Bitcoin (BTC) Price Analysis – November 2

Bitcoin, BTCUSD, CryptoCompare chartBitcoin Chart by Trading View

BTCUSD Medium-term Trend: Bullish

Resistance levels: $7,000, $7,200, $7,400

Support levels: $6,300, $6,100, $5,900   

The price of Bitcoin is in a bullish trend. Since on October 15, the crypto’s price was range bound above the $6,500 price level. On October 29, it broke out from the range bound movement and fell to the low of $ 6,300 to commence another range bound movement. Today, from the price action, Bitcoin is in a bullish trend but price is within the bearish trend zone. 

The price of  Bitcoin is below the 12-day EMA and 26-day EMA which makes it look bearish. But if the bullish trend continues, the price will fall within the bullish trend zone. However, the stochastic indicator confirms a bullish trend. The Stochastic indicator had previously shown that Bitcoin as being oversold. That is, the momentum was strong on the downward trend.

Today, it shows that Stochastic is above 20. That is the bearish trend is reversing as the blue band of the indicator is above the red band. Secondly, the bands are out of the oversold region of the chart. Nevertheless, if the BTC price breaks the resistance levels of $6,600 and $6,800, the price will rally at $7,400.

 BTCUSD Short-term Trend: Bullish    

Bitcoin, BTCUSD, CryptoCompare chartBitcoin Chart by Trading View
      

On the short term trend, Bitcoin is in a bullish trend.  The Stochastic indicator is above 80. This explains that the bullish trend is strong. There is the tendency that price is likely to close near the top and continue its bullish movement. The crypto’s price can probably reach the highs of $6,800 and $7,400 price levels

 

 The views and opinions expressed here do not reflect that of CryptoGlobe.com and do not constitute financial advice. Always do your own research.   

Consultancy Giant DeVere Launches Actively Managed Crypto Fund

Financial advisory firm, DeVere, has officially launched an actively managed crypto investment fund that is geared towards experienced investors who are looking to capitalize from future growth in the cryptocurrency markets.

DeVere’s chief, Nigel Green, spoke about the new fund, stating that the firm differentiates itself from a slew of cryptocurrency funds that already exist by offering investors access to the major profits while maintaining decreased volatility as compared to the majority of its competitors.

DeVere Group claims to be one of the largest wealth advisory groups in the world, and specifically caters to affluent and high-net-worth clients. The issuance of this new actively managed fund could direct some of this wealth into the nascent cryptocurrency markets.

Green explained that the group’s decision to launch this fund came about due to the increasing role that cryptocurrencies are playing in the fiscal ecosystem.

“Cryptocurrencies are now undeniably part of mainstream finance. Their momentum continues to gain traction as both retail and institutional investors increasingly value the need and demand for digital, global currencies in today’s ever-more digitalised and globalised world.”

The new fund has been launched in conjunction with Dalma Capital Management, a Dubai-based fund management firm, and will utilize diversification and active management strategies in order to reduce its volatility.

Green also explained that the new fund will also exploit arbitrage opportunities in order to secure regular gains for investors.

“Through a ground-breaking algorithmic system, when the price of one asset, for instance Bitcoin or Ethereum, is greater on one platform than on another, the opportunity is identified to generate profit from the difference of price across platforms. These trades, referred to as arbitrage, allow profits to be generated with little or no directional market risk.”

Many Investment Managers are Still Unsure About Cryptocurrencies 

Despite more and more wealth advisory and management firms entering the crypto markets, many are still hesitant to invest in what is viewed as being a speculative market.

Jeremy Edwards, an associate partner at Martin Redman Partners, spoke about how he strongly advises his clients against investing in the crypto markets.

“Personally I run away screaming from cryptocurrencies. I had one client ask me about it and I asked him how they would turn it back into currency they could actually spend and they said they didn’t know, so I said he should probably find out first. I know people who have made money out of cryptocurrency but it tends to be people who joined a long time ago and it is interesting that as soon as they made decent returns they bailed.”

The CEO of the world’s largest investment management firm, BlackRock, recently explained at an event that although the firm isn’t against cryptocurrencies, they will not be releasing any crypto products until the industry receives the blessing of the government.

