As originally published via CoinLive
I am the Co-Founder at CoinLive. Prior to founding Coinlive.io, my area of expertise was inter-market analysis. I came across Datadash 50k BTC prediction this week, and I must take my hats off to what I believe is an excellent interpretation of the inter-connectivity of various markets.
At your own convenience, you can find a sample of Intermarket analysis I've written in the past before immersing myself into cryptos full-time. Gold inter-market: 'Out of sync' with VIX, takes lead from USD/JPY USD/JPY inter-market: Watch divergence US-Japan yield spread EUUSD intermarket: US yields collapse amid supply environment Inter-market analysis: Risk back in vogue, but for how long? USD/JPY intermarket: Bulls need higher adj in 10-y US-JP spread
The purpose of this article is to dive deeper into the factors Datadash presents in his video and how they can help us draw certain conclusions about the potential flows of capital into crypto markets and the need that will exist for a BTC ETF.
Before I do so, as a brief explainer, let's touch on what exactly Intermarket analysis refers to:
Intermarket analysis is the global interconnectivity between equities, bonds, currencies, commodities, and any other asset class; Global markets are an ever-evolving discounting and constant valuation mechanism and by studying their interconnectivity, we are much better positioned to explain and elaborate on why certain moves occur, future directions and gain insights on potential misalignments that the market may not have picked up on yet or might be ignoring/manipulating.
While such interconnectivity has proven to be quite limiting when it comes to the value one can extract from analyzing traditional financial assets and the crypto market, Datadash has eloquently been able to build a hypothesis, which as an Intermarket analyst, I consider very valid, and that matches up my own views. Nicolas Merten constructs a scenario which leads him to believe that a Bitcoin ETF is coming. Let's explore this hypothesis.
I will attempt to summarize and provide further clarity on why the current events in traditional asset classes, as described by Datadash, will inevitably result in a Bitcoin ETF. Make no mistake, Datadash's call for Bitcoin at 50k by the end of 2018 will be well justified once a BTC ETF is approved. While the timing is the most challenging part t get right, the end result won't vary.
If one wishes to learn more about my personal views on why a BTC ETF is such a big deal, I encourage you to read my article
from late March this year. Don't Be Misled by Low Liquidity/Volume - Fundamentals Never Stronger
The first point Nicholas Merten makes is that despite depressed volume levels, the fundamentals are very sound. That, I must say, is a point I couldn't agree more. In fact, I recently wrote an article titled The Paradox: Bitcoin Keeps Selling as Intrinsic Value Set to Explode
where I state "the latest developments in Bitcoin's technology makes it paradoxically an ever increasingly interesting investment proposition the cheaper it gets."
However, no article better defines where we stand in terms of fundamentals than the one I wrote back on May 15th titled Find Out Why Institutions Will Flood the Bitcoin Market
, where I look at the ever-growing list of evidence that shows why a new type of investors, the institutional ones, looks set to enter the market in mass.
Nicholas believes that based on the supply of Bitcoin, the market capitalization can reach about $800b. He makes a case that with the fundamentals in bitcoin much stronger, it wouldn't be that hard to envision the market cap more than double from its most recent all-time high of more than $300b. Interest Rates Set to Rise Further
First of all, one of the most immediate implications of higher rates is the increased difficulty to bear the costs by borrowers, which leads Nicholas to believe that banks the likes of Deutsche Bank will face a tough environment going forward. The CEO of the giant German lender has actually warned that second-quarter results would reflect a “revenue environment [that] remains challenging."
Nicholas refers to the historical chart
of Eurodollar LIBOR rates as illustrated below to strengthen the case that interest rates are set to follow an upward trajectory in the years to come as Central Banks continue to normalize monetary policies after a decade since the global financial crisis. I'd say, that is a correct assumption, although one must take into account the Italian crisis to be aware that a delay in higher European rates is a real possibility now. !(https://coinlive.io/ckeditor_assets/pictures/947/content_2018-05-30_1100.png)
Let's look at the following combinations: Fed Fund Rate Contract (green
), German 2-year bond yields (black
) and Italy's 10-year bond yield (blue
) to help us clarify what's the outlook for interest rates both in Europe and the United States in the foreseeable future. The chart suggests that while the Federal Reserve remains on track to keep increasing interest rates at a gradual pace, there has been a sudden change in the outlook for European rates in the short-end of the curve.
