Global cryptocurrency markets added $18 billion in value last week despite macro pressures from Goldman Sachs. Bitcoin hash rate finally bounced off December 2019 lows which resulted in upward price momentum. Stocks also saw positive returns last week as investor confidence is being fueled by economies opening back up and decreasing COVID-19 velocity
Cryptocurrency Markets
Global cryptocurrency markets added $18 billion in total value last week, with global market cap starting around $246 billion on Monday and closing around $264 billion on Friday. Bitcoin saw +3.66% growth last week, but altcoins continued to capture more market share as Bitcoins market dominance dropped to 65% levels ( down ~2 % the last 14 days ). The market out-performer was Cardano ( ADA ) which saw almost +25% growth last week. Cardano has continued to witness upward momentum, now growing +38% the last 2 weeks compared to Bitcoins 2 week performance of +2%.
Cardano recently surged after announcements were made regarding “Shelley.” The Shelley integration will essentially transform Cardano into a proof-of-stake blockchain, meaning coin holders can stake their coins and be rewarded from securing the network. More positivity flowed into Cardano after the founder ( Charles Hoskinson ) spoke on a Cardano Podcast. The founder verified that Shelley would open up to everyone around June 9th, and would be officially “live” by June 30th. Charles Hoskinson believes that Shelley will make Cardano more “useful and rewarding” for global users.
Aside from Cardano, Ethereum was the second best performer, seeing +11% growth. As Visionary Financial outlined in a recent report, Ethereum daily transaction output surged above XRP for the first time since July 2019. It’s believed that the growth / interest in stablecoins is driving utility on the Ethereum blockchain.
Bitcoin Hash Rate
A catalyst behind the Bitcoin rally last week was from overall hash rates. In a previous report, it was outlined that Bitcoins hash rate had seen ~ 20% reductions since its 3rd halving. After overall hash rate approached December 2019 lows, the network saw a positive correction. About a week ago, there were 17 mining pools collectively working on the Bitcoin network. Since then, this number has increased to 32 which was a positive leading indicator since the halving. It will be crucial to continue watching Bitcoins hash rate. The Dec 2019 lows seems to be a solid support zone. Dipping below that zone could be bearish on price in the short-term. There seems to be a bit more “network risk” right now since you’ve seen a number of smaller pools / farms entering the space. We should see in the next week or so if miner sentiment is truly going up.
Bitcoin Doesn’t Care About Goldman Sachs
Last week, Goldman Sachs threw a jab at Bitcoin through a company presentation, in which they saw little to no value in Bitcoin long term. Despite many of the Goldman arguments being easily debunked, many feared Bitcoins price action after the announcement. With GS direct connection to the institutional space, many feared that positive outlook would be diminished. Following the report by GS, Bitcoin added $5 billion in value as investor sentiment had no interest in Wall Street outlook. Regarding institutional sentiment, Visionary Financial recent reported on the fact that Grayscale Investments was seeing record growth from hedge funds, as these entities continue to diversify away from traditional uncertainties.
Bitcoin Technical Analysis
Bitcoin recently dropped below the 25 day moving average, before making a sharp recovery. The 25 day moving average still represents a strong support level. Strong support zones currently reside around $9,050. As long as Bitcoin can hold this level, it can most likely maintain the bullish price action.
Maintaining $9,050 support levels will give Bitcoin the ability to test resistance at $10,500. Historically speaking, Bitcoin has rallied pretty hard after crossing back above the 25 day moving average which it recently did. Right now, it seems like bulls are still in control. Bitcoins RSI is still bullish and you really get the feeling that the $10,500 push is coming to fruition. As mentioned above, Bitcoins price action in the short-term will rely heavily on hash rate behavior. With the 3rd halving creating a difficult situation for miner revenues, we are applying much more fundamental analysis in the short-term opposed to technical analysis.
Bitcoin VS Traditional Markets Year To Date
Bitcoin VS Large Stocks Year To Date
Traditional Markets
Traditional market sentiment is undoubtedly helping digital asset momentum during these unprecedented times. Stocks continued to rebound last week due to a gradual move to reopen the economy. In addition, it was reported that New Coronavirus cases were dropping across the U.S which is helping investor sentiment. The Dow Jones, S&P 500, NASDAQ, and Oil all finished positive on the week, but we still argue that investors are still overpricing the market given the current infrastructure.
COVID-19 Second Wave?
Investors have been bullish on the fact that “new cases” have been slowing down based on recent data. What they’re not discounting is the fact that infections are starting to rise in states that are reopening. According to the reports, around 14 states were seeing “rolling seven day average” increases over the last 2 weeks. This is quite significant, because it signals a potential scenario where a “2nd wave” hits the market. This could be detrimental to the market, given the circumstances of businesses across the country right now. As more data flows in, this will surely be on investor radar.
US GDP
Many industry analysts are calling for ~40% reduction in annualized second quarter GDP. If this holds true, it would be the biggest quarterly decline since the great depression. Based on historical data, it becomes very difficult to assess overall potency. With GDP declining in the second quarter, the U.S would officially be in a “recession.” Determining the recovery stage is a whole different story based on the current environment. Getting back to “pre-pandemic” levels will be based on various fundamentals. As discussed above, we have no idea if a “2nd wave” will surface, and if so how relevant it will be to business production. In addition, we still have conflicting information on “vaccines” and when they plan to be introduced. This creates an environment where we have an extremely difficult time assessing whether the future has a “V” , “U” , or “L” shaped recovery.
Right now we still believe that investors are not being 100% rational. In addition, we believe a large chunk of market growth is being facilitated by Fed intervention opposed to natural investor sentiment.
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