Monday Crypto Market Update
December 2, 2019
The Rundown
Happy Thanksgiving to those in the States and welcome to December. For those who are wondering, I was able to celebrate the American holiday here in Shanghai with a couple of buddies, all of whom are not American (this goes to show you how despite the US-China trade friction, we can all just get along with pounds of meat, gravy, and mashed potatoes). Food solves a lot of problems doesn’t it? One problem that still needs to be addressed is the ongoing “QE11” Fed program implemented and the free flowing of US dollars into the economy. This never ending printing of money problem will continue until shit hits the fan but I want to share a chart that I came across on zerohedge showcasing the exponential wealth inequality that has taken place since the dollar was cut off from the gold standard in 1971:
And this jaw dropping chart:
And as numerous other central banks are already implementing zero interest rates, don’t be surprised if the US and China follow suit. In a report by Beijing-based private strategic think tank Anbound:
“Structurally, China’s non-financial corporate debt ratio is too high, and interest rates are too high. Considering that the repayment burden of existing debt has squeezed out the effective demand for new credit, and China is likely to become the next zero interest rate country.”
As mentioned in the previous weekly update, the 7000 level for BTC did act as a critical level by acting as a support line since its bounce on November 25th. The 7000 level represents the 0.236 Fibonacci level which is represented by [(1+sqrt5) / 2]^-3 (if drawn from the high in Dec’17 to the low of Dec’18). The MFI has a reading now of around 34 versus last week’s low of 3 and the MACD is flirting with crossing under the signal, possibly indicating a short-term swing trade. BTC could easily hit sub-6000 levels by the end of the year. I envision the range between 5000 and 6000 to be the lowest range BTC can trade in before the halving. Anything below 5000 would breach the 200 week MA, and if this happens, we could be in for a panic.
For the week, BTC managed a 2% gain while bad boy Tron had the highest amongst the major alts hitting a 6% gain. Since September, I have to tip my hat off to Justin Sun for turning things around at Tron. He’s managed to clean up his act, announced a solid partnership with Samsung, and has pledge funds to help fight negativity in the crypto space (kid’s all grown up now).
Three things to know
1. The Bank of Russia has been reported to support a potential ban on cryptocurrency payments. Although we see these types of headlines from other countries as well, one wonders does it actually stop the crypto economy in that country…most likely not.
2. Bakkt’s CEO, Kelly Loeffler, has been asked to serve as a replacement of US Senator Johnny Isakson until 2020. Conflict of interest? Or potential in bringing in more institutional money? Well for now, Bakkt’s BTC month futures contracts have looked decent since its September debut:
3. MSCI has started to implement more requirements for Chinese A-Shares to be included in their popular global indexes. As a measure of “caution” from the trade dispute and “political pressure”. Domestic Chinese stocks now make up about 5% of the MSCI EM Index which has pushed up foreigners ownership in China’s A-Shares market close to 4%.
Chart of the Week
Look out for the 7000 level to be a strong support for the next few weeks. As mentioned in the previous weekly update, the 7000 level for BTC did act as a critical level by acting as a support line since its bounce on November 25th. The 7000 level represents the 0.236 Fibonacci level which is represented by [(1+sqrt5) / 2]^-3 (if drawn from the high in Dec’17 to the low of Dec’18).
