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Analyst: Bitcoin (BTC) Is Tracking USD/Yuan Exchange Rate

Bitcoin BTC USD Yuan

A contributing author and Asian markets analyst on Forbes has pointed out that the non-correlation of cryptocurrency–that digital assets fluctuate to their own market devices–does not tell the full story. Instead, William Pesek argues that prices for Bitcoin are moving with the price of the Chinese Yuan versus the U.S. dollar, as opposed to the dominant assumption being placed on USD movements alone. According to Pesek,

“There’s an easily trackable correlation between bitcoin and the dollar/yuan exchange rate…No, bitcoin doesn’t track the dollar’s zigs and zags–except when we’re talking about its moves versus China’s currency. A sliding yuan tends to be bitcoin positive.”

Pesek continued,

“As the yuan weakens, after all, moneyed mainlanders are increasingly desperate to spirit their wealth beyond the prying eyes of Beijing’s tax collectors.”

The argument for the relationship between the Bitcoin and the USD/Yuan exchange rate hinges on the voracious appetite of Chinese investors for Bitcoin and digital assets. Despite the Chinese government and President Xi’s massive crackdown on Bitcoin, which culminated in the outright banning of BTC trading and initial coin offerings (and rumors of mining to be targeted next), savvy Chinese investors have continued to find ways to buy digital assets at an impressive pace.

Pesek also points out that the brewing trade war between China and the United States, stemming from the failed negotiations of both President Trump and President Xi, have thrown the USD and Yuan into flux. Similar to how the looming possibility of a no-deal Brexit pushed European investors into Bitcoin, the deterioration of U.S.-Chinese trade relations has mainlanders looking to BTC and digital assets favorably. Despite its historic volatility, Bitcoin is beginning to resemble the digital gold safe haven that has long been held up by supporters.

However, while the uncertainty kicked up over a possible trade war is good news for Bitcoin bulls, it also harbors deeper implications for the broader global economy. Pesek anticipates that fiscal policy by President Trump and the Chinese government will force further deterioration, and ultimately lead to even greater investment by the Chinese mainland into Bitcoin.

As evidenced in places of extreme economic mismanagement, such as Venezuela and Argentina, cryptocurrency has become an alternative asset for investors looking to harbor their funds against uncertain government fiat. While the U.S. and China represent two of the more historically stable economies, and the global powers driving financial markets, the lack of confidence inspired in the fluctuating USD and Yuan could make otherwise conservative investors take a glimpse at the digital gold of BTC.

At the Consensus 2019 event, billionaire investor and crypto bull Mike Novogratz shared his opinion that Bitcoin had likely maximized its utility as a store of value asset. While Novogratz commenting more on the room for innovation in Bitcoin as digital gold, it remains to be seen how digital assets handle a possible fortuitous turn in the coming years, with the combination of Brexit, a U.S.-China Trade war and inevitable recession looming on the horizon.

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US Global Investors CEO Predicts Bitcoin (BTC) Ready for Bull Cycle, Prefers Gold

Bitcoin BTC Price Analysis Gold 2019

Frank Holmes, CEO of US Global Investors and one of the more prominent natural resources capitalists in the country, called Bitcoin an alternative to gold, but stated that he preferred the physical store-of-value asset to its digital counterpart. In addition, he issued a stern warning to ‘millenial’ traders who have failed to do their homework on Bitcoin and precious metals such as gold.

Speaking in an interview with Kitco News on May 17, an organization that deals in precious metals trading, Holmes highlighted the fact that BTC and cryptocurrency wallets increased since 2018, despite the falling coin prices of last year’s crypto winter,

“What’s important during this whole year is that even though the price fell 80% to 90% depending on the coins, you had an increase of wallets out of people buying bitcoin, and that’s a sign that we’re ready for the next bull cycle. ”

In addition to increasing adoption, Holmes found the conditions of January 2018’s collapse to be somewhat favorable for a coming bear cycle. Compared to the traditional markets in 2008, which catalyzed one of the worst global recessions in history, the crypto markets of early 2018 were not overleveraging, which Holmes believes will allow them to recover more quickly,

“This [correction] can be a year, and we’re slowly climbing out of it, and [bitcoin] is becoming an alternative asset class like gold.”

