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Bitcoin Fundamentals Making a Case for Resting Bull-Run: Bloomberg

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After amassing a decline of 14 percent in June, it’s been hard to predict a bitcoin bull’s run over the past few weeks. July began the second half of 2020 and early price movements indicated positive signs for the largest digital asset. On 6 July Bitcoin breached $9333 and at press time the asset was valued at $9,183.75.

Despite market uncertainty, a recent report by Bloomberg Intelligence suggested that Bitcoin might be sustaining a “resting bull run” behind the covers. Some of the main indicators discussed in the report were with respect to on-chain addresses, investor flows, and declining volatility.

Bitcoin volatility approaches a 3-year low index

According to Bloomberg Intelligence, Bitcoin has recently plummeted to its lowest level of volatility compared to crude oil, suggesting that BTC could slowly create organic demand for the asset while slowly attenuating to mainstream investment markets. The social-distancing enabled environment has played a part in bitcoin’s strength as investors have gradually seeking exposure to the best performing asset of the past decade.

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With Bitcoin gaining higher on risk basis vs stocks, the asset has currently attained an upper hand on NASDAQ based on historical volatility. The report stated,

“The crypto’s 260-day volatility measure is the lowest ever vs. the stock gauge. Our graphic depicts Bitcoin volatility is about 2x Nasdaq’s. It was closer to 7x when the crypto price and index first crossed paths in 2017. Bitcoin volatility typically increases when its price rises, and the relationship is normally inverse for equities.”

Bitcoin-Gold Ratio; History repeating itself?

With respect to Gold, Bitcoin’s decline in volatility is a direct indication that that digital asset is becoming less risky in the market. Currently hitting a new low in 2020, the above graph suggests that the last time BTC volatility remained at such low levels, the asset went on to register its largest bull run in history in 2017. Since then, the annual Bitcoin-risk metric has dropped below 70 percent from just above 100 percent.

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Now, a long-term drop in volatility across the past 3 years might suggest that BTC is currently poised for a trend reversal but Gold’s volatility is currently doing the opposite, with its annual risk measure reverting higher from a two-decade low in 2019.

With the price struggling to break long-term resistance at $10,000 since May, BTC will eventually break above the threshold at some point in time. However, it is imperative for the bull run to be based on strong fundamentals if the impending rally is aiming to embrace another all-time-high.

Here’s Why $20,000 Bitcoin is Still a Distant Dream in 2020

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The community is split right in the middle with Bitcoin at the moment. Over the past few weeks, the largest digital asset has failed multiple times to breach $10,000 and certain market analysts indicated that BTC might falter under falling buying pressure.

Regardless of that, Bloomberg’s long-term outlook for Bitcoin remained completely bullish. According to Bloomberg’s June 2020 edition of Bloomberg Galaxy Crypto Index (BGCI), the company expected that asset to re-test its all-time high valuation of $20,000.

That is a relatively big ask for Bitcoin considering the asset has yet to rally past its yearly high of $10,500. BTC also has immediate resistance at a yearly high of 2019 at $13,800, which should be its current long-term target.

However, Bloomberg’s Mike McGlone analyzed the market a little differently than the rest of the industry. McGlone suggested that due to the COVID-19, the maturation rate of Bitcoin has accelerated which has led to the ever-increasing appetite of the institutional investors. He believed that Grayscale’s intent and action in terms of accumulation of more than 25 percent of the BTC supply in 2020 stands true to that fact.

Is $20,000 attainable at the current rate though?

Without attempting to rain on Bloomberg’s parade, it is important to note that we currently reside in an ever-changing environment went it comes to the larger financial landscape.

To be fair, Bitcoin has a strong chance of breaching 2019’s yearly high of $13,800. A consistent position between $8500-$10000 over the last month are clearly indicators that a bottom at this range might be strong enough as well in the future.

Hence, considering its next bullish cycle starts during Q3 2020, with the possibility of the world economy becoming more stable, it will be hard to argue that strong bullish momentum would easily push the asset above the $13,000 mark.

However, as observed since 2019, Bitcoin does not pump like 2017 anymore. A sudden jump of thousands of dollars has been a rare occurrence, and even though the valuation jumped 178 percent from April 2019-June 2019, over the next 6 months, we saw the asset shaved 50 percent of its valuation.

Now, many people in the community criticized such retracements but it is actually a healthy sign when the price corrects itself after a huge plunge.

From an on-chain point of view, the utilization has dropped down significantly as well.

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The above chart indicates the number of unconfirmed transactions in the BTC mempool. As observed the total number of unconfirmed transactions has been going down since the halving ended. Although it appears positive on the surface, it also indicates that users were no longer using the chain as fervently as before the halving. Less congestion equals to less unconfirmed transactions.

Hence, it becomes incredibly difficult to sustain a bullish rally that will not be backed with fundamental metrics.

Therefore, at press time it won’t be a wise bet to pinned down all your hopes on Bitcoin to reach $20,000. At least not at the moment, when the market is still trying to find its bearing back.

Bill Gates’ Perspective on Cryptocurrency

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Bill Gates has invested millions of dollars in all kinds of businesses and start-ups. The technology mogul, however, admits to holding zero cryptocurrencies. Notwithstanding the collaboration between Bill and Melinda Gates and Ripple to support the unbanked, Bill Gates dismissed Bitcoin and other digital assets as speculative risks. All based on the “greater fool theory”  type of investment.

Gates admitted to owning some bitcoins after receiving them as a birthday gift during an interview with Bloomberg. The billionaire also noted that he had sold them a while back. During a number of comments, Bill Gates exchanged different perspectives on emerging technology.

