Goldman Sachs Bullish On Bitcoin & Gold As Recession Signals Continue

Recent analyst reports from Goldman Sachs suggests investors should take advantage of the current Bitcoin price dip and buy now.

In a series of slides prepared by one of Goldman’s technical analysis teams and distributed to clients, the bank included one that put the short-term target Bitcoin price at $13,971.  They echo the sentiment shared by many that we are currently in a dip and that now is an ideal time to buy.

Bullish On Bitcoin Goldman Sachs

Source: Goldman Sachs

According to the report, there is also the potential that this could be the first leg of a five-wave count of price rises.  This means that any decrease in Bitcoin price from the $12,916-$13,971 level (where we’re currently at and have been for a few months) would be a smart buying opportunity.

This latest report from Goldman Sachs further adds to the sentiment that investors are once again eyeing the crypto industry.  Last year, Fidelity Investments revealed they would be launching a digital assets division, and earlier this year JP Morgan analysts claimed that Bitcoin has “intrinsic value”.

More recently, billionaire VC investor Tim Draper reaffirmed his belief in a $250k Bitcoin price by Q1 2023 at the latest.  These increasingly bullish feelings from Wall Street and institutional investors around the world will no doubt help drive up the price of Bitcoin in the coming months and years.

Gold was also mentioned favorably in the series of slides from Goldman, particularly in a scatter chart (see below) that “helps to identify where trends in the market are extending or turning on a week by week basis.”  Gold is featured in the “Strong and Stronger” quadrant, which means it has strengthened for both of the past two weeks. The chart also includes a note indicating that it is yet “another week in the top right quadrant for Gold/precious metals”.

Bullish On Bitcoin Goldman Sachs Percentage Increase

Source: Goldman Sachs

This comes in conjunction with a recent note sent to clients by Goldman Sachs saying that the bank expects the US-China trade war won’t be resolved before the 2020 presidential election.  They also said they believed that the economic slowdown will continue and that a recession is likely. Investors have already seen the stock market take a tumble as a result of geopolitical instability, and the U.S. has accused China of manipulating the value of the yuan to damage the profitability of American exports.

These economic conditions have caused analysts to speculate that the recent run-up in cryptocurrency and gold prices has in part been caused by Chinese investors wanting to protect their assets against a devaluing yuan.  This would mean that Bitcoin and gold prices would benefit even further from the continuation of the trade war and a subsequent recession.

BITCOIN DOMINANCE CONTINUES

Bitcoin’s dominance was down slightly this week, to 66% in total.  BTC saw significant growth in activity on futures markets, and many feel that we are currently in a bottom.  Several major analysts see a Falling Wedge pattern on the charts though, indicating that the Bitcoin price has a 70 percent chance of a bullish breakout

China’s digital currency is ready after five years of R&D.  An official from the People’s Bank of China (PBOC) recently stated that the CBDC (Central Bank Digital Currency) prototype exists and that the PBOC’s Digital Money Research Group has already adopted the blockchain architecture for the currency.  China’s CBDC won’t rely purely on the blockchain however, as they want a solution that has sufficient throughput required for retail use.

Mastercard recently added three job openings to their website pertaining to blockchain product management.  According to the job description, they are developing a blockchain wallet solution that will likely be a rival to Facebook’s upcoming wallet Calibra.

GOLD PRICE NOW TARGETING $1,550 LEVEL

After overnight buying took gold to $1,470 an ounce, the precious metal is now targeting the $1,500 level.  According to the MKS PAMP Group, an investment firm, “Early European bids underpinned the metal to a USD $1,470 high, with consolidation above USD $1,500 the key to a further extension of the recent move higher. Gold will now look to target resistance toward USD $1,480-$1,500, while USD $1,520 looms as a pivot for near-term pricing.”

Goldman Sachs also sees gold’s rally as far from over, with analysts saying that ““Gold prices have increased further as a weaker CNY sparked substantial U.S. and global growth fears. With growth worries likely to persist, gold could rise further, driven by an increased ETF allocation from portfolio managers, who continue to under-own gold.”

With no trade deal expected before the 2020 presidential election, investors will see higher gold prices due to increased global growth fears, added Goldman.  Gold’s ETF demand is also on a strong upward trend, with the bank upping its 2019 forecast from 300 to 600 tonnes.

Now is the time to take advantage of the rising price of gold and protect yourself from stock market volatility.  Indicators are showing that these bullish trends will continue in the gold markets, giving you an excellent opportunity for immediate growth and providing protection for your assets against future economic downturns.  Don’t miss out on this opportunity. Act now and reap the benefits of crypto investments.

Network Effects & Friendly Developer Moats

Crypto assets are unique in the sense that they are either natively baked into a network or exist on top of a network. There are many crypto assets but one, in particular, deserves your attention. The network is known as Ethereum and it has a native asset called Ether. Ethereum has the most daily users, daily transaction volume, the total number of assets built on top of the network and most importantly, the number of developers.

