In a tumultuous day of trading, the Dow crashed by 800 points, yesterday, as an ominous recession indicator came to life. For the first time since 2007, 10-year bond yields dipped below 2-year bond yields .
For the record, every time that happened in the last 50 years, a recession followed . We’re the first ones to say that past performance doesn’t indicate future results, but hey, you’ve got to admit that’s a pretty rockin’ track record.
It isn’t just the US standing on the cusp of what seems like an impending recession. Bloomberg had this to say in wrapping up the world’s financial woes:
“China reported the weakest growth in industrial output since 2002. Germany’s economy shrank as exports slumped, and euro-area production plunged the most in more than three years as the overall expansion cooled.”
So, yeah, not looking too hot out there. What does it mean for the cryptocurrency market? Yesterday, the price of Bitcoin (BTC) dropped below $10,200 while ETH, XRP, EOS, TRX, XTZ, and several other blue chips fell off the proverbial cliff. For anyone who is keen to think that crypto markets are decoupled from traditional markets – think again .
At a very fundamental level, the fortunes of all markets are tied together by whichever is the true hegemonic power. While we love crypto, it would be an outright lie for us to claim that digital assets assume more importance, economically speaking, than traditional global markets. With a total market cap that is less than Amazon’s, the cryptocurrency market pales in comparison to global stock markets, which are valued somewhere north of $60 trillion.
Bitcoin is just a drop in the bucket compared to the squidzillions at play in the bigger picture around the world. For those of you who, like us, are living and breathing crypto every day, this may be a hard fact to accept. However, being aware of it will strengthen your position and keep your hand steady. There is nothing financially worse than being caught by surprise.
BTC may act as a store of value during a recession
Bitcoin was born along with the last global recession back in 2008. Satoshi understood the ill effects of centralized finance and knew that bankers were sending the world economy straight for the dumpster.
While the Great Recession hit hard in countries around the world, BTC gained notoriety at first, and then real value right around 2013, when signs of relief from the recession first flickered. The rest of the digital asset market as we know it today emerged during a period of economic expansion and rebuilding in the US, Asia, and many European countries.
As such, the cryptocurrency market hasn’t faced a real recession, so predicting how it will react to a global economic downturn is more or less impossible. However, without recession fears at hand for last year and most of this one, altcoins have performed dismally. It’s highly doubtful that a downturn of the kind anticipated will help matters on that score.
Bitcoin, on the other hand, may perform better than expected. Safe-haven assets like gold and bonds have rallied in recent days. In 2008, the USD jumped nearly 20% against other currencies. Can Bitcoin make a safe-haven case?
Well…“Bitcoin is a remarkably stable and reliable store of value” said no one ever. With all due respect to Anthony Pompliano, it’s possible to be bullish on both Bitcoin and reality.
Look, we definitely puff puff pass the crypto hopium . But believing that people everywhere will suddenly flee for safety into an asset class based on bleeding edge tech defies reason. Then again, if Bitcoin has done anything well over the last decade, it’s defy reason.
Bitcoin’s drop yesterday was understandable. If someone says recession, everyone jumps back. The coming weeks and months will be crucial, though. Do we trend higher as hopes for the global economy sink further? That’s for time to tell.
Self-Professed Satoshi Nakamoto Publishes Part 1 of ‘My Reveal’
A man claiming to be the anonymous creator of Bitcoin has published the first article in a three-part series that will supposedly unveil the identity of the cryptocurrency mastermind known as Satoshi Nakamoto.
In part one of “My Reveal”, the self-professed Satoshi says he grew up in Pakistan, and his father worked at United Bank Limited, a Pakistani multinational bank based in Karachi.
“Nakamoto” says he was deeply affected when the UK’s central bank shut down Pakistan’s scandal-ridden Bank of Credit and Commerce International (BCCI) in 1991, as well as the global financial collapse and great recession that began in 2008.
