After stabilizing in the previous week, major cryptocurrencies rose last week. Once again, XRP took the lead, with Bitcoin, ETH, and XLM registering moderate gains–see Table 1
Seven-Day Price Change For Major Cryptocurrencies
Source: Coinmarketcap.com 10/12/19 at 4:30 pm
The broader market was mix, with 54 out of the top 100 cryptocurrencies advancing and 46 declining—see Table 2.
That’s similar to the previous week, when the ratio was 52 to 48.
Number of Cryptocurrencies that Advanced/Declined in the Top 100 Ranks
Source: Coinmarketcap.com 10/12/19 at 4.30 pm
The gains in major cryptocurrencies came despite of negative news from SEC. “Bitcoin and Ethereum moved higher the past couple of days, strengthening in the $8,000s mark – despite yet another setback from the US Securities and Exchange Commission,” says Christel Quek – Chief Commercial Officer, Co-Founder, BOLT.Global. “The SEC rejected another attempt at a Bitcoin Exchange Traded Fund (ETF) over concerns of transparency issues and market manipulation,” he says. “Crypto markets have been closely watching each ETF application for any signs of progress as it is hoped that a US Bitcoin ETF would provide traders and investors a more formal access to the cryptocurrency than going through the various crypto exchange platforms.”
But there was good news from the Fed: Another dose of monetary easing to push interest rates lower. “While the news once again capped market gains, Bitcoin and Ethereum moved higher – reacting to the US Federal Reserve’s plans to inject cash into the financial markets in a bid to drive inflation,” says Quek.
What’s the connection? “The Fed’s QE programmes have historically benefited Bitcoin – used as a hedge against such policies – as Bitcoin is deflationary in nature,” he says. “The Fed’s attempt at increasing inflation would push up bond prices and drop yields – making Bitcoin a high yielding asset for investors. A sustained QE programme should bring in Bitcoin to $11,000 – 12,000 levels.”
Daniel Haudenschild, CEO of SIBEX, sees geopolitics and low interest rates as the drivers of the demand for cryptocurrencies. “On the buy side, a continued rise in geopolitical instability and the onset of negative interest rates are creating strong global demand,” he says. “Cryptocurrencies offer mechanisms which can hedge against negative fiat interest rate exposure.”
Haudenschild thinks that’s a trend for Bitcoin and Ethereum. “There has been a steady increase in one-way fiat-to-crypto transactions since June, with traffic sometimes up 70% month-on-month, which continued into the past week,” he says. “This is primarily in the Ethereum and Bitcoin blockchains, the two which drive market prices.”
Meanwhile, Nicholas Pelecanos, Advisor to NEM Ventures, is watching the Bitcoin price action for hints of what is to come next.”Bitcoin’s price broke to the upside of the range it has been consolidating in since its September sell-off,” he says. “Currently it’s re-testing the break out level, however, if the price stabilizes we can expect to see the bears halt their selling in the short to medium term. On the run-up to the breakout Bitcoin recorded two positive days of +7% growth; generally, days of buying of this magnitude lead to a good week or so of continued positive movement.”
This pattern makes him bullish for the next week. “So, provided the support holds I’m cautiously bullish going into next week,” he says. “A break of this support could see Bitcoin continue to range or test for a new low.”