Monex Crypto Market Weekly: May 31

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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) inched higher early in the week before accelerating to over $8,900. It then paused but still registered a gain of about 5 percent for the week.
  • Major altcoins including Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCH), EOS (EOS), Litecoin (LTC) and Bitcoin SV (BSV) led the charge. Is a new portfolio composition emerging?
  • Will BTC break $9,000? It’s also near the potentially important level of 1 million yen per coin.

Market Trends This Week

BTC rallied again to briefly surpass $8,900. At one point it was up more than 10 percent on the week, before retreating.

BTC jumped on May 27, followed by a period of consolidation. Some traders credit the surge to a short squeeze, while others think it was led by LTC. There was also political uncertainty with Washington and Beijing still at loggerheads over trade while Theresa May resigned as prime minister of the U.K. Investor confidence in blockchain assets was stronger than feared amid those dark clouds.

Major altcoins like ETH, XRP, BCH, EOS, LTC and BSV rose in BTC terms. Some had catalysts on an individual level. XRP neared a “golden cross” chart pattern while BSV and BCH were reportedly affected by fake news in China. However, it is natural to think at least some money has shifted from BTC to other cryptocurrencies as investors diversified portfolios.

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

Topics of the Week

  • Facebook (FB) plans to build an electronic payment system using its own currency GlobalCoin in 2020. (5/24)
  • Bitwise publishes new research report on the Bitcoin market. (5/24)
  • BitFlyer establishes bitFlyer Blockchain as a wholly owned subsidiary. (5/24)
  • Binance will start offering margin trading soon, CEO suggests. (5/24)
  • Bitbank implements a biometric screen lock function on its official Android app. (5/24)
  • BitMEX reports BCH suffered a double payment after its May 15 hard fork. (5/24)
  • Cryptographic asset platform Robinhood has raised $200 million, Bloomberg reports. (5/25)
  • Bit Factory releases mobile signature-management service “Duragé Link” for DApps. (5/27)
  • QUOINE adds separation margin method to Liquid by Quoine’s margin-trading method. (5/28)
  • BTC Box announces a change of representative director and a capital increase. (5/28)
  • Germany’s Federal Financial Supervisory Authority (BaFin) warns that Coinbene may be operating without the correct license. (5/28)
  • The Australian Securities and Investment Commission (ASIC) warns that OneCoin may be operating as a Ponzi scheme. (5/28)
  • HDR Global Trading, owner of the exchange BitMEX, made a donation to the Massachusetts Institute of Technology (MIT). The funds will promote development of blockchain technology. (5/28)
  • Major shipping companies MSC and CMA CGM join Maersk’s blockchain-based trading platform TradeLens, according to Reuters. (5/28)
  • Barclays and Bold Capital Partners lead a $5.5 million founding round for FinTech startup Crowdz Invoice Exchange. (5/28)
  • BitFlyer reduces the maximum leverage factor of margin trading. (5/28)
  • Zaif resumes MONA trading in the easy-buying and selling service. (5/29)
  • AP communication establishes new field of cryptographic assets in glossary “AP style guide.” (5/29)
  • Salesforce.com (CRM) announces “Salesforce Blockchain.” (5/29)
  • Coinbase considers adding margin trading. (5/29)
  • TaoTao officially starts exchange service. (5/30)
  • BUIDL announces AML / CFT countermeasure tool “SHIEDL” for cryptographic asset-exchange companies. (5/30)
  • 271 persons with a 18% decline in crypto assets “Billionaire”, 18 year tax return. (5/30)
  • SBI Ripple Asia launches a trial of its merchant-settlement service MoneyTap. (5/30)

Market Forecast for Next Week

Can BTC break $9,000 — or 1 million Japanese yen?

There’s been a lot of interest overseas in FB’s Global Coin. Companies within the blockchain industry had positive news, like Binance and Coinbase considering margin trading. There were also new developments involving exchange companies: the establishment of BitFlyer, the capital increase of BTC box, and the launch of Yahoo-related exchange TaoTao (also in Japan).