“On a personal level, when I visited the UK in 2005, no bank would open its doors for me to give me access to a bank account because I didn’t have a permanent UK address. Without a bank account, I had no access to online facilities, and I didn’t know how to overcome this obstacle…
I felt like a failure and was humiliated by the banks so I made it my mission to invent something that would enable a common layperson to access money without involving the big banks. I wanted to empower the poor person, empower the little man, and create something that was accessible as the people’s money – the people’s bank with no boundaries, no nationalities, and no discrimination – where nothing was controlled by the government and where no one dictated and destroyed people for the sake of misplaced politics.
Even a poor kid with limited education could potentially reap the benefits from Bitcoin whilst sitting in China, India or Africa. I was driven to create something that would change finance and the banking world forever and would give people the power, taking away the central banks’ control.”
After studying cryptography, “Nakamoto” says he began to build Bitcoin with Hal Finney in 2006. Finney, a computer scientist who passed away in 2014, is well known for working with Satoshi and famously proclaimed he had successfully started running a Bitcoin node back in 2009.
In the post, “Nakamoto” also publishes images of a computer he claims to have used to mine Bitcoin back in the early days. The computer is a Fujitsu Lifebook laptop, model Fpc04041b.
The post concludes by thanking Finney for his contributions to Bitcoin, and promises to reveal the name and identity of Nakamoto on August 20th.
“Hal knew from day one that I was neither a cypherpunk nor a hard-core techie, but he always said that he liked my sincerity and smartness in things that no one else could envision. He liked when I talked about signs in people and he mentioned that in his last post on the 19th of March 2013 on Bitcointalk.
‘Today, Satoshi’s true identity has become a mystery,’ he said. ‘But at the time, I thought I was dealing with a young man of Japanese ancestry who was very smart and sincere. I’ve had the good fortune to know many brilliant people over the course of my life, so I recognize the signs.’
I think he used this post as a way to communicate with me, as he knew all my emails had been hacked. Unfortunately, by the time I looked at the post in 2015, he was gone forever.”
The digital marketing agency Ivy McLemore & Associates published the piece and claims it’s a transcription of Nakamoto’s words. The New York-based agency has strongly denied the notion that the series is an elaborate PR stunt.
The real Satoshi can prove his identity by signing a message with the address from the very first Bitcoin block. Until then, crypto leaders like Litecoin’s Charlie Lee say they’re taking the new posts from the self-professed Bitcoin creator with a giant grain of salt.
A Break Below $10,100 Means Bitcoin Bulls Are in ‘Big Trouble’ While Above $12k is ‘Hot Air Territory’
- An upside trap before downward continuation, expected target $9,700
- Large accumulation happening after big players took profit at 2019 high
- If Bitcoin breaks above $12,000, bulls will be back into the beast mode
- The upside is “considerably larger than the downside”
On August 16th, the Bitcoin price broke above $10,000 and since then has remained above this level.
Analysts and traders are still calling out for bears and expecting a drop soon.
TraderX0X0 says Bitcoin monthly is holding well but nothing is clear at the moment. While he is not looking for longs, possible shorts from a break or close below monthly.
Currently, BTC/USD is trading at $10,400 with 24-hours gains of 0.59%. But trading volume is back to falling at $634.5 million, as per Messari.
An Upside Trap Before Downward Continuation
On the initial move, bitcoin is most likely to break to the upside as an ascending triangle but this is expected to be a bull trap, said trader Jonny Moe.
An upside trap means downward continuation that will take us to $9,700.According to analyst The Cryptomist, Bitcoin has broken down a rising wedge and now we are testing sym triangle resistance.
“If we break below, (approx 10.1k) then bulls are in big trouble,” she said.
The Cryptomist has previously emphasized on the gap left by CME Group’s Bitcoin futures being the force behind Bitcoin’s drop to $8,500.
However, a drop to this level means 50% retracement of 2019 high move.
As for the gaps, they are not meant to be filled, said economist and trader Alex Kruger.