“It will ultimately have to be backed by a government. I don’t sense that any government will allow that unless they have a sense of where that money’s going for tax evasion and all of these other issues,” Larry Fink said.

As the world’s governments begin to further develop common-sense regulatory frameworks, and begin approving products like the VanEck/SolidX Bitcoin ETF, which is currently under review by the SEC, the cryptocurrency industry will likely see an influx of products from major financial institutions, leading the markets to new highs.

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CEO of BlackRock, World’s Largest Asset Manager With $6.4 Trillion of AUM, Talks About Crypto

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CEO of BlackRock, World’s Largest Asset Manager With $6.4 Trillion of AUM, Talks About Crypto

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On Thursday (1 November 2018), Larry Fink, the Chairman and CEO at BlackRock, the world’s largest asset manager with $6.4 trillion of AUM, said (according to CNBC) that his firm would not consider launching a crypto ETF until the crypto industry becomes “legitimate.”

Fink is a staunch Bitcoin bear, though perhaps not to the same extent as Berkshire Hathaway CEO Warren Buffet (who said back in May that Bitcoin is “probably rat poison squared”) or JPMorgan Chase Chairman and CEO Jamie Dimon (who said on Wednesday, the 10th anniversary of the Bitcoin white paper, that he didn’t give a “sh*t” about Bitcoin). 

For example, on 13 October 2017, whilst speaking at the Institute of International Finance, Fink said:

“Bitcoin just shows you how much demand for money laundering there is in the world. That’s all it is. I mean, it is an index of money laundering.”

Then, a month later, on 13 November 2017, according to Reuters, Fink called Bitcoin “a very speculative instrument” and “an instrument that people use for money laundering” at the Reuters Global Investment 2018 Outlook Summit:

“The reason why it does so well is it is anonymous. It’s anonymous, and it’s cross-border… If you legitimize it, you know who your counterparties are…the question is how many people will use it if you have to acknowledge you are a buyer or a seller.”

On 16 July 2018, the BlackRock CEO was asked in an interview on Bloomberg TV if it the reports about his firm working on some kind of crypto-based were true. He replied:

“No, I mean we’re looking at… blockchain technologies. We’re studying them [cryptocurrencies] to see how they are performing.”

And when asked about BlackRock’s clients’ interest in having some crypto exposure, he answered:

“No, I don’t believe that any client has sought out crypto exposure… When it becomes more legitimatized… that you identify who the players are on both sides… that’s probably when we’ll look at it as an alternative to all currencies.”

According to a CNBC report, yesterday, Fink was speaking at The New York Times DealBook conference in New York City.  He was asked when BlackRock would be launching some kind of crypto ETF. He replied:

“I wouldn’t say never, when it’s legitimate, yes.”

He then added:

“It will ultimately have to be backed by a government… I don’t sense that any government will allow that unless they have a sense of where that money’s going for tax evasion and all of these other issues.”

Also, he once again pointed out that Bitcoin’s anonymous nature makes it mainly useful for criminals:

“I do see one day where we could have electronic trading for a currency that could be a store of wealth. But right now the world doesn’t need a store of wealth unless you need that store of wealth for things you should not be doing.”

And finally, perhaps rather unsurprisingly, he reiterated his belief in blockchain technology:

“We are a huge believer in blockchain, The biggest use for blockchain will be in mortgages, mortgage applications, mortgage ownership, anything that’s labored with paper.”

 

Featured Image Credit: Photo via Pexels.com

 

The Incoming Wave of ICO Regulation (Yes, It’s Coming)

Alex Sunnarborg is a Founder of Tetras Capital. Previously, he was a research analyst at CoinDesk and a founder of the crypto investing app Lawnmower.


As you may know, securities classification analysis in the U.S. today primarily revolves around the Securities Act of 1933 and the SEC v. W.J. Howey Co. Supreme Court case of 1946.

The Securities Act of 1933 was established to require issuers to disclose certain pieces of information to potential investors prior to any public securities offering. This law was enacted to reduce misrepresentation by issuers and to help protect investors, but applies only to the sale of “securities.”

In 1946, SEC v. W.J. Howey Co. broadened the definition of securities by including any “investment contract”, defined as: (1) an investment of money (2) into a common enterprise (3) with the expectation of profit (4) to come solely from the efforts of others.