Despite being receptive to a bullish cycle ahead for Bitcoin, Holmes reiterated that he prefers gold to BTC, stating that the latter is not a replacement for real-world precious metals. He also cautioned younger investors not to become too caught up in cryptocurrency, and to consider other asset classes, including as a way to contribute patriotically to the U.S.,

“[Millennials] should do their homework, they should open up a history book on why gold is so significant… why the great ‘love trade’, that if you love your country you should have gold in reserve. If you have a crisis, your paper money goes down in tremendous value. Gold is what bailed out Britain, getting it over to Canada, and then trading to get weapons from America, it was gold that did it.”

Holmes gave another prediction that the price of gold would rise with the easing of central banks around the globe, particularly in Europe, causing a decrease in value for fiat currencies that would push traders into precious metals. He highlighted the looming trade war between the United States and China that will ultimately lead to negative rates. He claimed the EU to have “massive” negative real interest rates with “no hope of them rising.” He further chastised EU governments for continuing to print money, and made the statement “you better buy gold, and you better back up the truck and have that minimum 10% golden rule.”

The geopolitical uncertainty brewing around U.S.-Chinese trade relations could further contribute to investment interest in cryptocurrency–similar to early April’s Brexit craze–as traditional economies and fiat currencies appear less certain.

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New Research Shows Bitcoin (BTC) Conversation Has Matured Dramatically

Bitcoin BTC Conversation 2019

The recent price rally for Bitcoin and cryptocurrency has a number of analysts and investors scratching their head and asking the question: what’s different between now and 2017?

While coin prices fell through the majority of last year, leading analysts to label 2018 a crypto winter, the market reached an all-time high in late 2017 following a massive bull rally for Bitcoin. Despite currently trading at under $8000, the price of BTC reached an all-time high of $19700 in the final weeks of December 2017. At the time, it appeared that Bitcoin was finally receiving the adoption and investor interest it deserved after nearly a decade on the market.

However, it quickly became apparent that market prices had outstripped valuation and usability, and the entire landscape of cryptocurrency collapsed with coin’s falling 80 percent or more over twelve months. In the aftermath of the price fall, analysts pointed to Fear Of Missing Out (FOMO), unrealistic expectations and greed as primary contributors to the spectacular boom and bust cycle for Bitcoin.

Bitcoin Conversation Evolving

Compared to eighteen months ago, alternative data provider Indexica believes that Bitcoin has matured as an asset since the last bull rally, and has published research supporting their claim. The group created a custom index processing the language contained in thousands of text documents related to cryptocurrency and Bitcoin, and found that the industry, as a whole, has matured greatly over the last several years.

According to their findings, professional discourse around Bitcoin has continued to grow throughout 2019, marking a key price indicator for the currency’s rally since the start of April. As outlined by Bloomberg, Indexica’s findings show three main drivers for growth:  “a more complex conversation surrounding Bitcoin, fewer concerns about fraud and a shift in the tense of how Bitcoin is talked about from the past to the future.”

‘Complexity of Bitcoin’–defined as a measure of the quality of discourse surrounding the asset–made up the majority (24 percent) of the conversation related to BTC. Indexica attributes the increased quality of discussion to the growing pool of academics and professional investors now populating the space of cryptocurrency, moving beyond the niche technology market it represented just a few years ago.

Bloomberg cites the entrance of Fidelity Investments getting into the cryptocurrency game for institutional investors as one strong indicator that the marketplace for Bitcoin has changed dramatically over the last eighteen months. In addition, Wall Street investment bank JP Morgan Chase has also given a vote of confidence to the utility of digital assets, by creating the in-house JPMCoin.

