Monex Crypto Market Weekly: April 5

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This post is a translation of the weekly cryptocurrency analysis by Crypto Lab, a wholly owned subsidiary of Monex Group (Tokyo, Japan). Monex is the parent of TradeStation Group. Thanks to the difference in time zone, we’re able to share Friday’s report today.

Summary

  • Bitcoin (BTC) soared after breaking through $4,180, a resistance line from early 2019. It peaked above $5,300 before pulling back.
  • Bitcoin cash (BCH) led the rally initially, for reasons that aren’t clear. BCH registered a gain of more than 50 percent on the week.
  • Will BTC test its recent highs in the next week? There’s speculation it may push toward $5,450 in the near term. Roughly $4,850 is potentially the bottom of the range.

Market Trends This Week

BTC exploded higher after breaking resistance and traded above $5,300 before pausing.

BTC was in a gradual uptrend from the beginning of the week, and then accelerated sharply after pushing though $4,180. That was resistance from a high price in the first week of January. Short sellers were squeezed out of the market, also lifting prices. Profit taking occurred after the initial surge but it still registered a gain of more than 20 percent on the week.

Risk-on behavior in the global market was the main factor behind the move. The Federal Reserve’s dovish monetary policy had a limited impact on currencies and U.S. equities continue to advance. Trade talks between Washington and Beijing, long an area of concern, increasingly point toward an agreement. Given the positive sentiment, it makes sense that BTC investors have been stepping in.

While the specific reasons aren’t clear, BCH rallied even more than BTC. It’s confirmed this could cause the hash rate to switch from BTC to BCH after April 2.

Bitcoin (BTCUSD), with hourly candles.

Bitcoin (BTCUSD), with hourly candles.

Topics of the Week

  • U.S. Securities and Exchange Commission delays making a decision on two BTC-based exchange-traded funds (ETFs). (3/29)
  • The Rakuten wallet virtual-currency trading service is launched. (3/29)
  • Coinbase Custody supports Tezos (XTZ), with plans to add MakerDao (MKR) soon. (3/29)
  • NEM.io Foundation publishes catapult roadmap and outlook. (3/29)
  • Bakkt publishes details of director’s organization on blog. (3/30)
  • OmiseGo denies acquisition reports, while the media stands by its reporting. (3/30)
  • Bithumb temporarily suspends deposit and withdrawal services due to virtual currency outflow. (3/30)
  • Coincheck launches large over-the-counter (OTC) trading service. (4/1)
  • Bühler, a major Swiss food company, announces products compatible with blockchain technology. (4/1)
  • The joint venture SBI R3 Japan will hold a kickoff event. (4/1)
  • Details of the fourth edition of Binance token sale are announced. (4/1)
  • The Malta Financial Services Authority (MFSA) approves 14 agents under the Virtual Currency Financial Assets Act (VFA). (4/2)
  • The Swiss Exchange (SIX) plans to list an exchange-traded product (ETP) linked to the price of Ripple (XRP). (4/2)
  • BTC soars above $5,000. Several altcoins follow the rally. (4/2)
  • Electronics payment giant PayPal (PYPL) invests in Cambridge Blockchain. (4/2)
  • U.S. SEC seeks to hire a general currency specialist specializing in virtual currency. (4/2)
  • Switzerland’s 5-star hotel The Dolder Grand accepts BTC payments. (4/2)
  • Liquid Group, a Japanese cryptocurrency trading platform, is valued at more than $1 billion in a venture-capital round. That gives it so-called “unicorn” status. (4/3)
  • The European Union launches the international organization INATBA, aiming to popularize blockchain technology. (4/3)
  • The U.S. SEC announces new regulatory guidance for token issuers. (4/3)
  • SEC issues its first No-action Letter to companies scheduling initial coin offerings (ICO). (4/3)
  • Binance plans to launch Binance Singapore and Binance DEX within the month. (4/4)
  • Exchange-Traded Products for XRP, Litecoin Go Live for EU Investors. (4/4)
  • Coinsquare Announces the Pre-Launch of eCAD™, Canada’s First Fiat-Backed Stablecoin. (4/4)
  • Software maker Digital Asset open sources its DAML Language. (4/4)

Market Forecast For Next Week

This week’s surge in BTC saw volumes more than double, according to CoinMarketCap. Going forward it’s likely to draw new investors into the market.

Given the risk-on sentiment, we’re likely to see cryptocurrencies follow price action in equities. Short-term trading could become more common. BTC may push as high as $5,450 and we’re watching support around $4,850.

Still, a word of caution: If a large sale forces BTC lower, there’s a risk of funds exiting the market.

Next Week’s Topics

  • 4/8: Security Token Summit will be held in Los Angeles.
  • 4/9-10: Crypto Invest Summit will be held in Los Angeles.
  • 4/10: OKEx C2C Launch Event will be held in Berlin.
  • 4/11-15: Odyssey Hackathon 2019 will be held in the Netherlands.

Industry Related Trends

Regulatory Trend: U.S. Announces Regulatory Guidance for Token Issuers

On April 3, a department of the U.S. Securities and Exchange Commission (SEC) issued new regulatory guidance for token issuers. It came from the FinHub Innovation Strategy Office within the SEC and is not legally binding.

The published guidance provides criteria for determining whether a token should be considered a security. It attempted to apply the Howey test (based on a 1946 Supreme Court ruling), which says an investment contract exists when “a profit is expected based on the effort of a third party,” and “a financial investment in a company is occurring.”

FinHub seems to think the first criterion could apply to cryptocurrencies. This impacts token issuers because it determines whether they’re subject to the Securities Act. That can significantly impact business operations .

Previously, there was an extreme view that all tokens should be considered securities. But the SEC seemed to move away from that position this week by issuing a “no-action letter” (approval) that said tokens aren’t securities.

Technology Trend: NEM.io Foundation Reveals Catapult Roadmap and Outlook

On March 29, NEM.io Foundation published the development roadmap for the Catapult release of its core engine. It would represent a significant update to the existing NEM (XEM) blockchain.

NEM (XEM) is already known for its ease of development, and Catapult release has been developed by open source. It includes many functions such as batch processing of multiple transactions, multisig setting in multiple layers, and cross-chain swap with other block chains. Scalability, security and usability are all expected to improve significantly.

The current road map says the pretest is planned for the second quarter, with release to the test net before the end of September. It will be made available to the main net in the fourth quarter of 2019. Development processes like the expansion of wallet function, SDK development and implementation of a new consensus algorithm will take place during these periods.

The NEM is initially focused on releasing to the test net in the third quarter. Other idea-based plans such as security token offerings (STO), stable coin, IoT and support of IPFS will occur after the main net launch. Regular progress updates should be monitored from time to time.

Individual Company Trend: Liquid Group Achieves ‘Unicorn’ Status after Funding Round

On April 3, Liquid Group, owner virtual-currency operator QUOINE, was valued at over $1 billion after a series C funding round. That gives the five-year-old company so-called “Unicorn” status.

Wednesday’s investment round was led by IDG Capital (IDG), a global fund involved in blockchain companies such as Coinbase, Ripple and Bitmain. Bitmain also participated as a shareholder in Liquid.

The funds will be used for global expansion, platform development and entry into the security-token market.

“With IDG and Bitmain joining us, Liquid will be one of the leading companies driving the virtual currency market this year,” Liquid CEO Mike Kayamori said.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.