Monex Crypto Market Weekly: May 24

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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.

Summary

  • Bitcoin (BTC) moved sharply since the start of the week. It briefly pushed over $8,300 but retreated close the week little changed.
  • Bitcoin SV (BSV) surged on May 21st. It was apparently lifted by Craig Wright’s application for a BTC whitepaper and code copyright registration.
  • Two bills regulating cryptocurrencies progressed through Japan’s legislature.

Market Trends This Week

BTC dropped quickly to $7,000 on May 17, only to rebound back above $8,000. Now prices have encountered some resistance at the top of that range.

Legislative progress in Japan was one positive factor. Another catalyst was the BSV rally associated with speculation of the U.S. government recognizing Craig Wright as Satoshi Nakamoto. There were also negatives like a delay in Van Eck’s exchange-traded fund (ETF).

Bitcoin (BTCUSD) chart, with hourly candles.
Bitcoin (BTCUSD) chart, with hourly candles.

Topics of the Week

  • Coincheck’s new-account applications surge as BTC moves higher. (5/17)
  • Bitfinex completes fundraising and officially announces listing of exchange token “LEO,” with May 20 as the first trading date. (5/17)
  • Circle releases stablecoin USDC audit results. (5/17)
  • Ground X announces that in June it will launch its own block chain Klaytn, under the umbrella of Kakao. (5/18)
  • Nikkei reported that Japan’s Financial Services Agency (FSA) is investigating cryptocurrency exchanges before next month’s G20 summit. The goal is to ensure the establishment of anti-money money laundering policies (5/18)
  • Enjin announced a beta test of the first blockchain-powered Minecraft server. (5/18)
  • The U.S. Securities and Exchange Commission (SEC) again postpones the examination deadline for Van Eck’s virtual currency. (5/20)
  • Honda Motor (HMC) and General Motors (GM) jointly research how electric vehicles and smart grids can work together using blockchain technology. (5/20)
  • Zulu Republic launches “Lite.Im,” a virtual-currency remittance platform on WhatsApp. Zulu Republic is an ecosystem of digital platforms powered by Ethereum (ETH).
  • NYSE Arca applies to the SEC for a rule change concerning a new virtual currency-ETF. (5/20)
  • Coinbase supports USDC with payment service Coinbase Commerce. (5/20)
  • The bill for revision of the Financial Instruments and Exchange Act and the Fund Settlement Act is passes the main assembly of Japan’s lower house. (5/21)
  • Lawyers from Bitfinex and Tether seek dismissal of New York’s case against them, citing jurisdictional points. (5/21)
  • Bitfinex and Ethfinex launch initial exchange offering (IEO) platform Tokinex. (5/21)
  • SEC shuts down a cryptocurrency Ponzi scheme involving diamonds. (5/21)
  • Australia’s Securities and Investment Commission (ASIC) warns about companies suspected of virtual-currency fraud. (5/21)
  • BlockFi’s client assets under virtual-currency deposit account services top $100 million. (5/21)
  • Craig Wright fileswith the U.S. for copyright registration of BTC’s whitepapers and codes. (5/21)
  • Ninth anniversary of “Bitcoin Pizza Day.” (5/22)
  • Startbahn raised additional funding from SBI. (5/23)

Market Forecast for the Week

The recent gains in BTC spurred interest and account growth at Japanese exchanges. The buzz has spread to the U.S. amid the potential for a virtual-currency ETF. There have been concerns about Tether and Bitfiniex, but odds don’t seem to favor a major price collapse.

Short-term price adjustments, with profit-taking and consolidation, are now likely after two months of big moves. The May 17 low of $6,600 is the main level on our radar. On a shorter time frame, we’re eyeing $7,300 as support.

Next Week’s Topics

  • 5/27-29: JBCNConf to be held in Barcelona.
  • 5/28: Ark (ARK) plans to release ARK Deployer.
  • 5/28: Aeternity (AE) will be implemented as a hard fork.
  • 5/28: Enjin Coin (ENJ) to hold a meet-up in Singapore.
  • 5/29: International Blockchain Summit 2019 in Dubai.
  • 5/30: TRON (TRX) plans to launch a test network of the Sun Network.
  • 5/31: Chainlink (LINK) mainnet launch.
  • 5/31: Aion (AION) plans to launch AVM mainnet.
  • 5/31: ICON (ICX) will release ICON DPASS identity service.
  • 6/1: EOS’s (EOS) Block.one event

Industry Related Trends

Regulatory Trend: Virtual Currency Related Bills Pass Japan’s Lower House

The Nikkei Shimbun reported on May 21 that the revised bill of the Financial Instruments and Exchange Act and the Fund Settlement Act moved from Japan’s (lower) House of Representatives to the (upper) House of Councillors. The bills include measures to strengthen regulations on virtual-currency exchange companies. They establish the term “cryptographic asset” and address margin-based trading.

Legislators are expected to approve the laws. Once they do, virtual-currency margin transactions will be regulated under the same Financial Instruments and Exchange Act covering foreign exchange. Exchanges will be required to hold “matching funds (same / equal amount of cryptographic assets)” for the virtual currency stored in the hot wallet.

Technology Trend: Enjin Coin Launches MichaServer Beta Test with Blockchain

On May 18, Enjin Coin (ENJ) announced a test version of its blockchain software development kit (SDK) for Java. The technology will facilitate developing blockchain games using Java.

ENJ is a project in Singapore that aims to build an online game ecosystem based on the cryptocurrency Ethereuim (ETH). Enjin lets users trade encrypted items held by an address with other users by linking with ETH’s wallet address inside the game.

ENJ has been focused on Korea, with prices spiking 700 percent in the single month of March.

Individual Company Trend: It Became Clear That Bitcoin Backed Some of Tether (USDT)

On May 21, the stablecoin Tether (USDT) admitted in court that some of the reserve had been invested in BTC. “Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin,” said David Miller, Bitfinex’s lawyer, according to
a report in The Block.

In the case, New York State Supreme Court judge Joel M. Cohen took issue with tether being invested in BTC. He said its link to a volatile cryptocurrency seemed to run against USDT’s goal of stability.

Tether admitted on the April 30 that U.S. dollars backed only three-quarters of its tokens. This revelation potentially hurts USDT’s credibility because it was intended to serve as a stablecoin linked to the greenback.

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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.