Market Insights

This post is a translation of the weekly cryptocurrency analysis by Block Insight, a wholly owned subsidiary of Monex Group (Tokyo, Japan). Monex is the parent of TradeStation Group.

Summary

• Bitcoin (BTC) plunged to a new seven-month low, but then rebounded to end the week little changed.
• Volatility may continue in the following week as BTC tries to hold $7,000.

Market Trends This Week

BTC’s little changed on a weekly basis despite a big swing in the last few days. On Wednesday morning it dipped below $6,500, followed by a violent short squeeze. The resulting bounce erased all the losses. It also produced a bullish outside candle on the daily chart, with a lower low and a higher high. That potential reversal pattern could indicate a halt to the recent downward trend.

The reason for the volatility wasn’t clear, but some attributed it reports of an alleged Chinese Ponzi scheme called PlusToken.

Altcoins also declined along with BTC in the last week, and have shown little signs of bouncing.

This Week’s Topics

• Russia’s national power company, Rosseti, has tested billing with distributed ledgers. One is run by German software giant SAP (SAP). (12/13)
• Cosmos completes the upgrade of Cosmos Hub 3 (12/13)
• TikTok owner ByteDance started a joint venture with a state-owned Chinese media firm, according to Bloomberg. The effort will include artificial intelligence (AI) and blockchain. (12/13)
• Sweden’s central bank, Riksbank, has hired Accenture (ACN) to help develop a digital version of the country’s Krona currency. (12/13)
• A study by Gartner finds that 75 percent of developers use or will use blockchain technology in their Internet of Things applications. (12/13)
• A survey by the Organization of Economic Cooperation and Development (OECD) finds that Southeast Asian investors may be excessively bullish on cryptocurrencies. (12/14)
• Twitter (TWTR) CEO Jack Dorsey decentralizes the social-media company according to an open-source architecture. (12/15)
• Facebook (FB) apparently removes “dividend payments” from its Libra cryptocurrency according to a Georgetown University professor. (12/15)
• Russian darknet Hydra is planning a $146 million initial coin offering (ICO) to expand globally. (12/15)
• A hacker stole more than $7 million from the VeChain foundation after a security lapse. (12/16)
• Traders blame BTC’s drop below $6,500 on reports of the PlusToken Ponzi scheme. (12/16)
• Fidelity widens its offering of digital-asset services to institutional investors in Europe. (12/17)
• Derivatives platform ErisX launches physically settled BTC futures, following a similar rollout by Intercontinental Exchange’s (ICE) Bakkt in September. (12/17)
• British exchange Coinfloor plans to delist Ethereum (ETH) because of uncertainty surrounding hard forks. (12/19)
• The financial magazine Forbes begins accepting subscription payments in ETH. (12/19)

Next Week’s Market Forecast

Volatility may continue through the end of the year in cryptocurrencies.

BTC and related tokens have remained under pressure as risk appetite spreads in financial markets. Aside from the Chinese government’s increased interest in blockchain assets, there are few clearly positive catalysts at present. Most fluctuations now appear speculative in nature with little fundamental backing.

Still there are some deeper reasons for optimism because continued downside will limit the supply of new cryptocurrency and potentially support prices.

For now, we continue to watch the $7,000 area for support.

Next Week’s Topics

• 12/23: Crypto exchange OKEx will launch a Dai (DAI) based staking service via the OKEx Pool.
• 12/27: OKeX will launch cryptocurrency options.

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