Interestingly, Indexica’s study also found that the tense of conversation surrounding cryptocurrency has changed within the last month. Futurity of Bitcoin, which logged 15 percent of the indexed conversation, gives an indication that discussions are geared towards the future of BTC–as opposed to what has already transpired. SInce the start of April, the future for Bitcoin and the crypto markets has been a dominant topic of conversation, providing another indicator on the direction of the industry.  

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First Brexit, Now Trade Wars: Global Politics Driving Bitcoin (BTC) Investors

Bitcoin BTC Cryptocurrency Trade War 2019

In April, after more than a year of falling prices, Bitcoin and the crypto markets took off on a bullish rally. While the initial price jump has been tied to a massive 21,000 BTC buy, geopolitical overtones at the time concerning Brexit contributed to the wave of investment interest.

During the same week that Bitcoin and cryptocurrency experienced its first bullish rally since the beginning of 2018, British Parliament and Prime Minister Theresa May were embroiled in a debate on how to handle their exit from the European Union. While once a seemingly impossible though, the U.K. appeared to be drawing near a ‘No-Deal’ Brexit, which would have brought about an abrupt and immediate cease in trade and relations with the European Union.

In anticipation for such an event, currency speculators were predicting a collapse in the British Pound and drop-off for the Euro, driven by the economic turmoil and halting trade between the two entities. Parliament swooped in during the first week of April to prevent a No-Deal Brexit, and the entire event was brought to anti-climatic end mid-month with Brexit being delayed to the end of October 2019.

However, the economic uncertainty kicked up in the wake of Brexit was enough to draw vast swathes of the investment landscape to cryptocurrency as a possible alternative to government fiat and the traditional markets that relied upon their currency. Similar interest in cryptocurrency has continued to be generated throughout May, as the fallout from U.S. and Chinese trade negotiations creates a murky global landscape.

The ‘trade war’ brewing from President Donald Trump’s handling of U.S.-Chinese relations has the investment class once again looking at cryptocurrency as a potential means for economic viability. The bullish turn for Bitcoin is no doubt related to the market cycle of a severe bearish period coming to an end, but the geopolitical implications of global economics have changed over the last eighteen months.

Whereas cryptocurrency was previously viewed too volatile to participate in, institutional investors are turning to the possibility of Bitcoin as a substitute store of value and alternative to the traditional markets. In addition, the entire industry has been vetted and supported by the entrance of social media giant Facebook and Wall Street stronghold J.P. Morgan Chase.

The vote of confidence for cryptocurrency is in; now it remains to be seen how the industry can move past the FOMO and price speculation that led to January 2018’s massive collapse in valuation. It’s possible that the looming global recession for the world’s markets–after 12 years of bullish prices–could force the hand of investors and cryptocurrency. But given the economic uncertainty being generated by both a looming trade war and a delayed Brexit, it could be only a matter of time before crypto takes a more central stage as a currency and digital asset.

Either way, the valuation for cryptocurrency appears tied up in larger factors than retail price speculation.

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Billionaire Mike Novogratz: Bitcoin Store of Value “Not Going to Change the World”

Mike Novogratz Bitcoin Web 3.0 2019

Billionaire investor and long-time Bitcoin bull Mike Novogratz shared some interesting views on the current state and future of the leading cryptocurrency by market capitalization.

While Novogratz has been an overwhelming proponent of Bitcoin and cryptocurrency, recently predicting that BTC would reach $20,000 by the end of 2020, he believes that the coin is reaching the end of its potential as a store of value. Speaking at ConsenSys’ Ethereal Summit May 11 on a panel titled, “The Herd is Still Coming!,” Novogratz explained that Bitcoin largely functions as a digital store of value and has managed to build on its competition by the being the first cryptocurrency to market, saying “it came first.”

As far as the potential for new development or innovation as a store of value, Novogratz claims that the coin is “kind of finished” in terms of maximizing that specific use case. Novogratz then made the common analogy of Bitcoin as a digital for of gold, claiming that both serve as a store of value for investors but largely function as social constructs. Similar to investors buying Bitcoin, gold continues to hold and change in value based off the expectations of its social surrounding, as opposed to exhibiting truly intrinsic worth.

