Goldman has mixed feelings on BTC as fundamentals improve
Hi everyone,
The turn of events in the US are now being replicated in the UK and in Europe as the impact of stifled economic activity begins to peak its head in the real world. The veil of disbelief was first removed in the US, which is witnessing mass demonstrations, protests and riots, all the while the S&P inches closer to all time highs — stocks literally rallied on news of one of Amazon’s warehouse being burned to the ground. Indeed, the mother of all asset bubbles is alive and well as the stock market hyper inflates and the disparity between the ‘haves and have nots’ widens. As you know, this is a major cause for concern. Societal unrest doesn’t benefit anyone and current conditions of mass unemployment only serve to exacerbate what would otherwise be something temporary. That said, it’s not all doom and gloom, in fact, bitcoin fundamentals are recovering and growing stronger with this backdrop which if anything at all, amplifies its anti-fragile properties.
In context: Goldman Sachs secretly likes bitcoin?
Former investment banker at Goldman Sachs, Ethan Vera and current executive at a crypto mining firm pointed to the fact that the perception of bitcoin by one GS division does not necessarily reflect the bank’s viewpoint. The exec emphasized that the main strategic investment group is entirely separate from the wealth management division that gave the rudimentary presentation.
Goldman Sachs is a large organization with many different divisions. The Wealth Management division’s opinion on Bitcoin & Crypto doesn’t necessarily reflect the company’s view pic.twitter.com/PpmYrRLkAy
- Ethan Vera (@ethan_vera) May 27, 2020
He added: “ I really do think Goldman is further ahead than most of the other Banks on Bitcoin.”
Similar to other hedge funds like that of Paul Tudor Jones, Goldman is taking what could be seen as a cautious stance on bitcoin, whose market capitalisation stands at $178 billion — less than 3% of gold’s. Taking recent events in their historical context, let’s not forget that just five years ago, Goldman invested in a bitcoin Company called Circle, which heads up the second biggest stablecoins in the entire market — USDC. In addition, back in September 2018, GS executive Martin Chavez had stated that the bank was working on a bitcoin derivative platform to meet the demands from clients, the reports of which had been withdrawn earlier in May that same year. Now that Grayscale — an institutional bitcoin trust — is quite literally buying up the majority of freshly minted bitcoin, owning close to 1.5% of the entire btc supply, it’s no wonder that GS has mixed feelings on how to approach it’s long-time crush that is bitcoin. Bearing in mind that JP Morgan — America’s largest financial firm — changed its tune on bitcoin by offering bank accounts to Gemini and Coinbase, the historical precedent for an eventual endorsement by GS is there (which we’ll probably learn about once they stand to gain from bitcoin’s price appreciation).
Hashrate recovers as block difficulty returns to January 2020 levels
Bitcoin’s hash rate has recovered significantly since its halving last month and is approaching all-time highs once again as the network difficulty retraces to January levels. The network hash rate is an indication of the bitcoin’s health since it shows the total processing power on the bitcoin network. Following last month’s halving, the slump which came about due to several mining operations powering down their hardware has since recovered as data from bitinfocharts shows.
Historically, the all-time high for BTC hash rate occurred on May 11 at 137.57 exahashes per second according to the source. Currently it has reached 126.52 EH/s, which is just 8% from the all time high. With prices holding just under $9,700, it seems like the much anticipated miner capitulation has either been absorbed by bitcoin zealots and institutional interest, or has yet to truly materialize in the price. Having said that, given that half as much bitcoin is now freshly pumped into circulation (compared to pre-halving levels), any price correction wouldn’t be that severe should bitcoin interest remain stable.
Disparity between transactions and price grows
Several articles have emerged which shed light on the fact that bitcoin’s transaction fees have recently come down to just under $1. However, this is largely due to the fact that network usage has come down since May, with the mempool backlog being in a steady and notable decline.
At the same time, the disparity between transactions and bitcoin’s price has widened since the beginning of June, suggesting an imminent corrective move to either side. Both these on-chain indicators are describing a picture that will probably end up in an explosive move in bitcoin’s price, which would also be reflected on these metrics.
Technically speaking
4-hour turns bullish
Bitcoin witnessed a second attempted dump to $9,390 ( Bitfinex) and shortly after recovered to $9,800 as it erased 2 days of price-action within a single 4-hour bullish-engulfing candle.. Currently, bitcoin has been testing the 50-EMA after having bounced off the 200-EMA in late May. Consequently, a significant bullish divergence has developed on both the RSI and MFI, suggesting a move back towards $10,000 could be in the works within the short term trend. Bitcoin’s target for continued upside remains $10,500, which if conquered, will open the door to a fresh local high beyond the $11,000 mark.
On the flip side, should bitcoin fail to break up from this ascending triangle, then an aggressive move to the downside could be in the works, with interim support zones being $8,800 and $7,500 respectfully. A bounce from these levels isn’t precluded, considering the fact that both levels offer notable technical support on the daily and weekly times-frames. In fact, not much has changed on these high time-frame charts since the previous newsletter. Given that price is still developing within the respected structures, any further analysis is meaningless at this stage. Bitcoin is simply trading within a consolidation pattern that has yet to give any additional information. That said, an explosive and decisive move which isn’t a fake out is on the horizon and should occur sometime this week. The question is: do the bulls have what it takes to take this uptrend to the next level? The fundamental reality tells us that bitcoin was made for this, but then again, bitcoin doesn’t necessarily have to do what it’s “supposed to do” — so to speak.
In the meantime, I leave you with these wise words from the Crypto Dog himself!
$btc will probably be over 10k sooner than I want it to.
- The Crypto Dog📈 (@TheCryptoDog) June 8, 2020
p.s. Don’t let your memes be dreams — follow me on Instagram for more lighthearted content.
Thanks for reading and have an excellent day!
Adam Back says crisis could push BTC up to $300k without institutions
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Christopher Attard
Founder of Chris on Crypto
Contributor to www.cryptoglobe.com
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Originally published at https://mailchi.mp.
