Crypto Market Update: Bitcoin Not Dead?
Over the past weeks, there has been quite a bit of bearish sentiment across the Crypto community but this is solely related to price action. It can be difficult to retain a bullish bias during downturns like the one we are experiencing. Despite this, we do see light at the end of the tunnel for Cryptocurrency markets as a whole for those willing to be patient.
Let’s start with more recent news:
It is encouraging to see that El Salvador made history this week with allowing Bitcoin to be used as legal tender in their country. There had to be a first and they will absolutely not be the last. We expect harsher regulations from the IMF, SEC, CFTC, and the Treasury Department at some point soon in response to the wider adoption of Crypto.
We have a confluence of indicators pointing to that we are close to a bottom in this latest multi month downturn. The Bitcoin NVT Price chart from researcher Willy Woo has predicted a bottom 7 out of the last 8 times it has dipped below the bottom of the NVT Price channel which it has recently done again.
The Fear & Greed Index also reached a historically low level of 10 (Extreme Fear) on May 30th which has been a bottom signal in past cycles. It has been on a slow and steady rise ever since with levels cusping 30 (Fear) at present. The downside momentum seems to be wearing out as well with the weekly RSI indicator bouncing off a strong support level at 44.
Thoughts on volatility:
It has come to our attention that the volatility of these markets are in the end what may be the main factor in Bitcoin not reaching mass adoption from everyday users and world governments. We do agree that this volatility can make it difficult in short term scenarios to be a viable store of value for regulated entities since it would be completely unacceptable for a world government to lose 70% of their treasury value in a matter of weeks.
Oh wait, this is already happening with inflation across every country on planet Earth.
Due to the scarcity of major Crypto assets, values will continue to rise over long time horizons inversely to inflation of fiat currencies. The volatility of these assets may be scary when it comes to prices decreasing, but we never hear anyone complaining of volatility when prices shoot up 100x over the course of a year.
Bitcoin vs Ethereum argument heating up:
One of the age old questions around Crypto investors is whether to have more portfolio percentage in BTC or ETH. It has even been said that during this bull market, ETH will flip BTC in market cap at some point. While this could very well happen, Bitcoin is not going off the #1 spot without a fight.
The Taproot protocol upgrade has been activated and will go live in November. It is quite possibly the most influential update in the history of Bitcoin and a major factor in the BTC vs ETH debate.
It is very rare that Bitcoin miners ever agree on any major upgrade to the protocol, this has become evident in all of the hard-forks that have occurred over the years. With the 90% required consensus achieved for Taproot, it is a massive accomplishment.
Once the upgrade goes live, Bitcoin will have privacy features, more malleable smart contracts, higher efficiency per transaction, and lower gas fees. Bitcoin has not been seen as a leader in innovation in the space for some years now, however it seems things are changing and we are happy to see the competition.
Ethereum still has a lock on the Decentralized Finance movement by a long shot…but will BTC come out with an answer to ETH DeFi? That remains to be seen.
The Bottom Line:
As it appears we are finally at the helm of a much needed recovery rally in Crypto markets. It is encouraging to see it correlating with incredible news and innovation to match. We look forward to the close of this 6 month candle at the end of June as this will give us some indication of where we stand in the macro cycle. Until then, do your own research and stay away from leverage. Our futures are right here for the taking.
About RF Capital
RF Capital is an alternative investment firm with a special focus in the underlying infrastructure of the blockchain space. Other areas of specialization include real estate, debt/equity markets, and OTC trading.
