in the next few days will likely determine its price movement for the rest of the week.

Litecoin: Post-Halving[3]

504 blocks have been mined, making the hash rate 97%. After Litecoin’s halving event earlier this week, its grip on the market strengthened. However, the overall performance of the market has dragged down its price quite a bit. Just after the halving, the price spikes up to $104, but then has been in steady decline since. Right now, Litecoin is trading at $92.194, which is a 6.22% decrease. Immediate support is at $90.16.

[1] “Bitcoin Needs Weekly Close Above Touch $12K Hurdle to Restart Price Rally” by Omkar Godbole for Coindesk published 8/7/19

[2] “Ethereum Price Analysis: Will August Bring in the Much Needed Rush for Ethereum (ETH)? by Ruti Vora for CryptoNewZ published 8/8/19

[3] “Litecoin Price Analysis: Market Fell by a Substantial Margin, Also Attracts Litecoin (LTC) by Roxanne Williams for CryptoNewz published 8/8/19