Despite being historically bullish on BTC and cryptocurrency, Novogratz concluded that Bitcoin was unlikely to change the world. Following up on his comparison of Bitcoin as a store of value, and being a limitation of the currency’s use, the former Wall Street exec claimed that BTC is  “not going to change the world.” Instead, Novogratz highlighted ‘Web 3.0’ as the most likely technology to institute dramatic change, stating “it has potential to change the world.”

Some community members have found fault in Novogratz’s take on Bitcoin’s limited use, and for relying on the tired comparison to gold. However, the billionaire investor’s comments appear to be more in support of ‘Web 3.0’ as opposed to an indictment of Bitcoin. He also coached the limitations of Bitcoin in a broader criticism towards the extensive altcoin market.

Novogratz explained that the vast market of altcoins will have to “prove themselves out,” as viable solutions and providers of utility, as opposed to being carbon-copy coins that generate undeserved billion-dollar market capitalizations. While Bitcoin may have reached its limit as a digital store of value, the broader altcoin market has yet to prove much in terms of usefulness. According to Novogratz,

“If you really think bitcoin is gonna win this store of value, everything else needs to be used for something.”

In April, Novogratz took aim at Litecoin in a series of tweets questioning the investment interest in LTC over Bitcoin,

“Gold has an $8.5 trillion dollar market cap. Silver is $15bn That is .17%.  $BTC has a $90bn mkt cap. $ltc is $5.7bn which is 6.4% of $BTC. Silver is at least useful for industrial production.  $ltc is a glorified test net for $btc. I don’t get this rally. Sell $ltc buy $btc.”

The price of Bitcoin has continued to climb throughout the weekend, trading at $7100 as of writing.

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So Much for $6000 Resistance, Bitcoin Price Dominance Reaches Sixteen Month High

Bitcoin BTC Price 7000 2019

After a week of bullish price movement, U.S.-based investors awoke May 11 to the sight of Bitcoin up 8 percent, approaching a relative high of $7000.

Despite April’s bullish turn in the crypto markets, analysts were calling for substantial resistance in BTC surmounting $6000. In November 2018 the price of Bitcoin plummeted from the market uncertainty of the BCH contentious hard fork and general investor fatigue. Retail investors fled the crypto markets in droves, cashing out at a loss. The remaining investors were thought to pose tough resistance for Bitcoin eclipsing $6000, marking the point where traders could recoup on losses incurred in the sudden plummet.

Instead, the price of Bitcoin has smashed the $6K mark and continued steadily towards $7000. Some analysts are calling for even greater price gains ahead, with the bullish sentiment and overwhelming effect of FOMO at a near-high not seen since 2017’s epic price rally. Others are pointing to the coin in danger of being overbought, after more than doubling in price since the start of the year and generating a near-continuous upward climb since the beginning of April.

Facebook, for what it’s worth, has played a role in the renewed interest in the crypto markets. While Bitcoin had likely reached a point of being oversold, falling close to 90 percent from it’s all-time high, the social media goliath has injected confidence and renewed interest in the industry. Prior to 2019’s string of adoption for cryptocurrency, which includes Wall Street bank J.P. Morgan Chase, retail giant Rakuten and Facebook, the industry was in danger of suffering from the backlash of 2018’s ‘crypto winter.’ Developers and crypto enthusiasts may have remained bullish on the outlook for the technology, but outside investors remain wary.

Facebook’s show of confidence in digital currencies has brought the interest of both institutional and retail investors, giving crypto a base that extends beyond 2017’s constant news headline of Bitcoin as an empty “get rich quick scheme.” Investors are finding more reason to be bullish on the long-term prospect of cryptocurrency, as opposed to cashing out at the first sign of market downturn. The Facebook Coin may eventually come to compete with BTC, as some analysts have predicted, but the more likely situation is synergistic for the price of Bitcoin due to increased exposure.