This criteria has come to be known as the “Howey Test,” and has now been used to evaluate a wide variety of investment schemes. Howey’s own securities sales involved selling real estate and service contracts for citrus groves he owned in Florida.

Combining these two pieces of regulation, the registration requirements defined by The Securities Act of 1933 must be satisfied prior to the sale of any investment contract as defined per the Howey Test of 1946.

71 years after the citrus groves, the SEC used the Howey Test to determine that the tokens sold in The DAO ICO were securities.

  1. Participants in The DAO invested money: ETH (defined as a “virtual currency” like BTC)
  2. into a common enterprise: The DAO
  3. with an expectation of profit: DAO (tokens purchased in the ICO)
  4. deriving from the efforts of management: Slock.it, the project’s founders, and The DAO’s curators.

Thus:

  1. DAO tokens were securities.
  2. The DAO ICO was an unregistered securities offering.

Instead of levying action against management, the SEC did not pursue charges.

The ICO boom

At the time of the SEC’s DAO report in July 2017, global token sale fundraising had just crossed $2 billion. Rather than cool the market down, in the next 12 months ICOs boomed and issuers raised over $20 billion (over 10 times the all-time total in just one year).

Almost none of these ICOs were registered pursuant to the Securities Act of 1933.

Moving forward to today, not much has changed. ICOs have not stopped and large rounds continue to be raised both publicly and privately.

Aside from the uncertain regulatory risk, an ICO is nearly a no-brainer for capital hungry entrepreneurs. ICOs have long since trumped VC as the preferred method of raising capital. Why would you bother pitching a critical VC firm when you can collect capital directly from anyone in the world?

Who’s still investing though? Despite many altcoin prices being down 90 percent or more this year, and much of retail feeling exhausted, many venture-style crypto funds were still raised in the last 12 months and thus are nearly forced to make large bets in new early stage deals.

The resulting pool of ICO risk

What’s done is done at this point for the majority of ICOs. Assets that were created as a result of an ICO and those involved in the issuance process can not take that ICO back. Token sales now date back five-plus years and the money involved has now dissipated through the world.

Many of the largest ICOs and crypto assets presently hold substantial risk as the following questions remain unanswered:

  1. Is the crypto asset a security now?
  2. Was the crypto asset a security during the initial or any subsequent sale?
  3. If not, did an exemption apply or was it an unregistered securities sale?
  4. Is U.S. securities law even relevant?

The SEC highlighted three key parties at risk of future action:

  1. Issuers of unregistered securities offerings.
  2. Investors in unregistered deals.
  3. Exchanges facilitating unregistered securities trading.

Regulatory action against any of these parties would likely result in selling and negative pressure on the underlying asset’s price. An action against exchanges would also likely coincide with a decrease in liquidity. Not only could exchanges be liable for previously facilitating the exchange of securities without necessary licensing, but in the event the exchange was currently listing the asset for trading and needed to delist the asset, overall market liquidity could drop severely.

Many crypto assets trade on only one or very few exchanges and thus an exchange delisting can suffocate liquidity and price. In addition to bad PR, the diminished liquidity would likely make it more difficult for new capital to buy in the future due to decreased on-ramp options. Further, other exchanges without securities trading licenses may also immediately follow suit and delist the asset to reduce regulatory risk and scrutiny, further centralizing liquidity.

What will regulatory action look like?

The DAO ICO illustrates a clear situation where:

  1. An issuer sold unregistered securities to unaccredited investors in the U.S.
  2. Both global retail and sophisticated institutional investors invested (many also leading the development of both The DAO and ethereum).
  3. Several exchanges (with users including unaccredited investors in the U.S.) facilitated the unregistered exchange of unregistered securities.

In their conclusion that DAO tokens were securities, the SEC took no enforcement action against the ICO issuer. Similarly, no investors or exchanges have been charged.

Many relative high profile ICOs are in a similar situation.

In June 2018, SEC director William Hinman stated “putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions (as with Bitcoin)”.

