Affair with the ETF and other reasons for market growth

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Paul Shipunov, head of analysis and research ICBF, under the author’s column told how affect the best stock market approval applications for ETFs from the SEC, as well as about what achievements to expect from bitcoin in the near future when a massive shift of the crypto-projects to a new level.

In this article we will look at the most topical issues: what is needed for the flow of funds into the cryptocurrency market and when to wait for explosive growth? To answer the first question, we consider 3 main components of this «cocktail for success».

First, it is the inflow of capital from those who really has the greatest volume of funds in the world. Of course, we are talking about banks and investment funds. Drawing an analogy with gold, we call bitcoin a «second gold». The most anticipated news in the upcoming weeks — possible approval filed by a U.S. regulator SEC (securities and exchange Commission and exchange Commission) registration requests crypto-ETF. Already there was a message on the postponement of the registration in September. This refers to the filed in the beginning of 2018 applications for the launch of ETF trading. This caused a mild panic among the community that could be noted in the relevant Telegram ducts, and later this idea was picked up by news sources. But when you look at the price, it was not clear why it continues to be on highs and not rolled back to the lows this month? And only in the subsequent analysis it became clear that it was the applications from smaller companies and stock exchanges, including Gemini from enthusiasts-the Winklevoss twins. Applications for crypto-ETF from «pillars of the financial system» of the US in the form of exchanges the CME and the CBOE are as relevant as ever. The exact date of announcement of the decision no SEC, but it can be taken from August 10. And with almost 90% probability it will be positive. But in the case of deferring consideration of all applications for summer break to start in the market can begin the disappointment of dashed hopes. This will be an occasion for corrective movement.

To understand why such a wave of discussions going on around the possibility of launching an ETF on cryptocurrency in specialized resources, let’s look into trading on gold over the past 68 years.

Figure 1. The price of gold in the period from 1950 to 2018. Source.

Bitcoin has already passed a similar stage, and gold, with the launch of futures on the CBOE and CME exchanges. Remember the explosive growth of bitcoin in the period November–December, and we note a similar movement in gold in 1974, followed by a correction (very similar to the dynamics of bitcoin, isn’t it?). But the most interesting situation occurred after the start of ETF trading in gold. The rise from 2003 to a maximum value in 2011 was 478%. Exactly the same effect and waiting for the market of bitcoin. In the case of obtaining the approval of the SEC should be expected inflow of liquidity from both private capital and top financial institutions towards the end of 2018−beginning of 2019. And it will be a trend for 1-2 months: it may take several years.

Second, the growing technological sophistication of blockchain projects. So, it can be noted that most of the projects are already at the level of 2.0, and a number of them have already made a step in the direction of the 3 stages. The first two stages involve only the storage of data in the blockchain and the intensification of PR activities in social networks. A new stage of development of crypto-projects are now crossed with all the Internet stage — the opportunity to improve what was before, and make it convenient for the user and monetize. That is for viewing content, participating in community activities, loyalty to the project, you can receive a token. And in the case of a successful IPO, this project will potentially make «x’s», and they can be profitable to convert to Fiat money.

Third (last item on the list, but not least), the ability to rearrange cryptocurrency market state regulation. This item may not agree, many «crypto-anarchists» and just supporters of anonymity in the network. Their main argument will be the idea of the Creator of the first cryptocurrency Satoshi Nakamoto (by the way, his real name is still secret): initially open to all participants in transactions between the purses, while preserving the incognito of their respective owners. But almost immediately after the FBI shut down silk road, which used bitcoin mostly for drug trafficking — and its imitators, was taken under the control of a sent bitcoin and arrests of administrators and traders «zapresheno». So it’s safe to say that the time of complete permissiveness gone and come ordering system, and with it the «town Sheriff».

