Bitcoin Reflections: Momentum Building

 
April has been a good month for Bitcoin. The social chatter has turned positive and people are talking about the moon and lambo’s again. Is Bitcoin a screaming buy as the CEO of Pantera Capital claims it to be right now? I am personally not a big fan of blanket statements like that. A lot depends on your time frame, what sort of portion it is of your overall investment portfolio and what your plan is when you do decide to buy it. Far too many people bought the hype last year and then sold the bottom. Unfortunately that is how markets work and wealth is transferred from those with a plan to those who do not have one. At ProButterfly what we are hoping to teach our readers is the ability to to invest and trade like a professional rather than the average retail investor. 
 
Let’s discuss some of the big fundamental news that we came across this week:
 

Binance Is Now More Profitable Than Deutsche Bank

The Binance digital currency exchange generated profits of $200 million in the January-March period, vastly outperforming Deutsche Bank, which recorded net gains of $146 million. 
 
There is undoubtedly a shift going on in the markets at the moment. In the long run however I am not very bullish on crypto exchanges in their current shape and form. We should start seeing the rise of decentralized exchanges at the end of this year. Binance is taking the lead and is also going to be launching their own version of a decentralized exchange later this year. Investors should keep an eye out for the Binance Coin (BNB) which may play a core role in the decentralized platform. We will update this story as we gather more details on how their native coin is going to be integrated in their decentralized exchange.
 
At the moment Binance is raking in profits, even though registration for their exchange has been closed for months. With Bitcoin’s momentum building coupled with the opening of these exchanges to new customers could see large spikes across all coins. 
 

Nasdaq is open to becoming cryptocurrency exchange

 
After seeing the success and profit figures of exchanges like Bittrex and Binance, it was only a matter of time that popular exchanges started to look into cryptocurrencies. This week the Nasdaq CEO went on the record talking about how with regulation they will be looking into their launching own exchange. We have spoken about the importance of on-ramps for the public in the past. This would not only be a massive on-ramp it will bring legitimacy to the entire space as a whole.
 
As a first step to move towards this future, Gemini exchange which is owned by the Winklewoss twins have penned a deal with Nasdaq to use their SMARTS market surveillance technology. This is an important step as the Bitcoin ETF was rejected on grounds that the underlying market is too susceptible to manipulation and is subject to a lack of transparency. By taking this first step we could see greater confidence in the underlying market activity.
 

John Pfeffer Sohn 2018 – Bitcoin 700k

 
The Sohn Conference invites Wall Street’s best and brightest investors participate in this unique, “must attend” event to share their expertise. One of the presentations this year was the bull case for Bitcoin overtaking gold as a store of value by John Pfeffer. The current value of all privately held gold bullion is about $1.6 trillion, according to presenter. He went further to make the assumption that there will be 18 million Bitcoins in circulation by the time the cryptocurrency fully replaces gold bullion (about 17 million Bitcoins have been produced so far, out of the maximum 21 million that can exist), the implied value of a Bitcoin would then be $90,000. This is Pfeffer’s most conservative scenario, which he gives 8% odds of coming to fruition.
 
The super bullish predictions were if Bitcoin were to replace total foreign reserves which are currently worth $12.7 trillion. If the total value of Bitcoin does rise to the equivalent of all foreign reserves, or $12.7 trillion—including both gold bullion and reserves combined—then that would mean a Bitcoin price of $700,000. The presenter attributed a 1% probability of such an event taking place. Making the risk reward ratio very favorable for any investor.
 

Bitcoin Technical Weekly Technical Analysis

The week started off strong with a move up to the 200 day moving average briefly to around $9,775 on Bitfinex. We then saw profit taking as the fell nearly a $1,000. For readers who kept an eye out on the support at the 13d EMA actually got a great entry if they were hunting a bullish setups on a lower time frame. 
 
Currently the 200d MA is the next point of resistance that Bitcoin needs to break. It lines up with several key levels along with the large psychological number of $10,000 as well. Traders should keep an eye out for how price starts to react closer to those levels along with their momentum indicators. Also if we were to fail at that level look at the 13d EMA for support. 
 
If we were to zoom out and see the bigger picture we have resolved bullishly past some key resistance lines. What we would ideally like to see here would be a couple of weeks where we could consolidate and build a base for another bull run. 
 
As for taking positions right now it really depends on what you plan is. If you are wondering about taking a position and not sure send us an email on founders (at) probutterfly (dot) com and we will do our best to provide some advice. 
 
Have a great week ahead!
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