This statement. I believe, illustrates a few things:

  1. Hinman does not believe bitcoin and ether are currently securities due to their “decentralized structures”. (I would love to see more of his analysis.)
  2. Hinman purposefully “put aside” ether’s ICO and likely believes ether may have been a security at the time of the initial offer. (Presumably because he believes ether was more centralized at the time.) 
  3. Hinman likely believes that ether became decentralized enough to lose its securities classification at some point. Thus, he likely believes that the ether ICO was a securities offering and perhaps some exchanges were facilitating securities trading at some point in time. (I would love to see his analysis on when ether changed to decentralized.)                                                                                    
  4. SEC staff can make relatively bold statements in public. Statements from SEC staff are not the same as official reports from the SEC. Hinman speaking at a public Yahoo Finance conference is not the same as a report from the full SEC (but many could perceive it as such).

If Hinman thinks like his colleagues though, ethereum’s ICO may very likely be seen as an unregistered securities offering.

If ethereum’s ICO was an unregistered securities offering, the list of ERC20 ICOs and tokens built upon its blockchain looks something like a minefield on top of a house of cards. Not only are the majority of these ICOs likely unregistered securities offerings, but many of them have likely not cleared the bar of becoming decentralized that Hinman believes ether did.

Thus these assets not only had unregistered securities offerings in the past, but they are also currently securities. These token projects are not only at risk of enforcement against the issuer, but also most heavily at risk of a sharp drop in liquidity due to action towards exchanges without securities trading licenses and the subsequent delistings.

If my conclusions are correct, the SEC’s wrath has not yet passed. Rather, I believe the SEC is simply taking its time in organizing the facts and appropriate actions towards hundreds of ICO issuers, investors and exchanges.

The wave is building and I believe action is coming. The current list of enforcements in 2018 may be minuscule to what it will look like in a few years.

It is clear that many ICO issuers as well as the investors and exchanges that traded the tokens have taken some questionable actions. However to be fair to entrepreneurs, regulatory guidance has been extremely minimal and trying to navigate the industry generally feels like you’re wearing a blindfold.

In the long term, more regulation should lead to a higher quality marketplace for entrepreneurs and investors, and a better reputation for the eventual end user and industry as a whole.

In the short and medium term, though, we should be in for an interesting ride of regulatory action around ICOs.

Investing and avoiding regulatory risk

Investing in the crypto asset class is obviously extremely risky. Diversification within the asset class is somewhat of a myth. Liquid crypto asset price movements are highly correlated and many early stage crypto investments share exposure to (1) risk around securities regulation and (2) ethereum as its base blockchain.

Bitcoin leads the crypto asset class in terms of market cap, liquidity, age and security. I thus believe bitcoin should be most long crypto investor’s primary benchmark, and any alternative crypto investment should be analyzed as to the opportunity cost vs holding BTC. In modeling out various scenarios, one of the greatest weaknesses of many alternative crypto assets is the uncertainty around future liquidity.

If you invest in a very early stage deal, before even the ICO (in a pre-ICO, SAFT, or similar round), the journey to liquidity may entail:

  1. Waiting for the team to build initial software.
  2. Waiting for the team to decide on a public offering or token distribution strategy.
  3. Waiting for the team to distribute you tokens after any vesting or lock-up period.
  4. Waiting for an exchange or similar liquidity avenue to open a market you can sell on.

In addition to that daunting gauntlet of hurdles, at any point during this journey or after, regulatory risk can persist. The token can be deemed to have been a security when it was sold without proper registrations in the past, likely severely harming its liquidity.

When investing in any early stage deal, you need to be (1) very confident on your early stage deal’s estimated timeline to liquidity, and/or (2) confident that it can outperform BTC on any time horizon (as BTC will be liquid on all timeframes).

A VC portfolio can have many strikeouts that one home run like ETH can make up for, but I do believe many (especially institutional) crypto investors make the mistake of over-allocating to illiquid positions.

On recent time scales the ROI of ICOs vs liquid asset alternatives just doesn’t make sense unless you are extremely lucky or diligent and active with your ICO selection and trading. The lack of liquidity means that early stage investments that are going poorly are unable to be sold, leading to retaining underperforming regulatory risky and correlated positions. In my opinion, the benefits of the ability to actively re-balance a crypto asset portfolio cannot be overstated (2017–2018 alone should be proof of the advantages of liquidity alone).

