When it comes to the current Bitcoin price momentum, it is rather evident things may not necessarily evolve in a positive direction moving forward. In fact, the opinions on cryptocurrency prices throughout 2019 are all over the place, although CoinFi co-founder Timothy Tan isn’t too impressed at this stage. In fact, he has identified some potential signs which indicate this most recent drop off was a matter of time.
A Premeditated Cryptocurrency Dump
For as long as cryptocurrency has been around, it appears there have been concerns regarding potential insider trading. Although none of these claims have been proven to be correct – so far – it would appear the number of allegations isn’t necessarily diminishing either. That in itself always makes for some interesting discussions, albeit it also highlights one of the main problems this industry faces right now. Distrust leads to more volatility, which is not necessarily what this industry needs right now.
According to CoinFi co-founder and CEO Timothy Tam, the most recent market dump was somewhat premeditated. While that may be a stretch too far first and foremost, it would appear there is some evidence which can back up these suspicions. Tam identified a massive Ether transfer of 40,000 ETH – worth roughly $5m at the time of the transaction – was moved to an undisclosed exchange prior to the drop off materializing.
While that in itself might not necessarily be a sign of misconduct, it is evident someone was well aware of the Ethereum price declining in the near future and decided to take appropriate action ahead it is materializing. Considering how the latest wave of bearish pressure triggered a near 15% decline for Ethereum, it is evident this one large transaction had its role to play in those proceedings. To date, Tam ha snot confirmed which exchange was involved in the process, but he did state:
“Usually transfer of Ethereum onto an exchange indicates an intent to sell, and if there is a sell-off on one exchange it compounds like dominoes to another because arbitragers will sell immediately on the other exchanges as well.”
Although the overall drop affected Bitcoin and other markets as well, it is evident this Ethereum transaction raises a lot of questions which are not all that easy to answer. One would have expected the Ethereum Classic price to drop significantly following its recent 51% attack, but that only happened once all other major markets started to lose value. A very peculiar trend, but it also shows the markets are not evolving in a rational matter at this time.
Based on the findings by Tam, one has to wonder if this most recent market drop was orchestrated, or just a sheer coincidence. Considering how these drops seem to occur on a very regular basis over the past 12 months, it does appear as if there is some coordination involved to make these market drops succeed in spectacular fashion. Proving anything nefarious is going on will always be the main problem, though.
Swiss Bank Allowing Crypto Access is a Win for Bitcoin
The well known Swiss Bank, the Julius Baer Group AG, announced to allow its users to access cryptos by partnering with SEBA. SEBA is building a progressive technological bridge between the traditional and the digital asset world, raised quite a handsome amount of $103 million back in September, 2018. The raised funds are to be poured into the project to allow the users the liberty to transact cryptos through the banking system.
The Swiss bank, Julius Baer, is among the very first banks to allow such a crypto transaction facility within the banking arena. During the tenure of the cryptos, there has been a major rush over the fact that cryptos need mass adoption real fast. This can be carried out if cryptos are readily available for the use, triggering easy access. The Swiss bank incorporating cryptos is a similar move that bears the potential to bring in a massive amount of users to buy into the crypto market. The Julius Baer Group possesses a total of 254 billion worth of assets under management in pure corporate banking terms
SEE ALSO: JPM Coin is a ‘Failed’ Attempt to Redefine the Ideology of Bitcoin & Cryptos
Recently J.P. Morgan came to limelight when they announced to launch their own blockchain based stable coin (backed by USD) that goes by the name of JPM Coin. JPM Coin will be used to settle payments and transactions for JPM’s institutional clients over the blockchain. Another big news graced the internet when Facebook also announced their own Facebook coin for their Whatsapp userbase. Through Facebook Coin transfer of money within a country and across the globe can be made easier for the general public.
Silvergate Bank Adds 59 Crypto Clients, But Deposits Down $123 Million
Silvergate Bank, one of the few U.S. financial institutions that actively serve cryptocurrency businesses, added 59 such clients in the fourth quarter, but its deposits from the industry shrank 8 percent.
According to an updated IPO prospectus filed with the Securities and Exchange Commission, as of Dec. 31, the San Diego-based bank had 542 clients in the industry, including crypto exchanges, institutional investors in digital assets, and others. That’s up from the 483 crypto clients as of Sept. 30 that Silvergate counted when it first filed to go public last year.
Among the new crypto clients signed in Q4 were two exchanges, 24 investors and 33 firms in a miscellaneous category that includes blockchain protocol developers, miners and service providers, according to the updated prospectus.
For the first time in an SEC filing, Silvergate identified some of these clients, a few of which were previously not publicly known to be bank customers: market maker Genesis Trading and investment funds Kenetic and Polychain Capital.
