EQUOS — Morning Update — October 22nd

Stimulus bill negotiations have become predictable — one day positive, one day negative. Yesterday’s session was on a pessimistic note and so equities traded mixed, treasuries were still sold off, and the 10-year yield went above 0.8%. Gold rose 0.8% to $1,923.

I don’t want to talk about traditional markets, though. Bitcoin had an intraday high at $13,215 (an almost 11% move up from the open) and is closing at $12,853, piercing through the $12,500 resistance and sitting about 8% up on the session.

For anybody who’s been in the space for a while, the level is not unprecedented nor unexpected. We’ve seen it on the way up in 2017, on the way down in 2018, and during the 2019 high’s. It still feels great, though. Any holder of BTC (or crypto, really) is feeling richer today, or maybe bugged about not investing more. Anybody who was on the sideline is annoyed at the missed opportunity. This ‘fear of missing out’ environment can lead to some powerful moves.

The negative news out there, such as the Bitmex debacle or the OKEx investigation, didn’t curb people’s enthusiasm, but the move by many large and traditional firms to enter the space did create enthusiasm.

Even on the weekly chart, you can see we’re in a clear upward trend, and the move feels a lot steadier than before. The asset class and the crypto environment have changed since 2008, when the Bitcoin whitepaper was issued — even since 2017, when we had the ICO craze and ramp up to 20K. The monetary policies along with the acceptance and understanding of the technology has been key to this.

Just yesterday, two interesting pieces of news came out: Mode Holdings, a listed company in the UK, allocated 10% of its cash reserve to Bitcoin, and, more dramatically, PayPal issued a statement announcing they will enable crypto payments and transactions by 2021… that’s essentially next quarter.

As a quick note, for now at least, alts are also moving up but underperforming relative to BTC. That isn’t worrying in and of itself. Markets are cyclical and so when one coin leads, others follow, and there’s a lag between those two events. The focus of the larger players remains on Bitcoin, though, and so it’ll be interesting to see how the rest of the crypto market moves in comparison.

Lastly, to end on a cautionary note, I would remind people that while strong moves up show momentum and enthusiasm, they’re also profit-taking levels for anybody eager to cash out. Markets also need the right kind of volume to sustain that upside volatility and more often than not, the way up has to deal with pauses, retracements and corrections. Trade accordingly.

https://www.youtube.com/watch?v=QigvPzDRY6w