All price data were collected on Oct 21 18:00

International giants withdraw from Libra Association, US-China trade wars, BTC rebounds after falling below $8k USD

News in the cryptocurrency market has been abundant over the past two weeks, including the giants’ exiting the Libra Association and the US Securities and Exchange Commission’s (SEC) stopping Telegram’s token issuance. Various governments have condemned the Libra project since its announcement in June. The pressure from politicians and regulators in various countries has also led to the gradual faltering of the founding members of the Libra Association. On October 5th, PayPal announced its withdrawal from the Libra Association, and on October 11th, major financial services giants including VISA, Mastercard, eBay, Stripe, and Mercado Pago issued an exit statement within a few hours. Although the giants have withdrawn, Bertrand Perez, chief operating officer of the Libra Association, is still confident to have at least 100 members when the project launches. In addition, the US Securities and Exchange Commission (SEC) filed an emergency action and restraining order against the communications software Telegram and its Telegram Open Network (TON) in the Federal Court of Manhattan on October 11th, halting the issuance of its $1.7 billion USD worth of tokens.

In the US-China trade war, US President Trump expressed that the US-China phased agreement can be easily signed with mutual benefits during the Chilean Summit (APEC). Chinese Vice Premier Liu He also said that the new round of high-level economic and trade consultations between the two countries has achieved “substantial progress” in many fields. The US suspended plans to raise China’s $250 billion worth of imports to 30%, and China invited the US to travel to Beijing for the second phase of talks. Given that the US-China trade war has cooled, uncertainty and demand for risk mitigation has also fallen, gold has hit the recent lowest closing price and the biggest one-day drop. BTC also fell sharply, below the $8k mark to a lowest point of $7,765 USD (Figure 1) .

Figure 1: BTC/USD (BitMEX) Recent trends (3-hour intervals). Source: AIcoin

Recent price trend stable, with slight rebounds in view

As Bitcoin prices continued to fluctuate, the short-term performance of 10/20–10/21 was particularly eye-catching. The highest rebound returned to the position of around $8,300 USD, temporarily lifting the risk of falling below the support position of $8,000 USD with an increase of 5.38%. The volume has also rebounded with rising position-holding ratios of bigger investors for two consecutive weeks. It can be observed from Figure 2 that when the market rebounded, there would be a high probability of a “cross-star” k-line (the closing price and the opening price are at the same price or similar) the next day, with the cross-star’s often indicating a turning point in the market. The author believes that after the recent surge, heavyweight investors in the market have turned conservative as fluctuations are limited. As for retail investors to profit in this market, it is not recommended to have excessive multi-party operations as risk-reward ratios would not be cost-effective.

Figure 2: BTC/USD (BitMEX) Cross-star K line after rebound (1-day intervals). Source: AIcoin

As every other mainstream currency was slightly affected by minor fluctuations, it was BCH’s turn to have a large rebound. But there was no trending effect on future prices under the overall market sentiment. Due to the recent rebound performance of mainstream currencies, BTC once again took the initiative in a price surge, squeezing out the market share of other currencies (see Figure 3). BTC’s uptick has been a positive surprise, along with the rebound of the downturn, it is certainly worth paying close attention to.

Figure 3: Market share (1). Source: CoinMarketCap

Figure 3: Market share (2). Source: CoinMarketCap

Market Outlook

The rebound on the weekend has been a rare signal. However, the market has not recovered to the level before September 25th, and the market will continue to recover naturally unless there is an event-driven rise. It is recommended that active investors follow the high-short low-long approach with careful leverage, timely adjust the rules of the trade, and prepare for the response. If BTC falls below $7,860 USD, it will fall to the next support level; the core support is around $7,000 USD, so when prices have fallen by 15% from current prices, there could be a wider sell-off.

Bincentive’s selected strategies

Strategic profitability & quantitative advantages

As recent consolidations in the market have been slightly detrimental to trend-type strategies, the strategies’ stop-loss designs were effectively tested, and potential rewards were observed and realized. The “Pattern Strategy” closely followed with stable performances regardless of event-driven candles.

This month’s sleeper star is “BNB Strategy No.1”. After four months of silence, its monthly return has reached 3.5%. This strategy deals with BNB/USDT on Binance, the largest crypto exchange where BNB is issued. The exchange has continued to experience growth spurs in the second half of 2018. This strategy captures the high point as its core logic, and effectively exits to get paid. As the trend of BNB and Bitcoin becomes clearer, this strategy multiplies its profits.

Figure 4: BNB/USDT (Binance) 1-day K. Source: AIcoin