The role itself is already trying a number of organizations, including the United States. Thus, the struggle between the regulators SEC and CFTC for recognizing tokens, currency or the goods, while in the legislature, i.e. Congress can not yet determine the legal status of the crypts. But they have a very serious attitude to deal with this issue, why they have attracted leading experts. We can therefore expect that after the summer recess, the legislative process will bear fruit. For this reason, we can say that 2018 will be a year of change in the crypto industry, primarily due to the readiness to the regulation of this sector by the countries «the big twenty» (G20).

Now that we understand the global situation and external conditions for the auction, let us make a short summary. There is reason to believe that the market not simply already came from the major capitals around the world, but have already invested their money in interesting projects or negotiating investments, as well as considering mergers and acquisitions promising blockchain companies (traditionally referred to in the financial sector M&A). So let’s remember the most vivid example in the form of buying startup Circle (belongs to the Bank of the TOP 4 assets in America, Goldman Sachs) of the exchange Poloniex for $400 million. The chart below shows that even in a falling market continue investing venture capital and other investors. Thus, only the first 2 months of 2018 in crypto-projects had invested $323 million, and for the previous year, this figure exceeded $1 billion. And we can expect that the commitment to the regulation of the industry will lead to a multiple of the inflow of investment funds directly in the projects themselves, but also to buy their tokens.

Diagram of the flow of investment into crypto projects in the period of 2013−the first 2 months of 2018. Source.

But in order to get the answer to the second question, about expectations of explosive growth made in the beginning of the article, let’s look at the leading assets.

Bitcoin

The current analysis of bitcoin can be built on two diametrically opposite expectations dynamics, which also sets guidelines for the movement of the market. So, the first option involves the opportunity for development and growth in the future upcoming months. Yes, if will be executed a number of conditions, in addition to the above three external factors, to restore confidence to the stock market and need a direct clue from the price on the chart.

Let’s note a steady growth of quotations of around $6000, breaking the level of $8,000, above which is the price at the time of this writing, in the framework of the model of technical analysis «inverse head and shoulders». Almost all weeks of July have been steadily increasing recoilless. The bulls are enjoying their victory and clearly not ready to concede. So, the benchmark of the cryptocurrency market, provided overcome level of $8500 several daily candles give every chance to capitalize on the growing trend of the market in the 2 half of 2018. Yes, you need to understand what lies ahead in any case, the correction will be, so you should not have any illusions about the price of $2 million for one Bitcoin. This plan is almost 100% looks unrealistic. But you can expect moderate growth to levels that for the last 8 months would become the maximum values and where he started the reversal. Analysts ICBF in the previous review already mentioned the $10,000−$12,000−$17,000.

Spending more short term the Outlook for the coming weeks, we can note the opportunities for the development of «respite.» So, too actively pushing the price up buyers after meeting a very important level at $8500 (here can be very useful to located the signal line 200-day moving average, a break of which means reverse of trend) decided to take a break before a new storm. This advantage of the sellers are pressing the price to support at $8000, the $7400−$7600 and $7000. But do they have enough power to push it, or it is time to begin to celebrate those who occupy the position hold? If there is bridging $8500, buyers will be able to lock in profits on a sequential movement from level to level: first $8950, $9470 and after $10,000.

Chart BTC/USD daily timeframe. Source.

The current growth is estimated to be less optimistic experts, is «just a game» luring capital from the current values may further stall into a spin below $6000.

Ethereum

The rise of bitcoin has not yet led to a surge in active shopping for all alithina. In particular, the air remains close to their minimum values and can not gain a foothold above the resistance level of $480 (11% of Fibonacci retracement) and $487. Briefly it can be noted that targets for potentially increasing traffic will consistently reach $520−$530 and $570, and in the future to confirm the market recovery violas will help overcome the value of $600. But if will be confirmed the assumptions about the continued decline of the market, it is expected to fall below support at $370 and $358.

Schedule ETH/USD daily timeframe. Source.

Assessing all the above factors and the situation on the charts, it should be noted signals appearing on the growth, but make the decision to invest in each project need individually and with absolute certainty. So stay tuned for further reviews of market professionals, we wish you profitable trades!

For placement of materials within the author’s column, please write to np@decenter.org.

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