Bitcoin - what's next? 3 000 or 20 000+?
Hello everyone and welcome to FOBS!
My name is Bohdan Pinchuk and I am the founder of FOBS Asset Management. FOBS is a team of algorithmic traders with a focus on the cryptocurrency market, which appeared as a result of combining the efforts of our quants with Excavo Family analysts and Zetera Tech developers.
Today we have prepared for you a long-term fundamental and technical analytics for a pair BTC/USD. After a yearly downtrend and movement of up to 14 thousand, the opinions of the players are divided into two opposite points of view - pessimists shout about going up to 3,000 while optimists are confident in a bull rally above 20,000. Let's look at the mechanics of the market, as well as technical and fundamental analysis in order to understand which direction the wind is blowing for the next few years.
In order to understand where the price will go in the long run, that is, to determine the trend, it is necessary to understand what the mood of large capital is at the moment, since it is the portfolio managers of large investors who make the first stage to reverse the trend. The fundamental background is of great importance in choosing a tool for investment, since the portfolio manager expects that the tool will cause demand in the future and is currently underestimated after the panic and impulsive sales of previous investors in the phase of shaking out the last cycle, rather than dying for fundamental reasons.
Fundamental analysis
Let's start with a fundamental analysis, and then back to the chart.
1. Bitcoin is hard money — currencies with a fixed supply and emission schedule that no central authority can manipulate. As a result, this currency has no inflation and the value of which will increase in the long term compared to fiat money. According to Cointelegraph 64% of all mined coins, they did not move from the beginning of 2018 to December 2019. Accordingly, most investors are set to keep coins despite short-term drawdowns.
So, current investors are not inclined to sell, but in addition to supply, demand also affects pricing. Where will the new money come from and at whose expense will the banquet be?
2. A number of countries start the regulation of cryptocurrency activities; among a number of countries, such as Switzerland, Singapore, Luxembourg, Gibraltar, there is already a procedure for registering and accounting for cryptocurrency companies. For other things, the European Union and Germany in particular have been starting the licensing of near-currency activities since the beginning of 2020. Banks will be able to buy and sell cryptocurrencies for their customers, accordingly the infrastructure will develop and, as a result, counterparty risks are expected to decrease. These changes will increase the attractiveness among investors of traditional markets. It will also simplify market access for institutional investors. For example, Germany’s second largest exchange, Boerse Stuttgart, recently launched a cryptocurrency trading platform. Such trends of the leading European economy speaks of the adaptation of the market to cryptocurrencies and bitcoin in particular, which can also be considered as a positive phenomenon, which should affect prices.
3. Another equally important event is the approval by the SEC of the first ETFs and futures funds. According to bitcoin.com, the first futures fund, the NYDIG Bitcoin Strategy Fund, has been approved, which will be 100% provided with bitcoins and will make purchases / sales of bitcoins once a quarter. The first quarterly purchases are expected in May 2020.
4. I would also like to note the results of one of the latest reports of Deutsche Bank. Deutsche Bank Research has released a special edition of Konzept called Imagine 2030. Konzept is a regularly published research report on the fundamental issues that drive the world of economics and finance. One of the topics is the impact of cryptocurrencies on global finance. Deutsche Bank strategist Jim Reid believes that demand for gold and cryptocurrencies could increase in the 2020s.
Literally from the report:
"The forces that have held the current fiat system together now look fragile and they could unravel in the 2020s. If so, that will start to lead to a backlash against fiat money and demand for alternative currencies, such as gold or crypto could soar."
"Overcoming regulatory hurdles will broaden their appeal and raise the potential to eventually replace cash."
Technical analysis
It is important to understand that in order to open and close a big trades at a given moment, there is a liquidity problem and to implement a position at the best price requires a long time and special execution techniques (TWAP, VWAP etc). For this reason, there is a lot of money on the weekly and monthly charts due to the fact that a certain time period is required to gain a large position with low liquidity. Among the strategies, the most popular is following the trend (momentum). Most often, this time frame is used by portfolio investors and large players playing long purchases. The primary task of such players is to determine the fair price, and then to buy out their volume at the price as close as possible in the latter. There is an idea about the intersection of 50, 100 and 200 moving averages on weekly candles, according to which, when crossing the 50th down to 100th, the accumulation phase begins from the 200th moving. That is, the average price for 200 weeks is the best point to buy. The reverse crossing of MA 50 upwards MA 100 is a sign of market recovery and a signal for players with lower volumes. Accordingly, technically for large investors, the market is interesting for the perspective of the next 2-3 years.
At the moment, on 1W chart momentum indicators chart show short. The trend line is also downward. The nearest support and purchases zone will be the range 6000-6600, but we don't except retest of 200 weekly MA which is currently above 5000.
As a conclusion, we believe that at the moment it is attractive for long-term investments from a fundamental point of view. We expect that the reasons listed above will have a positive impact on pricing over the next few years. From a technical point of view, we are still in the downtrend and expect long signals for momentum strategies on the weekly chart in the next weeks.
Sources:
news.bitcoin.com/boerse-stuttgarts-crypto-exchange-live-for-all-traders-in-germany/
news.bitcoin.com/sec-approves-bitcoin-futures-fund/
news.bitcoin.com/deutsche-bank-strategist-predicts-crypto-could-replace-fiat-money/
cointelegraph.com/news/us-sec-approves-btc-futures-fund-to-offer-shares-to-institutional-investors/
coindesk.com/bitmain-announces-new-more-efficient-7nm-bitcoin-mining-chip/
cointelegraph.com/news/hodlers-are-insane-64-of-bitcoin-supply-has-not-moved-since-2018/
My name is Bohdan Pinchuk and I am the founder of FOBS Asset Management. FOBS is a team of algorithmic traders with a focus on the cryptocurrency market, which appeared as a result of combining the efforts of our quants with Excavo Family analysts and Zetera Tech developers.
