- The SFOX Multi-Factor Market Index has moved from uncertain to mildly bullish as of July 9th, 2019.
- Facebook’s Project Libra took center stage, highlighting both institutional interest in crypto and the persistent use case of Bitcoin as a decentralized currency.
- Rumors of Bitcoin’s current volatility have been exaggerated: we’re actually experiencing a downward trend in Bitcoin’s volatility peaks since 2017.
- LedgerX and ErisX were approved by the CFTC to offer physically settled Bitcoin futures contracts, indicating crypto’s continued financial maturation.
- Bitcoin’s performance during the Fourth of July appears to provide a further data point for SFOX’s thesis that Bitcoin appears, at least anecdotally, to have a positive relationship with holidays during bull runs.
- Watch for Senate/Congressional hearings, new innovations in futures, and updates to major blockchain protocols to potentially impact the crypto market in the coming month.
In the June 2019 edition of our monthly volatility report, the SFOX research team has collected price, volume, and volatility data from eight major exchanges and liquidity providers to analyze the global performance of 6 leading cryptoassets – BTC, ETH, BCH, LTC, BSV, and ETC.
Note: In order to better report and analyze the entirety of the continued crypto rally, the team at SFOX has extended the period this report covers from the beginning of June through July 9th.
Current Crypto Market Outlook: Mildly Bullish
Based on our calculations and analyses, the SFOX Multi-Factor Market Index, which was set at uncertain at the beginning of June 2019, has been moved to mildly bullish as of July 9th, 2019.
SFOX Multi-Factor Market Index, June 2019
Analysis of June and Early July 2019 Crypto Performance
- Facebook announced the details of its cryptocurrency Project Libra, which signaled the interest of major companies in crypto and coincided with the beginning of the current rally (June 18th).
- Bitcoin’s 30-day historical volatility cleared 80% for the first time since last December – but it’s far from being “more volatile than ever” (June 30th).
- LedgerX and ErisX received approval from the CFTC to offer physically settled Bitcoin futures (June 25th; July 1st).
- The Fourth of July saw a bump in Bitcoin’s price, reinforcing the view that major holidays falling on bull runs may potentially correspond to temporary boosts in Bitcoin’s price.
What to Watch in the Rest of July 2019
Look to these events as potentially moving the volatility indices of BTC, ETH, BCH, LTC, BSV, and ETC in the remainder of July and early August:
- Senate and House meetings on Facebook and Project Libra (July 16th – 17th)
- Bakkt initiating user acceptance testing for physically settled Bitcoin futures via ICE (July 22nd)
- Default block size cap of Bitcoin SV increased to 2 GB (July 24th)
- CME BTC futures last-trade date (July 26th)
- Litecoin block reward size cut in half (August 5th)
The Details: June 2019 Crypto Price, Volatility, and Correlation Data
Price Performance: A Bitcoin-Dominated Rally
Bitcoin is the headline of the ongoing crypto rally. The largest cryptocurrency by market cap opened June 2019 at a price of $8542.45; as of July 9th, it had risen to a price of $12490.74.
As of July 9th, BTC/USD led all asset pairs tracked by our report in month-over-month growth at 57.81%. ETH/USD followed with 26.94% month-over-month growth, with gold in third place at 11.01% – compared with 3.49% for the S&P 500. Ethereum Classic had the distinction of being the only asset tracked by our report with negative month-over-month growth as of the 9th (-5.95%).
Volatility: Riding Bitcoin’s Waves
By looking at the 30-day historical volatilities of BTC, ETH, BCH, LTC, BSV, and ETC, we see that the volatility of most major cryptoassets formed a relatively tight band that saw a sharp uptick on June 26th – the day BTC challenged the $13,000 price barrier. This increase in volatility may be related to the expiration of BTC futures contracts on June 28th, especially because these expirations included BitMEX’s quarterly contract.
The exception to the general volatility trend was Bitcoin SV, whose outsized volatility decreased throughout the month to more closely align with the rest of the market; this may potentially be a consequence of debate over Craig Wright being overshadowed by broader market news such as Facebook’s Project Libra and BTC’s rally.
Volatility of Leading Cryptoassets, Gold, and S&P 500, June 1st – July 9th, 2019
30-Day Historical Volatility of BTC, ETH, BCH, LTC, BSV, ETC, Gold, and S&P 500
By looking at the 30-day historical volatilities of ETH, BCH, LTC, BSV, and ETC as a percentage of BTC’s 30-day historical volatility, we can see more clearly that most altcoin volatility was following BTC’s volatility, with BSV starting to follow BTC near the end of June.
Relative Crypto Volatilities, June 1st – July 9th, 2019
30-Day Historical Volatilities of ETH, BCH, LTC, BSV, and ETC, Divided by the 30-Day Historical Volatility of BTC
Price Correlations: Bitcoin Positivity
BTC’s 30-day price correlations with ETH and BCH were both relatively positive as of July 9th. In contrast, BTC has an unusually negative correlation with Litecoin. This reinforces the narrative that, throughout 2019, Litecoin may be establishing itself as an asset with fundamentals independent of Bitcoin.