Compared to the price rally of 2017, this year’s bullish turn for cryptocurrency could receive a substantial boost from the foundation of adoption that has been slowly built over the last sixteenth months. Investors are responding to the belief that Bitcoin will continue to lead cryptocurrency, with the number one coin by market capitalization also achieving an increase in market dominance. BTC’s >58 percent market dominance is at its highest point in sixteenth months, dating back to the last bull rally of December 2017.

Altcoins might be making a general resurgence on the day, but investors are clearly putting their confidence in BTC as the coin that will continue to lead throughout the rest of the year.

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SFOX: Bitcoin Looks ‘Mildly Bullish’ For May 2019

SFOX Bitcoin Price Analysis 2019

Crypto analytics firm SFOX has released their most recent report on the state of the crypto markets, finding the outlook for May to be ‘mildly’ bullish for Bitcoin.

According to the most recent report and SFOX’s Multi-Factor Market, BTC continues to look mildly bullish entering the new month. While the final week of April appeared to show some price contraction for BTC, with the currency experiencing a sudden dip following news of Tether and Bitfinex being accused of market manipulation, SFOX continues to support positive price growth for the currency.

SFOX also claims that Bitcoin has continued to hold  control over the marketplace despite the rally in coin prices for other top cryptos. BTC market dominance climbed throughout the last month, with the original cryptocurrency piling on valuation compared to other currencies. SInce the start of April, Bitcoin has grown to 6 percent in market dominance, rising from near 50 percent to 56 percent, as of writing. SFOX writes that Bitcoin movements for other top cryptos, such as Ethereum, Litecoin and Bitcoin Cash correlated with Bitcoin throughout last month, despite the latter’s growing development.

SFOX also writes that, moving forward, investor interest should turn towards developments related to a Bitcoin Exchange-Traded Fund and other indications of substantial institutional investment Overall, the change in market sentiment from SFOX has not changed in the last month, with Bitcoin continuing to register a “mildly bullish” indicator from the analytics firm–the same metric it generated last month.

However, the company reports that the primary metrics used for gauging Bitcoin price performance–price momentum, market sentiment, and continued advancement of the sector–gives a positive outlook for both the price of BTC and the overall industry of cryptocurrency. Nonetheless, SFOX’s rating for BTC has ranked as ‘mildly bullsih’ for the fourth month in a row, a condition that the firm addressed in the more recent update,

“We determine the monthly value of this index by using proprietary, quantifiable indicators to analyze three market factors: price momentum, market sentiment, and continued advancement of the sector. It is calculated using a proprietary formula that combines quantified data on search traffic, blockchain transactions, and moving averages.”

SFOX cites strong Bitcoin fundamentals for being the primary driver for its rating into the fifth month of the year, with both price momentum and institutional interest showing signs of growth and giving an overall bullish indicator for BTC. The start of April, which kicked off one of the most bullish rallies for Bitcoin valuation in over a year of trading, was largely driven by one institutional or whale purchase–at least according to data compiled by the analytics firm,

“The beginning-of-April crypto rally, despite having injected the market with renewed volatility, appears to have primarily been driven by one large buy order rather than fundamentals, and the market appears to have largely normalized again at new levels post-rally.”

Despite featuring heavily into previous years of investment, SFOX claims that FOMO has taken a passenger seat to overall industry growth, leading investors to buy cryptocurrency for reasons supporting long-term valuation and market interest.

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Bitcoin at $6000 Could Prove Pivotal for Institutional Investors

Bitcoin Institutional Investors 2019

As the crypto markets make a slight recovery following their plummet earlier in the week, all eyes turn to the continued price gains of Bitcoin. Since the start of the year, BItcoin has posted more than 50 percent in gains, with the $6000 price mark becoming the next significant hurdle for the currency. Average investors may consider the psychological value of BTC at $6000, but institutional investors and their behavior will be the true indicators of market direction moving forward in 2019.

Tom Lee, Fundstrat cryptocurrency analyst and regular Bitcoin commentator, has pegged current market sentiment for BTC at its highest point in his Bitcoin Misery Index (BMI), a value not yet seen under bearish conditions. While Lee give some hope that having an elevated BMI in the midst of a bear market may give indication that the bulls are in for a turn, he also cautions that a rising BMI has historically correlated with a sudden downturn in pricing.