While the European Central Bank is no longer endorsing proactive policies as part of its long-standing QE narrative, President Mario Draghi is still not ready to communicate an exit strategy to its unconventional stimulus program due to protectionism threats in the euro-area, with Italy the latest nightmare episode.
Until such major step is taken in the form of a formal QE conclusion, interest rates in the European Union will remain depressed; the latest drastic spike in Italy's benchmark bond yield to default levels is pre-emptive of lower rates for longer, an environment that on one hand may benefit the likes of Deutsche Bank on lower borrowing costs, but on the other hand, sets in motion a bigger headache as risk aversion is set to dominate financial markets, which leads to worse financial consequences such as loss of confidence and hence in equity valuations. !(https://coinlive.io/ckeditor_assets/pictures/948/content_2018-05-30_1113.png) Deutsche Bank - End of the Road?
Nicholas argues that as part of the re-restructuring process in Deutsche Bank, they will be facing a much more challenging environment as lending becomes more difficult on higher interest rates. At CoinLive, we still believe this to be a logical scenario to expect, even if a delay happens as the ECB tries to deal with the Italian political crisis which once again raises the question of whether or not Italy should be part of the EU. Reference to an article by Zerohedge
is given, where it states: "One day after the WSJ reported that the biggest German bank is set to "decimate" its workforce, firing 10,000 workers or one in ten, this morning Deutsche Bank confirmed plans to cut thousands of jobs as part of new CEO Christian Sewing's restructuring and cost-cutting effort. The German bank said its headcount would fall “well below” 90,000, from just over 97,000. But the biggest gut punch to employee morale is that the bank would reduce headcount in its equities sales and trading business by about 25%."
There is an undeniably ongoing phenomenon of a migration in job positions from traditional financial markets into blockchain, which as we have reported in the past, it appears to be a logical and rational step to be taken, especially in light of the new revenue streams the blockchain sector has to offer. Proof of that is the fact that Binance, a crypto exchange with around 200 employees and less than 1 year of operations has overcome Deutsche Bank, in total profits. What this communicates is that the opportunities to grow an institution’s revenue stream are formidable once they decide to integrate cryptocurrencies into their business models.
One can find an illustration of Deutsche Bank's free-fall in prices below:
Nicholas takes notes of a chart in which one can clearly notice a worrying trend for Italian debt. "Just about every other major investor type has become a net seller (to the ECB) or a non-buyer of BTPs over the last couple of years. Said differently, for well over a year, the only marginal buyer of Italian bonds has been the ECB!",
the team of Economists at Citi explained. One can find the article via ZeroHedge here
. !(https://coinlive.io/ckeditor_assets/pictures/953/content_2018-05-30_1451.png) Equities & Housing to Suffer the Consequences
Nicholas notes that trillions of dollars need to exit these artificially-inflated equity markets. He even mentions a legendary investor such as George Soros, who has recently warned
that the world could be on the brink of another devastating financial crisis, on lingering debt concerns in Europe and a strengthening US dollar, as a destabilizing factor for both the US's emerging- and developed-market rivals.
Ray Dalio, another legend in the investing world and Founder of Bridgewater Associates, the world’s largest hedge fund, "has ramped up its short positions in European equities in recent weeks, bringing their total value to an estimated $22 billion", MarketWatch
Nicholas extracts a chart
by John Del Vecchio at lmtr.com where it illustrates the ratio between stocks and commodities at the lowest in over 50 years.
As the author states: "I like to look for extremes in the markets. Extremes often pinpoint areas where returns can be higher and risk lower than in other time periods. Take the relationship between commodities and stocks. The chart below shows that commodities haven not been cheaper than stocks in a generation. We often hear this time it is different” to justify what’s going on in the world. But, one thing that never changes is human nature. People push markets to extremes. Then they revert. " !(https://coinlive.io/ckeditor_assets/pictures/954/content_2018-05-30_1459.png) Bitcoin ETF the Holy Grail for a Cyclical Multi-Year Bull Run
It is precisely from this last chart above that leads Nicholas to believe we are on the verge of a resurgence in commodity prices. Not only that but amid the need of all this capital to exit stocks and to a certain extent risky bonds (Italian), a new commodity-based digital currency ETF based on Bitcoin will emerge in 2018.
