Market Insights

Summary

• Bitcoin (BTC) prices spiked in anticipation of the BTC halving.
• Expectations are set for an early resumption of economic activity in the United States and Europe.
• BTC investors will be watching the $10,000 level as the next area of price resistance.

Market Trends This Week

Bitcoin (BTC) prices gained momentum this week as investors anxiously wait to see the effect that next week’s halving will have on price if any. Strength in BTC rippled through cryptocurrency markets and sent alt-coins such as Ethereum (ETH) higher as well. Ethereum has seen renewed strength due to an increase in demand for dollar-linked stable coins. In a deflationary environment, the U.S. dollar is considered a good place to park money. Many stable coins linked to the dollar are built on the Ethereum blockchain.

As of late, cryptocurrency markets have been mimicking the general direction of global equity markets, but with amplified movement. Leaders in the United States and Europe sent the message that an earlier than anticipated resumption of economic activity should be expected. Equity, commodity, and crypto markets benefited as buyers cheered the news. Oil, which had been beaten down so severely that the May futures contract went negative, saw a dramatic recovery. Markets were also helped by the release of new data pertaining to Gilead Science’s (GILD) drug Remdesivir, which showed positive health effects on a group of COVID-19 patients in critical condition.

This Week’s Topics

• Regulatory filings reveal that Renaissance Technologies, one of the most successful asset managers in the world, is considering trading Bitcoin (BTC) futures. (4/25)
• China launches Blockchain Service Network (BSN) as part of a strategy to lead the digital transformation of the digital economy. (4/28)
• Binance, a leading crypto exchange, has launched Binance pool, a service which will allow users to participate in mining. (4/27)
• Sudden demand for stable coins, boosts the price of Ethereum. (ETH) (4/28)
• FTX, a cryptocurrency derivative exchange, is planning to launch a U.S. based exchange early this month. (4/28)
• Ya’an, located in Sichuan, China has called on the blockchain industry to consume excess hydroelectric power. (4/29)
• Coinbase and the Winklevoss brothers form a U.S. political group to raise funds for the expansion of crypto assets. (4/29)
• Nasdaq develops digital-asset platform in collaboration with Blockchain R3. (4/30)
• Google (GOOGL) searches show that interest in Bitcoin’s third half-life is at record levels. (4/30)

Next Week’s Market Forecast

All eyes are on the upcoming Bitcoin (BTC) halving coming on May 12. The halving means that the amount of newly minted Bitcoin will be reduced by 50%. So far, investors are betting that the past two halvings will be a guide for the upcoming halving. In 2012 and 2016, the halving lead to a multi-month rally.

Uncertainty surrounding financial markets in general still exists with the backdrop of the Coronavirus. Upcoming U.S. employment statistics will also be a big focus.

Investors will be watching the $10,000 level as resistance and $8,500 as support.