Fundamentals

The overall fundamentals of crypto look very strong right now. Price might not be doing much but the infrastructure is being built.

Bakkt

ICE (Intercontinental Exchange) owners of the New York Stock Exchange and many other platforms announced in August that they are launching a new company, Bakkt, which is intended to leverage Microsoft cloud solutions to create an open and regulated, global ecosystem for digital assets.

They’ve got some big partnerships. From the Starbucks blog -

“The new company is working with a marquee group of organizations including BCG, Microsoft, Starbucks, and others, to create an integrated platform that enables consumers and institutions to buy, sell, store and spend digital assets on a seamless global network.”

The CEO of Bakkt, Kelly Loeffler, has said -

“The digital market is fragmented like the energy market in the early 2000s. ICE was the pioneer attracting more and more institutions to trade energy, which is what created today’s liquid market.” “We’re about to see a revolution on the same scale in cryptocurrencies.”

It’s important to note that this particular exchange Bakkt is building will be settled in Bitcoin.

Since it means the actual buying and selling of Bitcoin (rather than simply cash settled contracts), it will impact the supply of Bitcoin (unlike other futures exchanges). Bakkt is planning to launch its futures exchange this November.

Fidelity

Fidelity is the fourth largest asset manager with $7.2 trillion in assets under administration as of October 2018. They announced they have been mining Bitcoin since 2015 and they are now launching Fidelity Digital Asset Services. The firm explained -

“The company will offer enterprise-quality custody and trade execution services for digital assets, commonly referred to as cryptocurrencies, to sophisticated institutional investors such as hedge funds, family offices and market intermediaries.”

Circle

Circle is a peer-to-peer payments company which is backed by financial firms such as Goldman Sachs. They recently bought the Poloniex crypto exchange in February 2018.

Nasdaq

Bill Dague, Nasdaq’s head of alternative data -

“Given the abundance of interest, we are exploring cryptocurrency related datasets. Whether or not we launch a crypto-related product remains to be seen.”

Others

Alistair Milne, the chief information officer at Altana Digital Currency Fund, stated sarcastically -

“Goldman, Citibank, ICE. Now Morgan Stanley. All launching Bitcoin products and services because there’s no institutional demand. Institutional money took the hedge fund industry from $300 billion to $6 trillion.”

The implication is that banks are seeing solid demand from institutions however the institutions don’t have the ideal infrastructure to deal with cryptocurrencies (yet). Seems like Fidelity and Coinbase are getting the ball rolling.

Regulatory Stance

Whilst regulation of digital assets has only just begun, so far, things look positive. It’s clear that most large regulatory bodies are building regulations and they seem to be doing it with a fairly open mind. The fact they are taking it seriously is a positive in itself, it helps legitimise the space, as well as helping remove some of the nonsense within crypto. Up until now it’s been a bit of treacherous space, with scams and other pitfalls posing a danger to those new and naive to the crypto world.

ETFs

The ETF situation is basically that there are a number of applications being reviewed, most being rejected and those that are considered by many to have the best chance of success (VanEck/SolidX Bitcoin Trust ETF) keep having the decision delayed by the SEC.

It is likely the SEC delays their decision as long as they possibly can (27 February 2019 is the final deadline) as they believe the space is not mature enough yet with price manipulation and lack of proper regulation. I can’t help but think there’s a reason they are delaying the decision rather than flat-out rejecting it. Is it too far fetched to speculate that once the proper regulations are in place and better exchange infrastructures are built, a Bitcoin ETF wouldn’t be too far behind.

What would an ETF mean for Bitcoin? In short, it would mean easier access for traditional investors. Meaning more reach for BTC.

Crypto Advertising

Earlier this year, Facebook and Google made sweeping bans on cryptocurrency ads in response to the ICO scams and the likes. In June, Facebook revised their ban and though still blocking ICO advertisements, pre-approved advertisers will be allowed to post some material.

In September, Google made similar revisions -

“plans to allow regulated crypto exchanges to buy ads in the United States and Japan.”

With cryptocurrency ads opening up again and multiple large corporations launching digital asset exchanges, it’s not difficult to imagine that they might spark another media hype frenzy.

The Bear Case

There is a case to be made for further bearish action.

The more times a support is tested, the weaker it gets. The $6,000 support level has been tested many times now. We’ve been ranging for quite a while and haven’t dropped down into the liquidity pool sitting below $5,800 as a final shakeout. The sell offs are stronger than the rallies. Rumours of Tether not backing USDT with real USD and Bitfinex being insolvent. If this were true, and came out, confidence in the market would be shaken deeply and we’d likely see the price crash. As of now though, only a rumour and could simply be FUD.

So TA wise, I think it’s pretty even. However, the fundamentals make me lean more bullish.

Conclusion

To me, Bitcoin looks like it may very well be at the end of its bear cycle. That’s not to say we’re definitely out the woods yet, we could see a dip lower to trigger people’s stop losses before climbing up higher. However, I wouldn’t count on it. What I am confident in is that Bitcoin will see new highs at some point in the future.

The institutions are likely to setup these platforms, accumulate at low prices, let the bulls take it up and then use any influence they have over the media to create a hype frenzy so that they can sell to retail buyers who don’t know any better.

Last alt season, January 2018, the two biggest alt exchanges, Binance and Bittrex, had to shut down new user registrations because their servers couldn’t cope. Think about that for a second. The last crazed alt season was cut short because existing infrastructure couldn’t handle it. The new infrastructure will presumably be able to handle more load and they’ll be easier to use, attracting more investors.

Now is the time to pay attention. Be ready.