Today we have prepared for you a long-term fundamental and technical analytics for a pair BTC/USD. After a yearly downtrend and movement of up to 14 thousand, the opinions of the players are divided into two opposite points of view - pessimists shout about going up to 3,000 while optimists are confident in a bull rally above 20,000. Let's look at the mechanics of the market, as well as technical and fundamental analysis in order to understand which direction the wind is blowing for the next few years.
In order to understand where the price will go in the long run, that is, to determine the trend, it is necessary to understand what the mood of large capital is at the moment, since it is the portfolio managers of large investors who make the first stage to reverse the trend. The fundamental background is of great importance in choosing a tool for investment, since the portfolio manager expects that the tool will cause demand in the future and is currently underestimated after the panic and impulsive sales of previous investors in the phase of shaking out the last cycle, rather than dying for fundamental reasons.
Fundamental analysis
Let's start with a fundamental analysis, and then back to the chart.
1. Bitcoin is hard money — currencies with a fixed supply and emission schedule that no central authority can manipulate. As a result, this currency has no inflation and the value of which will increase in the long term compared to fiat money. According to Cointelegraph 64% of all mined coins, they did not move from the beginning of 2018 to December 2019. Accordingly, most investors are set to keep coins despite short-term drawdowns.
So, current investors are not inclined to sell, but in addition to supply, demand also affects pricing. Where will the new money come from and at whose expense will the banquet be?
2. A number of countries start the regulation of cryptocurrency activities; among a number of countries, such as Switzerland, Singapore, Luxembourg, Gibraltar, there is already a procedure for registering and accounting for cryptocurrency companies. For other things, the European Union and Germany in particular have been starting the licensing of near-currency activities since the beginning of 2020. Banks will be able to buy and sell cryptocurrencies for their customers, accordingly the infrastructure will develop and, as a result, counterparty risks are expected to decrease. These changes will increase the attractiveness among investors of traditional markets. It will also simplify market access for institutional investors. For example, Germany’s second largest exchange, Boerse Stuttgart, recently launched a cryptocurrency trading platform. Such trends of the leading European economy speaks of the adaptation of the market to cryptocurrencies and bitcoin in particular, which can also be considered as a positive phenomenon, which should affect prices.
3. Another equally important event is the approval by the SEC of the first ETFs and futures funds. According to bitcoin.com, the first futures fund, the NYDIG Bitcoin Strategy Fund, has been approved, which will be 100% provided with bitcoins and will make purchases / sales of bitcoins once a quarter. The first quarterly purchases are expected in May 2020.
4. I would also like to note the results of one of the latest reports of Deutsche Bank. Deutsche Bank Research has released a special edition of Konzept called Imagine 2030. Konzept is a regularly published research report on the fundamental issues that drive the world of economics and finance. One of the topics is the impact of cryptocurrencies on global finance. Deutsche Bank strategist Jim Reid believes that demand for gold and cryptocurrencies could increase in the 2020s.
Literally from the report:
"The forces that have held the current fiat system together now look fragile and they could unravel in the 2020s. If so, that will start to lead to a backlash against fiat money and demand for alternative currencies, such as gold or crypto could soar."
"Overcoming regulatory hurdles will broaden their appeal and raise the potential to eventually replace cash."
Technical analysis
It is important to understand that in order to open and close a big trades at a given moment, there is a liquidity problem and to implement a position at the best price requires a long time and special execution techniques (TWAP, VWAP etc). For this reason, there is a lot of money on the weekly and monthly charts due to the fact that a certain time period is required to gain a large position with low liquidity. Among the strategies, the most popular is following the trend (momentum). Most often, this time frame is used by portfolio investors and large players playing long purchases. The primary task of such players is to determine the fair price, and then to buy out their volume at the price as close as possible in the latter. There is an idea about the intersection of 50, 100 and 200 moving averages on weekly candles, according to which, when crossing the 50th down to 100th, the accumulation phase begins from the 200th moving. That is, the average price for 200 weeks is the best point to buy. The reverse crossing of MA 50 upwards MA 100 is a sign of market recovery and a signal for players with lower volumes. Accordingly, technically for large investors, the market is interesting for the perspective of the next 2-3 years.
At the moment, on 1W chart momentum indicators chart show short. The trend line is also downward. The nearest support and purchases zone will be the range 6000-6600, but we don't except retest of 200 weekly MA which is currently above 5000.
As a conclusion, we believe that at the moment it is attractive for long-term investments from a fundamental point of view. We expect that the reasons listed above will have a positive impact on pricing over the next few years. From a technical point of view, we are still in the downtrend and expect long signals for momentum strategies on the weekly chart in the next weeks.
Sources:
news.bitcoin.com/boerse-stuttgarts-crypto-exchange-live-for-all-traders-in-germany/
news.bitcoin.com/sec-approves-bitcoin-futures-fund/
news.bitcoin.com/deutsche-bank-strategist-predicts-crypto-could-replace-fiat-money/
cointelegraph.com/news/us-sec-approves-btc-futures-fund-to-offer-shares-to-institutional-investors/
coindesk.com/bitmain-announces-new-more-efficient-7nm-bitcoin-mining-chip/
cointelegraph.com/news/hodlers-are-insane-64-of-bitcoin-supply-has-not-moved-since-2018/
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Telegram Channel: t.me/fobsfund
Twitter: @fobsfund
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