Bitcoin Bulls In the Time of Uncertainty

September 17, 2019
“Markets can remain irrational longer than you can remain solvent”
― John Maynard Keynes

5-Day Change

  • Bitcoin $10,218
  • Ethereum $199
  • S&P 500 $2,998
  • Dow Jones $27,076

Bulls In the Time of Uncertainty

Uncertainty has taken over Bitcoin... judging by the razor-thin volumes being traded right now. With the Bitcoin price stuck in the $9,500 to $11,000 range for the past month, it seems like no one has any idea of where it’ll go next - but we’ve got some ideas, and some ideas of where it isn’t.

It’s not about to drop off a cliff: Naysayers have been pointing at what looks like a descending triangle, similar to the one seen in 2018 that lead to $6,000 and below. But actually, the pattern doesn’t resolve to a descending triangle - not enough touches to justify. We’re actually still in a bull flag pattern.

We may actually be looking at a bear trap: That is, a bearish correction that makes it seem as if the price will drop lower, but actually reverses. And that has to do with the selling pressure easing, indicating that sellers may be exhausted.

And bullish indicators are pointing up: There are signs that Bitcoin has hit a temporary bottom, and some analysts have gone long in response. And while the Crypto Greed and Fear Index is currently slightly in the ‘Fear range, that may point to a good time to take advantage of others’ timidity.

Wut We Think: We’re still in the same holding pattern, and it looks like minor moves and steady growth towards $11,000 will be dominating the price action at least for the next week or so. But it’s important not to forget that the price is converging on a decision point - right around Bakkt’s futures launch, and things could get a lot more chaotic from there.


Sending $1 billion in Bitcoin

It must have been a nerve-wracking transfer... as some unknown party hit send on a $1 billion transaction. A crypto-monitoring site, Whale Alert, noticed a shift of $1 billion worth of Bitcoins from one address to another. 

Do we know who sent the funds and where? No to both - the wallets involved in the transfer weren’t on the list of known entities, meaning that they weren’t wallets associated with the usual suspects for large BTC transfers - exchanges and crypto companies. That doesn’t rule them out, but it does make it less likely.

Why would you send such a large amount? It’s true that you typically wouldn’t transfer a big chunk of coins like that all at once - it’s usually safer, security wise, to break a transaction like that up into bite-sized chunks and transfer those. But there are theories that the transfer has something to do with Bakkt’s new custody warehouse.

What does this mean for the price? Hopefully not much. There doesn’t seem to be any suspicious trading activity associated with the transfer, so the impact of the transfer on the price is minimal.

Wut We Think: It’s interesting to note that the senders overpayed the transaction fee - up to 20 times, or $700 USD - for the transaction to go through. But then again, maybe they just wanted to be extra sure that the transaction would confirm as quickly as possible.


Bakkt’s Bitcoin Warehouse Is Ready For Business

It’s getting closer to the launch of physically-settled Bitcoin futures... and that may be the reason for the current uncertainty in the Bitcoin market. Bakkt, the company behind the futures contracts, fulfilled a regulatory demand today by opening a custody warehouse for their clients coins today.

What does physically-settled vs cash-settled mean? Other Bitcoin futures prior to this have been settled in cash, that is the contracts were closed and paid out in USD. Bakkt’s contracts will be paid out in Bitcoin.

Are we on the way to explosive growth? It is possible - there are theories that the current sideways movement in Bitcoin (namely, supports at $9,000 and $10,000) are due to institutional investors buying up Bitcoin at those prices, instead of letting them fall further. If the futures take off and it turns out investor interest is high, than shooting far above $9,000 will be everyone’s goal.

It also means that altcoins fall further behind: As institutional investors get on board with Bitcoin and modern financial offering using Bitcoin, it’ll become a harder sell to justify altcoin existence. Bitcoin is already putting the squeeze on alts, and there doesn’t seem to be a recovery on the way.

Wut We Think: There’s lots of incidental evidence that physically-settled Bitcoin futures are going to be popular, from a mysteriously strong support to major, unknown Bitcoin transfers. And if Bakkt can prove that it’ll work, then it may pave the way for other Bitcoin dreams, like a Bitcoin ETF. Everything now, at least for Bitcoin, hinges on Bakkt.

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