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Week 36: August 28 - September 4, 2019

Bitcoin performance this week has dominated that of Ethereum (-5.9%), Litecoin (-6.5%) and EOS (-6%). As Bitcoin continues to put in a new two year high on market dominance at 73% this pressure on altcoins is unlikely to end any time soon. This week we issue a BUY on Bitcoin for the following reasons:

Rating: BUY

BTC Market Cap: $190.3B

BTC Price: 8.9% ($9,754.42 to $10,622.43)

BTC Active Addresses: 13.3% (705.4k to 799.5k)

BTC On-chain Transactions: 11.8% (339.9k to 380.0k)

Technical & Sentiment:

Bitcoin price is going to repeat a trend of testing horizontal resistance, this time at $11,350

Sentiment is forming a declining wedge that will break to the upside, stimulating market demand

Positive Price Drivers:

Increasing active addresses and transactions show the increasing use of the Bitcoin network typically indicating market demand

Increasing acceptance of Bitcoin as a payment solution reaffirms many investors beliefs about the future of digital currency and secure store of value

New regulated financial products lead to increased transparency for investors, often leading to more productive regulations

Negative Price Drivers:

Continuously declining prices in altcoins are producing negative sentiment among many investors, reducing their likelihood of future investment

Bitcoin may be forming a larger ascending triangle that could break to the downside

BTC Price Analysis:

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On a macro level:

BTC Sentiment:

Price Drivers This Week

This past week, headlines have been mostly covering the use of Bitcoin as a financial product, further building its credibility. There is sure to be an increase in trading volume by institutions and retail over the coming months as new regulated financial products and services are preparing for launch.

Financial Products for Everyone

Bakkt Futures & CME Options

Digital Asset custody company Bakkt is launching both products and services for Bitcoin this month. The first service to launch will be the Bitcoin Custody Warehouses which will be able to be leased out by third parties who want to launch their own Bitcoin derivatives. The second product to follow is the September 23rd launch of their regulated Bitcoin futures, which has attracted the attention of many institutions.

According to documents recently obtained by The Block, the CME Group is writing contract documents for exchange tradable options to be launched within the year. Options allow for miners to hedge their Bitcoin income by locking in guaranteed selling prices for Bitcoin at the expiration date of their option contract, just like Futures. Products launched by these exchanges will naturally attract volume by investors as the volatility of Bitcoin makes it a popular trading instrument.

Regulated Exchanges & Transparency

With this project fully regulated by the the Intercontinental Exchange (ICE) and using their clearing solutions, there will be a new level of transparency and clarity around bitcoin trading price and volume. One of the biggest reasons for the delay of Bitcoin futures has been due to the a lack of clean data around Bitcoin reported by exchanges. Should clarity come about through more futures volume on regulated exchanges, regulators will better understand the dynamic forces and apply productive regulations.

Binance Competes with Bitmex

Binance has launched two testnet exchanges for perpetual swap bitcoin futures, to compete with the notorious Bitmex. To spur activity testing the two platforms, Binance has announced a trading competition on their two test platforms, and for user feedback to ultimately choose just one layout.

As Bitmex does over $4B in volume with just one main financial product, Binance has a large network and may bring more volume. There will be a fight for new traders and institutions as Bitmex is known to have proven technology and was first to market, while Binance has a massive market and strong brand name in Asia. Either way, in aggregate between the two exchanges when Binance launches with margin volume is to drastically increase allowing for better price discovery for Bitcoin

At the end of the day however, Binance was caught copying Bitmex futures documentation, word for word! Many can compare this to when ICO scams used to copy whitepapers word for word…

Bitcoin as a payment option

Two Bitcoin events this week reaffirmed investors understanding of Bitcoin as a digital social currency. Major accounting firm PwC has announced starting October 1st they will accept digital currency as payment for services. In addition to the continuing global adoption of Bitcoin, Samsung has launched the long awaited Bitcoin wallet on S10 phones.

“We could not continue to invest in the field, promote it, build solutions for clients and support their transformation while not also being exposed to it.” -Thomas Campione Director Blockchain & Crypto-assets Leader PwC

The addition of PwC auditing to digital assets is a natural fit. With public ledgers, the accounting book is always viewable and tamper proof. The Luxemborg office is the second office to accept cryptocurrency as payment. The Hong Kong did so in 2017 as they were working proprietary blockchain tools. Firms like PwC add legitimacy of Bitcoin and remove the myth held by many including President Trump that it is based on thin air.

To accept cryptocurrency one must have a wallet address and the addition of Bitcoin wallets to over 5M new Samsung S10 phones has many excited. The global adoption of Bitcoin is furthered by the ease of access to simple tools that permit for use of digital currencies. Digital currency wallets and mobile phones are synergistic and now it is just up to exchanges to better promote easy to access on-ramps to currencies.

What the top personalities on Twitter are saying:

@PeterLBrandt with 303.7k followers discusses the increasing Bitcoin dominance over altcoins. He compares altcoins to lead, and Bitcoin to Gold.

@Str8Charts with 1,713 followers poses two different directional moves.

@ACXtrades with 17.4k followers is looking to long BTC at $10,497.

That’s it for the BTC weekly report from Aug 28 - September 4, 2019. Come back tomorrow for our Industry Special report.