The author of Datadash highlights the consideration to launching a Bitcoin ETF by the SEC. At CoinLive, our reporting of the subject can be found below: "Back in April, it was reported that the US Securities and Exchange Commission (SEC) has put back on the table two Bitcoin ETF proposals, according to public documents. The agency is under formal proceedings to approve a rule change that would allow NYSE Arca to list two exchange-traded funds (ETFs) proposed by fund provider ProShares. The introduction of an ETF would make Bitcoin available to a much wider share of market participants, with the ability to directly buy the asset at the click of a button, essentially simplifying the current complexity that involves having to deal with all the cumbersome steps currently in place."
Nicholas refers to the support the Bitcoin ETF has been receiving by the Cboe president Chris Concannon, which is a major positive development. CoinLive reported
on the story back in late March, noting that "a Bitcoin ETF will without a doubt open the floodgates to an enormous tsunami of fresh capital entering the space, which based on the latest hints by Concannon, the willingness to keep pushing for it remains unabated as the evolution of digital assets keeps its course."
It has been for quite some time CoinLive's conviction, now supported by no other than Nicholas Merten from Datadash, that over the next 6 months, markets will start factoring in the event of the year, that is, the approval of a Bitcoin ETF that will serve as a alternative vehicle to accommodate the massive flows of capital leaving some of the traditional asset classes. As Nicholas suggests, the SEC will have little choice but to provide alternative investments. Bitcoin as a Hedge to Lower Portfolios' Volatility
Last but not least, crypto assets such as Bitcoin and the likes have an almost non-existent correlation to other traditional assets such as stocks, bonds, and commodities, which makes for a very attractive and broadly-applicable diversification strategy for the professional money as it reduces one’s portfolio volatility. The moment a Bitcoin ETF is confirmed, expect the non-correlation element of Bitcoin as a major driving force to attract further capital. Anyone Can Be Wrong Datadash, But You Won't be Wrong Alone
Having analyzed the hypothesis by Nicholas Merten, at CoinLive we believe that the conclusion reached, that is, the creation of a Bitcoin ETF that will provide shelter to a tsunami of capital motivated by the diversification and store of value appeal of Bitcoin, is the next logical step. As per the timing of it, we also anticipate, as Nicholas notes, that it will most likely be subject to the price action in traditional assets. Should equities and credit markets hold steady, it may result in a potential delay, whereas disruption in the capital market may see the need for a BTC ETF accelerate. Either scenario, we will conclude with a quote we wrote back in March. "It appears as though an ETF on Bitcoin is moving from a state of "If" to "When."
Datadash is certainly not alone on his 50k call. BitMEX CEO Arthur Hayes appears to think along the same line. On behalf of the CoinLive Team, we want to thank Nicholas Merten at Datadash for such enlightening insights.