His prediction may have come true last week, as the price of Bitcoin crashed from $5400 to $5000, with the majority of the crytpo markets experiencing an acute retraction in price. However, most of the sudden price movement was brought about by the actions of the New York Attorney General’s office, who issued a court filing accusing Bitfinex and Tether of market manipulation. In the report, the New York AG’s office claimed that Bitfinex was in danger of insolvency, and used $850 million worth of Tether funds to cover the losses–funds that are supposed to be backing the value of USDT 1:1 with U.S. dollars.

The market uncertainty generated by the report, in addition to confusion surrounding Bitfinex user funds, led to a flash crash in the Bitcoin and altcoin markets. While BTC has steadily recovered to $5300 throughout the weekend, investors are still unsure which was the market will move entering the fifth month of the year. More than any other metric, the $6000 mark for BTC could prove a severe litmus test for the commitment of institutional investors.

Previous reports by analytics firm Adamant Capital report that the majority of retail investors, at long-last, fled the bear market of cryptocurrency in November 2018 following the collapse of BTC pricing. Since that time, the valuation of Bitcoin has seen a drop in price volatility, owing to the decreased actions of retail traders.

At the beginning of April a series of coordinated Bitcoin buys across multiple exchanges, totaling over 20,000 BTC, kicked off the present price rally which has taken Bitcoin to highest valuation in six months. While no single trader has come forth to claim responsibility for the transactions, analysts are owing the behavior to institutional investors–rather than crypto whales. The coordinated actions of a well-capitalized trader(s), who sunk nearly $100 million in BTC, means that the market is currently operating at the behest of institutional investors. And some analysts have pointed out, these large-capital investors could be riding short-term sentiment.

Considering the bullish turn in crypto market prices ignited from a series of transactions, it could be that these traders are waiting for the $6000 mark to take action again. For one, Tom Lee’s BMI measures market sentiment for Bitcoin, with that value reaching its highest point since 2017. Retail investors are looking at Bitcoin prices favorably, for now, but that could change with the looming hurdle of BTC at $6000. BItcoin was hovering around $6000 before its crash in November 2018, meaning a number of investors could be looking to recoup on losses at that threshold.

If this proves to be the case, the institutional investors which catalyzed the most recent bullish run for BTC could look to make a killing in the short-term, playing off the change in market sentiment that could accompany steep BTC resistance at $6000.

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Altcoin Trouble Ahead? Bitcoin (BTC) Dominance On the Rise

Bitcoin BTC Market Dominance 2019

On April 23, the crypto markets took a turn that have some questioning the outlook on altcoins. While the altcoin market has been holding its own against Bitcoin, with currencies like Binance Coin posting 300 percent gains since the start of the year, the market appears to be swaying in favor of Bitcoin.

Long time cryptocurrency investors will be familiar with the the tug-of-war price movement between Bitcoin and altcoins. At times, the entire cryptocurrency marketplace buoys on positive sentiment and increased investment. However, a shifting between the pool of capital in alts and Bitcoin is also a common occurrence. For one, investors avoid the headache generated by taxes and capital gains by trading between currencies.

But for the most part, investors have recognized that Bitcoin tends to be a more price stable currency relative to the rest of the market, while also offering the ability to appreciate during periods of positive price movement–a feature that stablecoins are unable to offer. In times of bullish market sentiment, such as what is brewing for the industry at present, investors grow fearful of missing out on massive BTC leaps, such as the epic run which took Bitcoin to $20,000 in December 2017.

Despite the development interest and growth into platform currencies such as Ethereum, EOS and TRON, the marketplace for cryptocurrency continues to flow through the original cryptocurrency. Bitcoin holds a wide margin in market capitalization over the second highest coin Ethereum, a gap that is greater than $80 billion. In addition, Bitcoin market dominance has continued to climb throughout 2019, up from 51 percent at the start of the year to over 53 percent. Today’s price action has taken BTC dominance to just under 54 percent, its highest point since September 2018.