For a full crypto correlations matrix, see the following chart.
30-Day Correlations of BTC, ETH, BCH, LTC, the S&P 500, and Gold
July 9th, 2019
You can check out the full SFOX Crypto Market Volatility Report: June 2019 here.
Bitcoin (BTC/USD) forecast and analysis on October 18, 2019
Cryptocurrency Bitcoin (BTC/USD) is trading at 7991. Cryptocurrency quotes are trading below the moving average with a period of 55. This indicates a bearish trend on Bitcoin. At the moment, cryptocurrency quotes are moving near the lower border of the Bollinger Bands indicator stripes.
Bitcoin (BTC/USD) forecast and analysis on October 18, 2019
As part of the Bitcoin exchange rate forecast, a test level of 8200 is expected. Where can we expect an attempt to continue the fall of BTC/USD and the further development of the downward trend. The purpose of this movement is the area near the level of 7260. The conservative area for Bitcoin sales is located near the upper border of the Bollinger Bands indicator strip at 8420.
Cancellation of the option to continue the depreciation of Bitcoin will be a breakdown of the upper border of the Bollinger Bands indicator stripes. As well as a moving average with a period of 55 and closing of quotations of the pair above the area of 8540. This will indicate a change in the current trend in favor of the bullish for BTC/USD. In case of breakdown of the lower border of the Bollinger Bands indicator bands, one should expect acceleration of the fall of the cryptocurrency.
Bitcoin (BTC/USD) forecast and analysis on October 18, 2019 implies a test level of 8200. Further, it is expected to continue falling to the area below the level of 7260. The conservative area for selling Bitcoin is located area of 8420. Canceling the option of falling cryptocurrency will be a breakdown of the level of 8540. In this case, we can expect continuation growth.
Bitcoin re-enters $8,000-zone, but what is its upside potential? – Confluence Detector
- BTC/USD went up from $7,998.50 to $8,077.50 this Thursday.
- The daily confluence detector shows two healthy resistance levels to overcome on the upside.
Following two straight bearish days, which took the price below the $8,000-zone, BTC/USD is on the course to recovery. Bitcoin had gone up from $7,998.50 to $8,077.50 this Thursday before it improved further to $8,087.40 this Friday. The hourly BTC/USD chart shows us that the market found intra-day resistance at $7,943.15 before it bounced up to $8,075. Since then, the price trended horizontally for a bit, negotiating with the $8,090 resistance line. The bulls managed to rally together to break past it and go up to $8,110, before correcting itself to $8,087.40.
BTC/USD daily confluence detector
The daily confluence detector has two healthy resistance levels at $8,190 and $8,260. $8,190 has the five-day Simple Moving Average (SMA 5) and one-week Fibonacci 61.8% retracement level. $8,260 has the SMA 100, one-day Pivot Point resistance two and one-day Bollinger Band middle curve.
On the downside, there is a support level of note at $8,065, which has the SMA 5, SMA 50, SMA 200, one-hour Bollinger band middle curve, one-day Fibonacci 38.2% retracement level and one-hour previous low.
Bitcoin could become store of value, as institutional interest increases
Institutional interest in Bitcoin has seen a significant rise in 2019, as several derivative financial products on top of Bitcoin have flooded the market. Active exposure of these investors to the digital asset realm has brought back the debate about whether Bitcoin is the new “store of value.” According to Grayscale’s managing director Michael Sonnenshein, there has been a certain shift in perception for sure.
Sonnenshein appeared on ‘The Scoop‘ recently to discuss the impact of institutional investor’s exposure to the digital asset class. The managing director of the firm believed that although Gold has been the standard store of value for centuries, and it made sense in the physical age, but given the rapid growth of the digital monetary age, Bitcoin for sure is challenging to become the new store of value. He explained,
“It is now nearly 2020 and we’re starting to ask investors with this question which is, what constitutes a store of value? It historically has been gold but that may have made more sense for a physical age. As we are in fully immersing ourselves now in this digital age perhaps gold doesn’t hold up as much as it once did as that store of value and perhaps investors need to think about a digital store of value such as Bitcoin.”
Institutional investors hold the key for Bitcoin and any other digital asset to gain mainstream adoption, and as of today they are more aware and learned about Bitcoin and its potential as an investment than ever before. More importantly, these investors are using Bitcoin as a hedge fund and store of value to diversify their investment portfolio as well as make quick capital gains on their investment.
The increasing interest of institutional investors is evident from the fact that GrayScale registered its highest gain in the last quarter with over $250 million raised from the investors, Binance has registered the highest daily volumes of over $700 million from its Binance futures platforms. Bakkt has launched its futures contracts recently while CME’s futures contracts year-to-date volumes have seen a significant rise over the past year.