Each quarter, Obvious Capital sends out a letter to our investors and followers, updating them on the performance of the crypto markets and on the most relevant news that happened all around the crypto ecosystem.
From April to June, we’ve watched Bitcoin lead the pack and recover from $3,500 USD back to a 5-digit figure. An astonishing recovery that illustrates well the typical volatility that digital assets tend to present.
With the plausible end of the bear cycle, digital markets have grown from $145 Bn to $345 Bn in just a quarter duration. Bitcoin also has re-gained a wider share of its dominance, growing from 52% to above 62%.
Crypto Market Performance — Technical Overview
This has been quite a massive quarter in terms of performance, along with a lot of unexpected good news and some brand new challenges.
Firstly, Bitcoin has experienced a major bounce from the (presumably) cycle lows at $3,100 USD. Crypto insider talks, back in March of this year, assumed a total success of finishing out the bear period if solid closes above $6,500 were seen. And, literally, no-one was expecting for such a following run-up during this second quarter.
Good news usually come with a challenge. And this time it wasn’t different. In particular, at Obvious Capital, we faced the problem of having to turn around many client’s accounts (that were mostly in Fiat), to increase their crypto-exposure and to take advantage of the bullish signals that markets were starting to exhibit. That demanded considerable effort from us, in order to re-align the accounts to the new market condition.
Gladly, we were able to obtain early signals of the upward trend that was brewing and boiling on the background. Our proprietary Market State indicator and study did a pretty good job at anticipating the move with enough time for us to prepare the accounts.
Looking retrospectively, Bitcoin has been crushing resistance zone after resistance zone with relative ease. A few notable mentions: $5,000 area, $6,500 area, $7,500 area, $8,500 area, $10k area, and $12k area.
This (almost) vertical growth has produced severe gaps in CME regulated markets. Further, it’s a well-known tale in technical analysis that once a critical area gets breached without almost no friction, a re-test is due from the other side. Therefore, although we’re impressed and remain positive about that exponential growth, it also opens up a possible scenario of a pullback during Q3 that would re-test these broken areas, before resuming the upper trend.
Crypto Market Performance — Fundamental Overview
On the fundamental side of the equation, we have been also flooded with plenty of positive news. One of the most exciting, and abnormally least shared through media, is the closing of Q2 with an all-time record value for Bitcoin Hash Rate — the amount of computing power dedicated to secure the Bitcoin blockchain. The same all-time high was also established for the Mining Difficulty.
In our perspective, those facts clearly signal that the market insiders (miners) are bullish and predominantly positive about the future of the Bitcoin Network. Accumulation is happening and, behind the scenes, they have in mind the next Bitcoin halvening, expected to happen during May of 2020.
Institutional grade funds are flowing into new mining equipment and an abnormal number of start-ups are offering a wider commercial offering, attracting capital from every single type of investor. That spells business with capital letters and one just needs to follow the track of the money.
Highlights from the Press
One the news side, it’s been quite an entertaining quarter. To mention the most notable ones and maintain this section to a reduced number of paragraphs is a tough exercise:
- Starbucks, Nordstrom and Whole Foods started accepting Bitcoin as payment using an in-store scanner provided by Gemini and an app called Spedn, built by payments startup FlexaHQ. AT&T mobile carrier also followed that lead and started to accept payments in cryptocurrency.
- A serious hack in Binance happened, which is currently the main retail crypto exchange. After that, it also stopped accepting US costumers, planned to open a US exchange, and confirmed margin trading.
- Tether was threatened by the USA administration because it is apparently not backed up 100% by Fiat.
- Major global institutions launched their own version of a blockchain through the umbrella of Facebook’s Libra. The new coin, scheduled to launch in 2020, will be a stable coin, backed by a mix of sovereign currency and short-term debt instruments.
- Microsoft launched a decentralized identity tool on Bitcoin Blockchain called ION.
- Bakkt to accept users for testing their BTC Futures on 22 of July.
- Amazon filed a proof-of-work patent using cryptography.
- SEC postponed VanEck bitcoin ETF.
- Goldman Sachs plans to launch a stable coin.
Despite some negative news and FUD around, Bitcoin has shown proofs of its inherent anti-fragility. And that’s a solid takeout from Q2 of 2019.
What will bring us Q3? We’re working with a few possible scenarios. The most bullish ones are pointing to a target area between $15k up to $16k, where there are some interesting harmonic confluences, from a technical analysis perspective.
On the least bright side of the equation, there is also some plausibility that a Summer pull-back may happen, leading the prices to revisit the previously easily broken levels and to gain even more strength on the following upper movements.
The more bearish scenarios even point to a closer re-test of the $3,100 year-to-date low. But, so far, we have tagged those scenarios with a very low probability to happen.
Currently, the price is sitting in the $11k up to $12k region. Between here and Bitcoin’s all-time high, there are not many significative resistances. It isn’t unfeasible, neither low probable, that we might see Bitcoin heading up to $20k still within 2019.
Important Note: The information provided on this post has been prepared solely for informational purposes and should not be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any transaction or trading activity. The contents are based upon or derived from information generally believed to be reliable although no representation is made that it is accurate or complete and Obvious Capital accepts no liability with regard to the user’s reliance on it.