Will the 20s be the decade of Cryptos?
10 Jan 2020
9 min read
A decade of crypto
Bitcoin did not break the dream level of 100k USD and will most likely not reach it in the foreseeable future. Nevertheless, even the biggest critics of cryptos did not expect that Bitcoin to survive and to trade at a price 7 times higher than in it did in 2014. Those critics have preached that regulation, taxation, and many other menaces will hammer once and for all the last nail in the coffin of cryptos. But, it seems that those views are far from becoming a reality and both critics and sycophants and advocates would need another decade to understand the nature of Bitcoin and crypto-assets in general. The new decade starts in an environment of global political torment, which will push investors to look for safe harbor investments. And this might be in the long run the main catalyst of cryptocurrencies.
Unrest in the Middle East bolstered the Bitcoin price
The main cryptocurrencies including Bitcoin, Ethereum gained altitude amid
increasing tensions between the US and Iran over the past week in positive.
The recent escalation of the Middle East situation, igniting the flames of a
potential military conflict in the region brought momentum to Bitcoin
Thus, since last December Bitcoin found a new support level at 7,739 USD and broke the psychological barrier of 8,000 USD. This move is driven by investors which increased tactically their portfolio allocation in cryptos perceived in the current state of affairs as a safer haven. Over the last week, Bitcoin breached the upper Bollinger band and entered in an area of unstable supply-demand equilibrium.
Moreover, the perspective of additional US sanctions against Iran brought in the market a significant number of speculators. They are assuming that Bitcoin would be used for money transfers between Iran and the rest of the world when the American sanctions will add more restrictions and surveillance for banks dealing with Iran and related countries.
This hypothesis is supported by the recent announcement of the Qatar Financial Centre Regulatory Authority stating that all financial services involving cryptocurrencies became illegal in the country. Qatar, once seen as a pioneer in adopting cryptos and blockchain technologies fears that with the conflict escalation in Iran and the potential resurgence of terrorism in Irak, cryptocurrencies may become the main vehicle for laundering funds and financing terrorism.
Crypto-world at a glance
Tokenization in professional sports
Should Cristiano Ronaldo have his token? He may not need one at this point. But, Brooklyn Nets guard Spencer Dinwiddie does need one. Thus, he decided and got the approval to be able to tokenize his professional contract.
Dinwiddie announced last year that he would tokenize his three-year, 34.5 million USD contract on the Ethereum blockchain, looking to raise 13.5 million USD for the first year. How does it work? The investors buy token linked to hi professional contract and receive payments throughout the season depending on his performance on the pitch. This initiative could be a game-changer for many professional athletes and clubs. For instance, AC Milan can exit from the current hiatus by tokenizing the contracts of its players, given the fact that the fans may be wealthier than the current investors.
Troubles for Telegram’s ICO
Telegram, the Russian "WhatsApp" raised 1.7 billion USD in an ICO pre- sale of tokens between February and March 2018. The American market regulator (SEC) accuses the London-based company that has allegedly sold tokens after the ICO closing, thereby entering under the incidence of unregistered securities regulation (Regulation D).
The European Securities and Markets Authority (ESMA) has announced to work on developing sound regulation around cryptocurrencies and tokenized assets as part of its 2020 priorities. ESMA regulates the traditional financial markets and the underlying financial instruments. ESMA sticking its nose in the crypto is not necessarily a positive thing. If cryptocurrencies are deemed as financial instruments as equities or FX, the whole crypto-paradigm will change massively. This could push a lot of the current market players toward the exit and open widely the doors for traditional investment banks.
Coins of the week
Bitcoin Cash and Satoshi Vision
Bitcoin Cash and Satoshi Vision moved into positive territory since mid-December 2019 with an increase of over 30 and 80 percent respectively. Other than the Middle East tensions the surge of Bitcoin Cash seems to be linked to a recent document submitted to US court by, Craig Wright, the self-proclaimed inventor of Bitcoin. The Australian cryptographer may seemingly control an investment trust holding 10 billion USD in Bitcoin. Speculators imply that he would hold also detain a significant amount in Bitcoin forks, thereby boosting the prices of Bitcoin Cash and Satoshi Vision.
Nevertheless, in the global picture of Bitcoin evolution, this recent rally of Bitcoin’s forks is highly speculative and may be the result of a pump-and-dump scheme aimed to extract few quick dollars in the dawn of this year.
The evolution of the US-Iran conflict will remain most likely the main driver of the cryptocurrency price over the next month. Bitcoin climbed in the first weeks of 2020 into the green. Is this trend sustainable? With the American election on the horizon, the global political unrest is not likely to cooldown and for sure will bring more turmoil. Global traditional markets and especially commodities are expected to enter a region of increased volatility. Therefore, Bitcoin prices will try to test the 8500 USD resistance level following a volatile trajectory. Bitcoin’s trend will animate in the short-run the other coins including Ethereum and Litecoin, but with a lower level of volatility. In the long run, under if the current market configuration remains unchanged, Ethereum would remain in the current price cluster, thereby experiencing a decoupling from the Bitcoin complex.
We expect Bitcoin Cash to return to the normal level after the mini- bubble initiated during the past week will explode. Thus, Bitcoin Cash may fall below the support level of 220 USD over the 10 days before returning on Bitcoin’s pattern. XRP is expected to keep the same pace oscillating around the current value of 0.21 USD.
The information and data published in this research were prepared by the market research department of Darqube Ltd. Publications and reports of our research department are provided for information purposes only. Market data and figures are indicative and Darqube Ltd does not trade any financial instrument or offer investment recommendations and decision of any type. The information and analysis contained in this report has been prepared from sources that our research department believes to be objective, transparent and robust.