Monday, July 8, 2019

The probability of bitcoin above $20k 😎

July 8, 2019 View in browser
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Good morning! Thanks for reading. If you enjoy our newsletter, please share us with a friend and tell them they can subscribe here.

Today's top reads

  1. Bitcoin price probability
  2. The battle of "exchange effects"
  3. Tether stands ground
  4. The holiday pump

This week's poll: Does bitcoin make up more than 50% of your portfolio?
Click to answer:
Yes!
No way!


Market update

COIN PRICE 7-DAY
BTC $11,884.16 + 11.25%
ETH $308.16 + 6.03%
XRP $0.404 - 0.21%
LTC $120.39 - 0.57%
BCH $413.19 + 1.81%

1. Bitcoin price probability

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Options traders are painting a picture. While the derivatives market is still relatively underdeveloped compared to the rest of the cryptosphere, it's picking back up. Since February, the market has consistently set new highs for volume each month as traders get more aggressive.

In exchanges' eyes, it's a bullish sign. Last month, LedgerX, a New York-based crypto derivatives exchange, saw an unidentified trader purchase $4,500 worth of call options that bet on bitcoin's price rising to more than $50,000 within the year.

Josiah Hernandez of Satoshi Capital explained the phenomenon to the Wall Street Journal:

"When you get these bull markets, people get a little excited and they start making more and more aggressive trading decisions."

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So here's the market's price prediction: According to skew, a crypto market analytics platform, bitcoin options traders see a 15% chance that bitcoin's price will be higher than $20,000 by the end of the year, 10% by the end of September, and less than 2% by the end of July.

But confidence can change quickly. Back in April, skew published the same option-price probability chart and only 11% of traders saw bitcoin above $10,000 by the end of September vs. the 59% of traders now.

The bottom line: The options market might provide a solid benchmark for trader's views, but just like the spot market, it can turn on a dime. However, with 15% of traders betting on bitcoin rising more than 77% in six months, you can't help but see the bullish sentiment.


2. The battle of "exchange effects"

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It's back. According to a report published last week by Decrypt, the "Coinbase Effect" - or rather, the U.S. exchange's impact on price after listing, is happening again. The most recent winner, Chainlink (LINK), an altcoin ranked #17 in the world by market cap, jumped from $2.20 to a peak of $4.36 in just 2 days after its listing announcement.

But why does Coinbase have a strong influence? And how does the world's largest exchange by volume, Binance, stack up against the San Francisco-based exchange?

Well, here's the impact each exchange on the last five coins just two days after listing:

Binance Coinbase
DOGE + 12.7% LINK + 72.4%
ALGO - 15.9% EOS - 0.12%
FTM + 46.2% REP + 12.8%
TFUEL - 12.5% XLM + 3.13%
ATOM - 10.8% XRP + 1.09%
Average + 3.94% Average + 17.86%

Although each individual listing effect seems to be largely based on how well the market is performing (like ZEC and BAT's negative reaction after listing Coinbase during the 2018 crypto winter), it's clear that Coinbase has a much greater impact. This is likely because Coinbase's massive 15 million-userbase largely caters to U.S. retail investors - a crypto-hungry and relatively wealthy area of the world.

The takeaway: While Coinbase listings certainly impact projects more than Binance, it's a gamble as a trade. Either way, according to the last 5 listings, you're looking at a positive return on average for both.


3. Tether stands ground

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If you've got beef with Tether (USDT), we're sorry, nothing has changed. Even with the consistent criticisms that rock the stablecoin off of its 1:1 USD peg every now and then, it still reigns king.

Per Messari's Stablecoin Index, USDT accounts for more than 98% of the total stablecoin trading volume. More than that, USDT has regained its 80% dominance even after leading exchanges have made explicit actions to onboard adoption for USDC, TUSD, PAX, and GUSD.

The question is: If USDT is back to dominating the stablecoin market, how much of an influence will it have on bitcoin's price? Just last week $100 million USDT was printed on the ethereum blockchain to bring the total circulating amount to $3.78 billion. Could this printing be pumping the price?

Jesse Powell, CEO of the Kraken exchange, shared his take in an interview with TD Ameritrade:

"I don't have inside knowledge of what's happening at Tether, but I can tell you that, historically, when you've seen growth in the supply of Tether, we've seen growth in the supply of U.S. dollars coming onto Kraken. And other exchanges would report the same."

In the end: USDT's growth metrics compared against its peers undoubtedly shows demand for the stablecoin. Whether or not USDT printing has had a significant impact on bitcoin's price this run, or vice versa, still remains unknown.


4. The holiday pump

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Holidays are good at two things:

  1. Bringing family together
  2. Boosting the crypto market

The reason behind #2? FOMO. Apparently, your Uncle John asking "Do you own any bitcoin?" can be a powerful question - and one that moves markets significantly if we are already in the midst of a bull market.

Research from SFOX explained that back in 2017, the hefty gains started just before Thanksgiving and only amplified leading up until Christmas. The same could be said for the duration of China's Spring Festival in 2019.

It's not just prices though. Besides gains timed just right, Google also saw strong spikes for search queries containing "bitcoin" near those same holidays - suggesting family members are talking about it.

Looking ahead: As we roll towards the end of 2019 with bullish tones, we should be conscious about the home stretch and its FOMO potential.


5. You should also know

  • BitMEX, an exchange known for leverage, has tallied more than $1 trillion in volume in the past year.
  • CME bitcion futures had record activity in June as they pushed for a 30% increase in sign-ups.
  • Bitcoin's hash rate just hit an all-time high of 74.5 million tera hashes per second.

6. Nope to BSV

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From last week's poll, 75% of respondents claimed that they don't support Bitcoin SV (BSV).


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