One notable improvement has been the growing role of cryptocurrencies as an alternative to equities. That could make a test of the 1 million yen market for BTC just a matter of time. Traders should remain vigilant of short-term volatility, but longer-term sentiment is better than expected.

We’re watching $ 8,900 as the latest resistance level, and roughly $8,400 as support.

Next Week’s Topics

  • 6/4: Cardano (ADA) plans to update roadmap.
  • 6/4: Bitcoin.com plans to launch BCH’s P2P marketplace Local.Bitcoin.com.
  • 6/4: Binance Coin’s (BNB) FinanceX trading competition ends.
  • 6/4: NEO (NEO) holds Demo Workshop in Seattle.
  • 6/6-7: WeAreDevelopers World Congress 2019 in Berlin.
  • 6/6: OKEx Talk 2019 will be held in Tallinn.
  • 6/9-13: Blockchain Cruise 2019 will be held in Europe.

Industry Related Trends

Technology Trend: XMR Plans Transition to New PoW Algorithm

On May 24, CoinTelegraph reported that monero (XMR) plans to switch to the new proof-of-work (POW) method RandomX in October. The plan is based on an agreement with Arweave, which will pay for auditing the new algorithm. That is expected to cost about $150,000 over the next two months.

XMR’s current algorithm “CryptoNight” is hard-forked every six months to prevent some people from monopolizing the mining process. However the frequent hard forks places a heavy burden on developers and other users. Arweave claims that Random X could improve ASIC robustness and operate efficiently on CPUs.

Until now, XMR has been concerned about fraudulent mining by bots and malware software. Random X requires 2 gigabytes or more for mining, which makes it difficult to hide mining on poor-quality IoT devices. Also, Web mining can only show poor performance in anonymous mode, which will also help prevent fraud.

Individual Company Trend: Bitcoin Cash Suffers 51% Attack

Two mining pools made a 51 percent attack on BCH, according to
Cryptoconomy host Guy Swann. While their goal was to reverse malicious transactions, it was widely criticized.

BTC.com and BTC.top joined their hash rates on May 24 to prevent an unknown miner from taking coins incorrectly in the wake of a hard-fork code change nine days prior.

A so-called 51 percent attack lets miners control a network. They can block access by others, reverse records and even make double payments. They’re usually viewed as malicious but in this case it was apparently done to prevent fraud.

The mining system’s decentralized management typically prevents abuse. However, cryptocurrencies without sufficient miners have endured multiple 51 percent attacks. BCH’s hard forks and high market capitalization have usually prevented such incidents. Certain miners perpetrated them earlier to prevent fraud. A malicious attack in the future would almost certainly impact sentiment in the market.

Individual Company Trend: Barclays Leads $5.5 Million Investment in Blockchain-Based Forex Trading

On May 28, U.K. financial giant Barclays (BCS) and investment firm Bold Capital Partners announced plans to invest $5.5 million in Silicon Valley’s FinTech startup Crowdz Invoice Exchange (Crowdz’s). The company is working to automate operations in the foreign-exchange market still performed manually.

“Today small and midsize businesses often have to wait for a financially crushing 90 to 120 days or more to get paid,” said Crowdz CEO Payson Johnston. “It’s no wonder that more than half of them suffer cash-flow problems during any given year.”

The Crowdz Invoice Exchange will let such firms receive payment within a few days and at lower cost. he added.

Three other companies are investing aside from BCS and Bold Capital. The funds will be used for product development, marketing and staffing.

Crowdz is unique because it’s an automated B2B platform up to invoice processing. For small and medium-sized enterprises, it is important to look outside the country in search of a larger market, but the cost of procedure and time lag can be fatal. Aiming to replace financial institutions while being a marketplace is an interesting approach.

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