Gates said he would bet against Bitcoin in 2018. He said that if there was an easy way to get a bitcoin short, he would do it. While speaking to Squawk Box, he found out that speculation about earning anything from the asset class should be proportionate to a certain amount of productive input.

“As an asset class, you’re not producing anything and so you shouldn’t expect it to go up. It’s kind of a pure ‘the greater fool theory’ type of investment,”

Warren Buffett, a consistently ranking business mogul in the Forbes list of billionaire explained the above phenomena in an interview with Yahoo Finance. Buffet said :

 “You’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more.”

The greater fool theory amusingly denotes the following: 

“Yes, I am a fool for buying this asset right now, but I’m convinced i’ll find a greater fool to sell it to later on for more” 

Well, the speculative part of this theory could work but its only an investment vehicle on assets with no intrinsic value. 

“Bitcoin and ICOs, I believe completely [they’re some] of the crazier, speculative things”

The Microsoft founder also pointed out the role of Bitcoin and other digital assets in driving criminal syndicates. He said that bitcoin was once used in a global fentanyl ring, an epidemic that has triggered overdoses in the US and other countries.

In 2017 for instance, the United States Department of Justice listed several deaths related to fentanyl. At the same time, the department of justice promised to shut down AlphaBay, a darknet market.

When a commentator told Bill Gates that the US physical dollar is also used in global trade deals; he suggested that anonymous cryptocurrencies make such criminal dealings more efficient and difficult for authorities to track.

“Yes – anonymous cash is used for these kinds of things but you have to be physically present to transfer it which makes things like kidnapping payments more difficult”

Meanwhile, Gates has a point about these criminal dealings. For instance, Bitcoin makes it easy for criminals to collect ransom anonymously. They don’t have to physically or virtually represent their identity. Hackers are also penetrating into exchanges and crypto wallets only to get away with massive amounts of money.  Of course, all these represent the downsides of cryptocurrencies just as there are downsides with other technologies. 

Gates’s only bitcoin problem and its effect is the privacy that technology offers. In 2014, Gates posted a bitcoin-based optimist outlook. He referred to the digital asset as a better currency you can trade-in without actually being in the same place.

“Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient,”

Nonetheless, most people find anonymity as Bitcoin’s dynamics of financial freedom, decentralization, and control against dystopic policies.  Bitcoin’s value proposition highly contributes to a cashless society and the potential of a decentralized future.

Meanwhile, Gate remains enthusiastic about Blockchain technology rather than cryptocurrencies. The Bill & Melinda Gates Foundation awarded a $100,000 grant to Bitsoko back in 2015. Furthermore, the foundation’s partnership with Ripple is implementing the blockchain to provide banking solutions to the unbanked. 

Gates remains interested in the blockchain technology behind bitcoin, the digital ledger where transactions are confirmed and recorded. Gates said: 

“There’s some really good technology in terms of sharing databases and verifying transactions that is talked about as blockchain, that is a good thing,”

 

US Presidential Candidate Michael Bloomberg Seeks to Create Crypto Regulatory Framework

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Recently reported, a 2020 US Presidential candidate Michael Bloomberg sees cryptocurrency as an asset class. In addition, he also mentioned his proposal for crypto regulation.

In a financial reform plan, published on Tuesday, founder and CEO of Bloomberg LP, Michael Bloomberg proposed a ‘regulatory framework on cryptocurrencies”.

His promise sounds similar to crypto-friendly views shared by Andrew Yang who unfortunately drops out of the presidential list on Feb 11.

Compared to anti-bitcoin views shared by Donald Trump last year, Yang stood strong for the crypto community. He showed pro-bitcoin and blockchain views which certainly impressed the entire crypto ecosystem.

Besides Yang, the other pro-crypto candidate, Eric Swalwell failed to proceed further. However, now Bloomberg is likely to be an impressive community by promising a ‘ clear regulatory framework for crypto. ‘Yang despite the tech background and support of the crypto community couldn’t make it and Bloomberg despite having the charge of sexism and racism is making his best to gain traction from the crypto industry.

In a report, he emphasized that digital assets have yet to be backed up by sensible regulations and stated that it will work ‘ with regulators to prove clearer rules ‘ including rules to protect consumers from crypto-fraud, crypto-asset taxation, securities, and requirements for financial entities holding cryptocurrencies.

“Cryptocurrencies have become an asset class worth hundreds of billions of dollars, yet regulatory oversight remains fragmented and undeveloped. For all the promise of the blockchain, Bitcoin and initial coin offerings, there’s also plenty of hype, fraud and criminal activity.

More so, when Facebook announced its plan to launch Libra, Congress has had a strict eye on how a crypto asset will be the threat for sovereign currency, US Dollar. In fact, the social media giant is yet to launch its over-hyped stable coin as it is yet to clear the several criticizing factors shared by regulators across the world, majorly US regulators.

More so, Bloomberg’s proposal towards the crypto industry impressed crypto enthusiasts, namely Binance boss Changpeng Zhao (CZ) who then took to Twitter and write ‘Go, man’. CZ, the founder of Binance crypto exchange has worked at Bloomberg 15 years ago and henceforth, it comes as an exciting note for him. Nevertheless, CZ tweeted as follows;

Go, man! I remember BLOOMBERG as a leading Fintech company when I worked there 15 years ago. We had servers so big that they are called BIGs. I (my team) owned the FutBig (Futures BIG server). We proposed to call it the FuBig first but went with FutBig in the end.