“Even though gaps often fill, gaps are not meant to be filled. Gap filling is a combination of random variations (price moves), self-fulfilled prophecy (traders assign value to gaps), and lack of support/resistance within gaps (i.e. no trades inside),” explained Kruger.
Large re-accumulation Happening
Despite it being a weekend, Bitcoin is doing nothing new.
We are still waiting for a close below $10,025 that would lean to bearish while a close above $10,800 is bullish for the leading cryptocurrency, said crypto investor and trader Josh Rager.
And if Bitcoin breaks above $12,000, bulls will be back into the beast mode.
“Above 12K price enters hot air territory i.e. little resistance. Price will eventually break out and go vertical before starting to fill in,” said Kruger.
In a separate analysis, Rager shared how the current Bitcoin price movement looks like “one large re-accumulation” happening after big players took profits at $13,900, the 2019 high in late June.
According to him, the price could drop down again but “highly unlikely” that it falls below 20 MA, at high $8ks currently.
In the short term, a drop is expected but the bigger picture is much larger.
“$BTC will eventually break through $20K, in 2020 or 2021, and once it does, it should trade $30K, $40K and $50K fast,” Kruger said.
Why is Bakkt Important For Mainstream Adoption of Bitcoin (BTC)?
- Bakkt get green light from CFTC, to launch Bitcoin futures contracts next month
- Bitcoin Futures, Custody, Payments, & Compliance by Bakkt
- One-day physically delivered BTC futures contracts traded on registered exchange big for Bitcoin
After a year of repeated postponements, we are finally going to have physically-delivered Bitcoin futures.
September 23rd is the day when Bakkt is launching its physically-delivered Bitcoin futures contracts after receiving the green light from the CFTC.
“Transparency and trust to digital assets,” is what Bakkt vows to bring to the cryptocurrency industry which is still in its early stages.
The digital asset platform launched by Intercontinental Exchange, a US company that operates 12 regulated exchanges and marketplaces is expected to be the beacon for the institutional investors.
Bakkt: Bitcoin Futures, Custody, Payments, & Compliance
In the decade long history of Bitcoin, one of the most concerning issues with the crypto industry is the wild swings in prices of crypto assets.
This kept the institutional investors at bay though they have started to make their way in crypto space. But with ICE backed Bakkt making its way into the market while adopting practices employed in the global futures market, more interest from institutions is expected.
Bakkt is partnering with ICE’s leading futures exchange and clearing infrastructure to bring its physically delivered futures contracts to market participants in more than 30 countries. These participants will undergo AML/KYC rules consistent with CFTC-regulated markets.
In addition, “Bakkt will routinely participate in financial and security audits, as well as regulatory compliance reviews.”
As for the custody, it provides secure storage backed by insurance for digital assets held in frozen wallets. Moreover, they are working with leading merchants who recognize the potential of crypto-assets as these new global currencies evolve beyond speculative assets and or a store of value.
A way for large, risk-averse institutions to buy & custody bitcoin
Crypto market is largely designed to serve retail customers rather than institutional participants and Bakkt is bridging the gap — concerns related to lack of regulation, liquidity, market quality, fees, and operational risks — to access this market.
“It offers a way for large, risk-averse institutions to buy and custody bitcoin through an end-to-end regulated system approved by the CFTC and NYDFS, and backed by the sterling reputation of ICE,” said Jake Chervinksy, General Counsel of Compound Finance.
Most notably, these bitcoin futures are physically settled contracts, unlike 98% of futures in the finance industry.
Bakkt is offering an innovating one-day futures contracts, traders will thus take delivery meaning it will be similar to trading spot, as explained by economist and trader Alex Kruger.
The fact that these futures will be traded on a fully regulated exchange, is huge to attract institutions and:
“could thus be an extremely bullish development IF demand is there.”
Bitcoin price meanwhile reacted somewhat positively to the news as we went above $10,500. But BTC/USD is yet again in the red by 0.54% while trading at $10,345.