In fact, Bitcoin dominance has largely been on the rise over the last 12 months, with the coin reaching a relative low of 35 percent dominance in May 2018. While BTC experienced a slight retraction during the market fall of last December, the coin is making a recovery that could be trending towards the >80 percent dominance the coin historically experienced prior to early-2017.

More than likely, Bitcoin will not be able to eclipse its 2017 dominance of 85 percent, given the changing landscape of cryptocurrency. While BTC is by far the most recognizable currency in the industry, with Bitcoin holding household-name status familiarity (the coin is largely synonymous with cryptocurrency in mainstream markets), altcoin projects like Ethereum and EOS have carved out a substantial amount of developer interest. With Bitcoin yet to overcome the hurdle of scalability, its price is likely to stall again at upper limits in the absence of a solution like Lightning Network.

Cryptocurrency, assuming it can gain price traction again as in 2017, is still in need of proven usability. Investors and speculators may continue to drive up the price of Bitcoin and contribute to its market share dominance, but the entire landscape of currencies have to generate scalability in order to become an accepted technology.

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Adamant Capital: Bitcoin in ‘Accumulation Phase’ Before Next Bull Run

Bitcoin Price Prediction 2019

A new report by Adamant Capital concludes that the bear market for Bitcoin might be nearing an end, with the currency entering an accumulation phase before the next big bull run.

Compared to the crypto winter of 2018, during which investors were forced to shed BTC or suffer losses as the currency fell from $20,000 to a relative low of $3000, the current market has traders much more optimistic about on the price outlook. Investors are now accumulating Bitcoin, putting pressure on bears who may be selling just ahead of another big price rally.

Tuur Demeester and Michiel Lescrauwaet, co-authors of the report, said that the current price point for Bitcoin should be appealing to investors,

“Now, at 75% below its 2017 all-time high, we believe the current bear market represents an exceptional opportunity for value investors.”

In what Adamant Capital refers to as the ‘accumulation phase’ for Bitcoin, the analytics firm expects BTC to trade in a range of $3000 and $6500, as bears unload their coins to willing bulls who are looking to lock in a discounted price for the number one cryptocurrency by market capitalization.

The report also concluded that retail investors took a bath in November 2018, capitulating any previously made gains–or submitting to significant losses–in a capitulation event that saw the price of Bitcoin fall 48 percent. While some of the cryptocurrency price fall can be attributed to the market uncertainty of Bitcoin Cash’s hash war, investors were also fatigued from nearly 12 months of bear market prices. The end result is a glut of investors looking to re-enter the market at a favorable condition, especially if they sold out at Bitcoin’s relative price low during last November.

Adamant Capital has made a point of tracking unrealized Profit and Loss and indicator of market performance, and reports that the most recent price rally has had a substantial impact on that metric,

“The recent price rally from $4,000 to over $5,000 markedly improved HODLer’s Unrealized P&L improving our reported sentiment value from capitulation to hope,”

The report, in particular, looks at the claim that retail investors (individual investors as opposed to professional traders or institutions) have largely left the market following the last year of losses. Such a situation would indicate that the well of bearish sellers for Bitcoin may be smaller than previously thought. Adamant Capital points to Google Trends data that indicates “apathy and disinterest” on behalf of retail investors, with searches for Bitcoin dropping to as low as March 2017 values.

Adamant also points to gradual decline in Bitcoin price volatility over the last several months, a factor that has historically been attributed to the actions of retail investors,

“High Bitcoin volatility can be a proxy for the involvement of trigger-happy retail speculators, whereas low volatility tends to coincide with phases of consolidation, apathy, and accumulation.”

With finicky retail investors gone, long-term holders have come to make up the majority of the market, a group that will be looking to accumulate more BTC at current prices and avoid succumbing to the bearish sellers.

The combination of price anticipation and investor makeup has led Adamant to conclude that Bitcoin, at its current price point, is back in “undervalued territory.”

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