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Fundamentals, FOMO, and Futures

Bitcoin Suisse

Bitcoin Suisse
Visit: Bitcoin Suisse

Market Update

3rd June, 2019

Trading near to USD 8,500 at the time of writing BTC has already once tested USD 9,000 on May 30th. The cost of doing so was a sell off (off a cliff actually) and within hours BTC had traded as low as USD 8,000. A reminder of where the fear of missing out (FOMO) can take you when price is bolstered by analyst after analyst barking at a 10k price target for BTC for the past 2 months with little justification as to why.   

The Bitcoin network fundamentals have seen only modest improvements with a gradual increase in transaction count per block over the past 12 months. Data from New York-based blockchain researcher Chainalysis Inc. show that only 1.3% of economic transactions came from merchants in the first four months of 2019.[i]

However, mining difficulty of the network is currently at it’s all time high meaning the network has never been more secure. In Layman’s terms, mining difficulty refers to the ease which miners are able to solve the cryptographic equation required to “mine” a new block on the bitcoin network. Since launch over 10 years ago the Bitcoin network has never suffered a data breach.

Source [ii] : Yellow: number of miners in the network increases the difficulty of hash rate (as more computational guesses need to be made per second to mine a block). Blue: Transaction per block as representation of network activity. Grey: BTC price

Technology doesn’t have to be used as intended, focusing on decorrelation and the store of value aspects of Bitcoin the Financial Times [iii] reported that BTC is proving a better store of value than the Argentine Peso. Had an Argentine purchased BTC at the height of the 2017 bubble, he/she would’ve been better off than holding cash with the central bank.

We made note in May’s Market Briefing of price action related to the Trump/China trade war. The below chart supports our commentary of potential flows into BTC by Chinese investors seeking a haven away from the Yuan facing ongoing pressure by US tariffs.

Purple: CNYUSD

Measuring institutional sentiment last Friday saw the CME Bitcoin Futures set an all time high of 5,190 contracts (circa $220m) of open interest. Although CME Futures are cash settled around 50% are due to be rolled over today (Monday), a majority rolling over into the next contract would evidence further commitment to BTC bulls.

Finally, we hope you will make good use of the BTC currency symbol added to Microsoft Excel last week.

Written by Richard Wynn, Institutional Services and Sandro Huwyler, Trade Desk of Bitcoin Suisse AG



[iii ]

Disclosure: Bitcoin Suisse

This publication has been prepared by Bitcoin Suisse AG. The publication is solely for information purposes and should not be considered investment advice and nothing in this publication shall imply any elements of a contractual relationship nor any offering. While the information contained herein is believed to be true and accurate and the sources are believed to be reliable, Bitcoin Suisse AG does not make any warranties as to its accuracy or completeness.

The information provided is not intended for use by or distribution to any individual or legal entity in any jurisdiction or country where such distribution, publication or use would be contrary to the law or regulatory provisions or in which Bitcoin Suisse AG does not hold the necessary registration or license.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Bitcoin Suisse and is being posted with permission from Bitcoin Suisse. The views expressed in this material are solely those of the author and/or Bitcoin Suisse and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Bitcoin Futures

TRADING IN BITCOIN FUTURES IS ESPECIALLY RISKY AND IS ONLY FOR CLIENTS WITH A HIGH RISK TOLERANCE AND THE FINANCIAL ABILITY TO SUSTAIN LOSSES. More information about the risk of trading Bitcoin products can be found on the IBKR website. If you’re new to bitcoin, or futures in general, download The Beginners Guide to Bitcoin Futures.

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