1. Bitmain’s Antminer L3 Series. In this guide I will use the Antmier L3+, a very powerful ASIC miner that uses Scrypt to mine Litecoin.ASIC stands for Application Specific Integrated Circuit and it means that these miners are made solely for the purpose of mining a specific coin, making them super efficient. Bitcoin’s Mining Difficulty Sees Largest Percentage Drop in 9 Years . Zack Voell Nov 3, 2020. PayPal. PayPal Raises Crypto Buying Limit to $15K/Week for ‘Eager’ Customers. Nathan DiCamillo ... View the full list of all active cryptocurrencies. Rank Name Symbol Market Cap Price Circulating Supply Volume (24h) % 1h % 24h % 7d Current value is updated every 2 hours from Bitcoin Block Explorer consumption The power consumption in watts of each individual worker. And ever since, the crypto community has been inBut BCH's November 13th hashrate difficulty adjustment and BTC's Regardless, many BCH supporters saw the Bitcoin Classic news ; Crypto Mining Blog Search 7, Aug 2014 It has been a month already since we have ... Bitcoin is then used to transfer value on the backend. “It was an incomplete solution to offer [pesos-to-bolivar] remittances because as soon as they received the money, they had to spend it ... CRYPTO MARKETS. The digital dollar murmurs put a charge in bitcoin Monday, as prices rose 15% in a 24-hour period, peaking just short of $7,000. The momentum died down as bitcoin traded in a ... The difficulty of Each Block. You might remember how I told you that mining is similar to solving a really difficult puzzle. In fact, the puzzle is so difficult that no human could solve it! Well, over time, the difficulty of each puzzle gets harder and harder. When this does happen, it will make it more difficult for your computer to get the mining reward and your profits will go down ... Bitcoin Miners Listed Bitcoin Dictionary Bitcoin News 2017 Bitcoin Miners Listed Bitcoins Value Usd Bitcoin Wallet Wiki. Bitcoin Miners Listed Mine Bitcoin Nvidia Bitcoin Mining Power . Bitcoin Miners Listed Bitcoin Mining 2009. Bitcoin Miners Listed Bitcoin Graph Price Using Bitcoin Bitcoin Miners Listed Bitcoin Generator Premium Apk Does Bitcoin Have Value. Reddit Get Bitcoin Free Bitcoin ... ★ Bitcoin Inventor - Who Accepts Bitcoin As A Payment Bitcoin Exchange With No Fee Bitcoin Inventor Free Bitcoin Faucet Dice @ Bitcoin Inventor - How To Buy Bitcoins Safely Anonymously Bitcoin Exchange With No Fee Bitcoin Inventor Crypto Currency Guide Who Accepts Bitcoin As A Payment Bitcoin Present Value Bitcoin Pc Bitcoin Inventor Buying Bitcoin With Paypal How To Buy Bitcoins Safely ... The Luck value of a block is the ratio of the actual workload to the difficulty of mining. If the workload is lower than the mining difficulty, that means there's more pool luck, the Luck value increases, and vice versa. When it comes to mining, luck can play a fairly important role. It is common for the Luck value to fluctuate. The longer the mining time, the closer the final Luck value gets ...
What is a Stop-Limit Order? Learn about Stop Limit orders and how to use them on Binance the Cryptocurrency Exchange. Subscribe to keep up to date with more ... My Second Channel: https://www.youtube.com/channel/UCvXjP6h0_4CSBPVgHqfO-UA ----- Supp... Robert Kiyosaki interview: Blockchain technology, AI, Crypto, Bitcoin BTC Halving 2020 Robert Kiyosaki 58,261 watching Live now BITCOIN VS WORLD DICTATORSHIP + Cypherium Review (Stack vs Register ... Bitcoin's price in 2020 is climbing! So let's look at real data! Real "on-chain" metrics to see the best bitcoin price prediction 2020 going into June, July,... The new bitcoin banks are here! Mattie will also look into bitcoin being the new gold and the ongoing trade war. In addition, Mattie will talk about Hal Fin... In today's video, we take a look at the binance expected acquisition of coinmarketcap and whether or not this is good for crypto. If you would like to be highlighted on my channel please reach out ... The latest bitcoin news and more! The data suggests a new bitcoin trend (2020) related to the relationship between bitcoin price and people's likelihood of spending their BTC. ChainLink's LINK ... Bitcoin Price Jumps, Massive Power Grab, Binance In China, Ripple + Santander & Games On Tezos The Modern Investor. Loading... Unsubscribe from The Modern Investor? Cancel Unsubscribe. Working ... Bitcoin Technical Analysis & Bitcoin News Today: The Bitcoin price is going up and just passed $6,000, looking bullish. Also, I'll use technical analysis on the Bitcoin price to make a Bitcoin ... willkommen zur Bitcoin-Informant Show Nr. 848. Heute sprechen wir über folgende Themen: Bitcoin Nutzung sinkt - Kommt noch ein Dump - Binance will Coinmarketcap für 400 Millionen Dollar kaufen ...