Outside of early stage illiquid deals, I generally group liquid asset ICO regulation exposure in three buckets:

  1. Least risky: asset has had no sales (no ICO, etc.) – e.g., BTC, XMR, DCR
  2. More risky: asset had a private ICO or sales (restricted to institutions, accredited investors, etc. only) – e.g., FIL, ZEC, XRP
  3. Most risky: asset had a public ICO (totally open to anyone in the world) – e.g., ETH, EOS, SNT

To minimize risk to future securities regulation, minimize overall exposure to early stage illiquid deals without clear registration and liquid assets in bucket 3.

The SEC has not forgotten or overlooked any deal, the wave of ICO regulatory action is coming.

Wave image via Shutterstock

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DeVere Group Targets Arbitrage With New Crypto Fund

U.K.-based financial advisory firm deVere Group, which says it has over $10 billion under advice and management, has launched an actively managed cryptocurrency fund.

Announced in a press release Thursday, the new investment offering, called deVere Digital Asset Funds, is being launched in partnership with Dubai-based hedge fund manager Dalma Capital Management.

The fund will provide investors with a diversified exposure to digital currencies, but aims to reduce the volatility “for which the market is known,” deVere states.

The fund will invest in a portfolio of various digital assets using algorithmic trading over different platforms – including cryptocurrency exchanges and OTC [over the counter] markets, as well as taking advantage of arbitrage.

Arbitrage involves buying an asset on one exchange and selling it on another where the price is higher to profit from the difference in prices.

The founder and CEO of deVere Group, Nigel Green, said in the release that he believes that cryptos are now “undeniably part of mainstream finance” and that there is growing demand from clients.

Arbitrage, he added, allows profits to be generated “with little or no directional market risk.”

Zachary Cefaratti, CEO of Dalma Capital said that crypto markets have offered numerous arbitrage opportunities that have not been seen in conventional markets for decades, adding:

“Arbitrage opportunities abound – the prices of the top 25 crypto assets vary across over 400 liquidity venues. The ability to trade long and short allows profit opportunities regardless of market direction.”

In a previous foray into the crypto space, deVere in February launched a cryptocurrency app called deVere Crypto that allows users to store, transfer and exchange bitcoin, ethereum and litecoin.

London city image via Shutterstock 

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Bitcoin Price Watch: BTC/USD Targets Fresh High Above $6,400

Key Points

  • Bitcoin price gained traction and moved above the $6,335 and $6,350 resistances against the US Dollar.
  • There was a break above a key bearish trend line with resistance at $6,345 on the hourly chart of the BTC/USD pair (data feed from Kraken).
  • The price is currently correcting lower, but there are decent supports near $6,345 and $6,325.

Bitcoin price is gaining upside momentum against the US Dollar. BTC/USD could dip a few points before it climbs above the $6,380 and $6,400 levels.

Bitcoin Price Analysis

Yesterday, we saw a decent upside move from the $6,220 swing low in bitcoin price against the US Dollar. The BTC/USD pair moved higher and traded above the $6,300 and $6,325 resistances. Later, there was a minor downside correction and the price tested the $6,290 support, which was a resistance earlier. The price bounced back again and traded above $6,335 and the 100 hourly simple moving average.

The upside move was strong as the price traded close to the $6,380 level. Moreover, there was a break above a key bearish trend line with resistance at $6,345 on the hourly chart of the BTC/USD pair. The pair traded as low as $6,379 and it is currently correcting lower. Sellers pushed the price below the 23.6% Fib retracement level of the recent wave from the $6,291 low to $6,379 high. At the moment, the broken trend line is acting as a support near $6,345-50. Below this, the price could test the 50% Fib retracement level of the recent wave from the $6,291 low to $6,379 high at $6,335.

Bitcoin Price Analysis BTC Chart

Looking at the chart, bitcoin price is pointing positive signs above the $6,325 and $6,335 levels. If there is an upside break above $6,380, the price will most likely surpass $6,400 for more gains.

Looking at the technical indicators:

Hourly MACD – The MACD for BTC/USD is slightly placed in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI is placed above the 50 level.

Major Support Level – $6,335

Major Resistance Level – $6,380