Earlier published reports have noted that the bank worked with bitcoin wallet provider Xapo, diversified crypto startups Paxos and Circle, and exchanges Gemini, bitFlyer, Kraken, Coinbase, Bitstamp and Bittrex.
Despite the growth in crypto clientele, the amount of U.S. dollars these customers held in their Silvergate accounts declined by $123 million in the fourth quarter, from $1.593 billion on Sept. 30 to $1.470 billion on Dec. 30.
This shrinkage came entirely from the exchange category, where account balances declined by $174.4 million, to $618.5 million. while deposits from the other two groups grew. Crypto investors’ deposits increased $4.8 million to $577.5 million and other startups’ balances grew $46.4 million, to $273.9 million.
Crypto-related businesses not only make up the main customer base of Silvergate but also own 13.1 percent of the bank’s stock. Silvergate’s 10 largest clients had $843.6 million of deposits at the bank – roughly 4.. percent of the total – and nine of them are crypto businesses, the latest filing said. Further, the 37 cryptocurrency exchanges using Silvergate account for 34.7 percent of its total deposits.
For the full year, Silvergate noted, deposits from digital currency clients increased $150.4 million, or about 11.4 percent – even as the price of bitcoin crumbled from over $13,000 to less than $4,000 over the same period, suggesting that the bear market didn’t impede this bank’s growth in 2018 as a whole.
Is The Crypto Winter Coming To An End?
Questions are being asked constantly when it comes to Bitcoin’s battle with the $4000 mark. The result of this battle sets the tone for a bullish or bearish trend. Since December 14, 2018, there have been several battles between bulls and bears at the price level of $4K. In each of this battle, bulls have lost the war because, after the first attack at the $4K level, the bears have been able to gain enough strength to push the price back below this critical mark. It is in this essence, that this level has become a matter of death or life for crypto traders.
If you are a long-term investor, you will not really worry about these short-term levels. The element of risk premium is of critical importance here and I find this immensely interesting. For simplicity’s sake, consider this as a premium that one is willing to pay over the previous low which would have been a better entry price. For instance, the price of Bitcoin at the time of writing this article is trading at 3962 and the recent meaningful low was formed on March 4 when the price touched the price level of $3671. The difference between the two is your risk premium. We all know that it is extremely arduous to catch the extreme low. It is all about making an intelligent choice and buying when the price is still close enough to its bottom. For investors who are buying at these levels, they usually have a target of previous high, and for Bitcoin, it needs to be the level of 20K.
This is because there is a high chance that the next bull run has a minimum potential of pushing the price 5 times higher. That is over $100K. I personally believe that each Bitcoin can go up as much as $400K and if history repeats itself, this number is not a fool’s paradise. This is a simple math calculation: approximate percentage projection of the price which we experienced during the last bull run.
Why am I saying that crypto winter is coming to an end?
Well, before I go and talk about fundamentals, the below chart shows the percentage drop for the Bitcoin price after its major rallies. Back in 2011, the price plunged nearly 93 percent and in 2014, it dropped 84 percent. As for the most recent price crash, we have experienced the smallest price crash, 79 percent from its recent high. The most important part is that the price has started to rally back up. This argument becomes even more clear when we look at the bottom panel of this chart. The drawdown percentage curve is much higher now (shown in green circle) as compared to what happened back in 2011 (shown in red circle).
Similarly, if we look at the monthly gains of Bitcoin and plot this on a chart (as I have done this in the chart below), it becomes clear that Bitcoin has broken its longest streak of monthly losses. This is the strongest signal for the bulls that crypto winter is no longer as cold as it was back in December or November.
Another major bull signal comes from the weekly chart as I discussed before, the 200-week moving average (shown in green) has saved the day for the bulls. The 50-week moving average (shown in pink) is moving fast towards the price to close the distance between them. Now, if the price kisses the 50-week moving average goodbye and moves above it at that stage, all bets would be in favour of the bulls. Looking at the chart, when the price breaks above the 50-week moving average, it sends the strongest bull signal and so far it has worked really well. But this is something that we would have to wait and see. It may take a couple of months for this to happen.
As for the fundamental aspect, there is absolutely no shortage of positive news. We are seeing more actual use cases of blockchain technology now than ever before. For instance, TreeCoin is one of the strongest projects out of Switzerland which is using an asset class that has performed extremely well. The project is going to tokenize timber, and this would improve the liquidity and most importantly save the environment with their German technology of reforestation trees. The action is not only limited to start-ups, but more and more major firms are jumping in this space. The battle to own the custody space has become even more intense with IBM also stepping into this space.