Bitcoin, Ether, XRP & Volatility | Crypto Markets


After the dramatic market fall at the end
of 2018, crypto markets were pretty calm and flat. We talked to eToro’s Mati Greenspan, Patrick
Heusser from Crypto Broker AG, and Anthony Pompliano from
Morgan Creek Digital and asked them what was the reason behind such low volatility and what to expect in the nearest weeks. We were looking at volumes across the four
big exchanges: Bitstamp, Kraken, Coinbase and Bitfinex. And over the past six months those exchanges
had volumes of roughly a 109,000 coins per month. January only produced 65,000 coins. Then, as well, focus on Ether-Dollar, which
has some erratic price movements around the 100 dollar mark. We think this is linked to the MakerDAO stablecoin. There are some liquidation levels just below
the 100 dollar mark on this MakerDAO stablecoin. We will start with ETHBTC. There we can see that we took out recent lows
in December 2018. The chart looks very weak and we think there
is more weakness to come. There is also some erratic price movements
on that chart, but that is driven by ETH to dollar. Our main focus is still the MACD charts and
the advance decline line charts. If you look at the Bitcoin MACD you can clearly
see that there is some strength around versus the altcoins. That hasn’t changed. If you look at the MACDs for the altcoins,
ranking 2 to 10 and 11 to 50, those are clearly in negative territory. And last but not least, the smoothed out advance
decline line, the purple one, trading below the 0.5 level, which is a negative sentiment
for the altcoins. Then I believe that it really right now what
we’re seeing is the markets trying to find a more fair value, that can accurately be
described as what the cryptos are actually worth according to adoption and real use. I believe that we’re testing the lower limits
at the moment, I think it’s pretty clear that the market is trying to find a bottom for
bitcoin. For example, we find a very clear level of
support at 3,000 dollars a coin, certainly it could dip a little bit below that. But if I had to describe it, what I would
say is that right now it’s looking for a floor. I think it is more likely than not, that we
have not hit the bottom yet. The market was incredibly frothy throughout
2017. In 2018 we able to wash a lot of that out,
but I still think there’s a little bit of that unreasonable expectations and projects,
that shouldn’t really be valued where they are today. We’ve got a little more to flush out. And so until that happens, I just think that
we’re going to follow that macro trend that the bear market and eventually we will hit
a bottom. We have a pretty new tool provided by LedgerX,
which is the bitcoin VIX. Basically they call it the Fear Index just
like in the stock market, they have a Volatility Index. And this is over the last 3 months. So we can see that during the big fall in
December, we saw a big hike in volatility. And over the last month really the volatility
has come down a lot. It’s still not where it was before, that big dip, but you can see it kind of leveling off at the moment. I think volatility can’t be something that
is persistent, right. So you can’t have an asset that just swings
kind of 50% either direction, day in day out for years, right. And so what you end up getting is you get
these short spurts of high volatility and then you get these periods of kind of a more
lulled timeframe. And so in 2017, for example, a majority of
the upward volatility, the appreciation of price was attributable to like 10 or less
days. And so I think what we’re seeing now is this
downward price pressure from the high of 20,000 to where we are today. There’s only been a certain number of days
that have contributed to that, it hasn’t been highly volatile every single day. And so if you remember back, I think it was
October of 2018, bitcoin was actually less volatile, than the S&P 500, the Nasdaq. And so I think that there’s these periods,
where the asset will be highly volatile, but then there’s these longer periods, where we
won’t get volatility and I think that’s where we are right now. We had a pop in Ripple the other day of 10%. Basically it had erased the losses from the
previous week, and in about an hour it was something to see. What’s being perpetuated on the social media
at the moment is this is due to a partnership, that happened between SWIFT banking system
and R3, which is a payment startup. R3 is connected to Ripple Labs, they’ve just
announced a kind of partnership in December. Overall, what we’re looking at, is… Basically over the last year or 2 years we’ve
been witnessing a battle within the payments industry. And what we’re noticing just now is that rather
than a battle, it’s kind of a network, where there’s a lot of major players. They’re all fighting for market share, but
at the same time they’re growing a kind of interoperable network, where payments will
be using the power of technology much quicker, much faster, much cheaper down the line based
on those partnerships. And what it seems is that Ripple Labs is increasingly
gaining stature within that network. When it comes to kind of short term price
appreciation, you know especially double digits, like we saw with the XRP recently, most of
that is driven by the public announcements. I tend to think that public announcements
are able to affect price whether it’s public equities or crypto currencies. The difference is in the public markets we
see a lot of people who… There’s just better price discovery, there’s
more people, who understand how that public announcement will actually affect the bottom
line, there’s better projections and accuracy. And so in crypto we don’t have that yet. And so what you get is more volatile swings
on prices compared to stocks, but over time I think we’ll get better at trying to price
some of this stuff in or the market will become less volatile or less reacted to those types
of announcements, because people will have a better understanding of how they actually
impact the underlying asset or fundamentals.

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