While Bitcoin is #1 when it comes to total network market capitalization and general market awareness, Ethereum will continue to gain notoriety in the space as it can do what Bitcoin cannot do; smart contractsprogrammable money and decentralized applications. Ethereum has developed an incredible network effect and developer moat during its past four years of existence. This will cause it to not only continue to grow rapidly, but with compounding effects as shown by Metcalfe’s Law.

Network effect is a phenomenon whereby increased numbers of people (developers, companies…etc) or participants (users, investors…etc) improve the value of a good or service. One way to judge a crypto asset’s network effect is to look at projects built on the network.

In the case of Ethereum, there are currently more than 2,600 decentralized applications. In comparison, its closest competitors are EOS.IO and BlockStack which have 297 and 250 applications respectively.

The problem for Ethereum competitors is that they are still building the primitive building blocks that are necessary to create more complex applications. Ethereum has been developing these building blocks over the past few years and includes things like decentralized exchangesoracles, and stable coins. These allow developers to build more complex applications through what is known as composability — the ability to leverage existing projects in order to build something completely new.

Ethereum Building Blocks — Source is Delphi Digital

Source: Delphi Digital

One great example of composability is Set Protocol. This utilizes Ethereum, a stable coin (Dai, built in 2017) and decentralized exchange (KyberSwap, built in 2018) in order to create automated asset management strategies which are sometimes called “autonomous money robots.”

Ethereum Composability — Source is Delphi Digital

Source: Delphi Digital

While there are already projects looking to compose Set Protocol into the next mind-blowing application, Set is just one example of many projects that were created through Ethereum composability.

The term network effect is not new and what we are seeing now is nearly identical to the growth of the internet.

“The internet was of relatively little value to anyone outside of the military and some research scientists at first, but as more users gained access to the Internet, they produced more content, information, and services.” — Wikipedia

This snowball effect that happened in the early days of the internet is happening now with Ethereum.

This network effect tends to create immense stickiness with builders which forms a developer moat. The majority of developers do not want to recreate an entire ecosystem just to deploy their new application successfully. This creates a chicken and egg problem for new networks as developers want access to the basic building blocks to create interesting and complex use cases, which sends them directly to the vibrant Ethereum ecosystem.

This post has only just scratched the surface of Ethereum, which is a constantly evolving organism and is nowhere near its final form. While it’s nearly a full-time job keeping tabs on this lush ecosystem, I do my best. If interested in learning more, feel free to reach out to me directly and I’ll be sure to point you to the best resources.

Bitcoin Market Cycles and You

anthonypost2Let us analyze the Bitcoin Market Cycles and how the deeper know-how help in building a robust investment portfolio of future.  Market adjustment is inevitable and better not leave any stone untouched!!

The crypto asset market is highly emotional, full of noise and thus incredibly hard to navigate. This has created significant information asymmetry among participants, which can be a boon to investors who can be level headed and get proper signal. We are at an inflection point in a market that shows institutions are coming as critical infrastructure continues to come online. Most notably the launching of CME Futures in 2017, Fidelity Digital Assets in 2018, and now ICE’s BAKKT in 2019.

The crypto asset market has since been primarily dominated by retail investors but certainly has shown niche hedge funds in the mix as well. Interestingly enough, this once in a lifetime market has shown that not only has the average Joe not taken advantage of buying and selling opportunities, but even some of the most prominent hedge funds in the space did not have proper risk management.

If you are reading this article around the date of publishing, it is time you take notice of where we may be in the current market cycle. The chart below shows the past 3 Bitcoin market cycles, which consist of bull markets, bear markets and accumulation phases. Based on this chart, it appears we are entering a final re-accumulation phase before the next large bull market which would likely propel Bitcoin far higher than the previous $20,000 all time high.

It’s important to understand that this chart is not to be taken as gospel but more as a basic education reference point to help you understand market cycles. The re-accumulation phase may very well be shorter (or longer) than shown in the image.

Again, this market is highly emotional and causes most investors to focus on short term price action instead of gathering high quality information and positioning themselves properly for more significant midterm or long-term price action. The crypto asset market and associated high quality assets will continue to appreciate in value; don’t miss out on this once in a lifetime opportunity due to low quality information and short term thinking.

Thoroughly understanding the Bitcoin Market Cycles help you as investor to build a balanced growth portfolio. Learn more on why seasoned investors are including Cryptos like Bitcoin & Ethereum in their portfolios in 2019 & beyond!!

Reaffirming Bitcoins’ Strength for Long Term Investment 💰

bitcoin

A new study indicates that Bitcoin (BTC) holders make a profit after an average of 1,335 days – which equates to roughly three years and eight months. The data was released earlier by Bitcoin maximalists, and the cycle lengths are shown roughly correlate to the various reward halving events.

The chart (shown above) essentially considers the amount of time between different peaks and how long it would take an investor to profit if they bought at the previous cycle’s peak. Refer to the chart above.

This means that a 100% definite profit would have taken a maximum of 1,335 days, which relates to the bull market run that occurred late in 2013 when the Bitcoin price surged to $1,150. If an investor bought at that price, the peak of that cycle, then it would have meant it took until early 2017 before the Bitcoin price finally broke that level again.

Seeing as this chart is looking at the market extremes, missing the peak of that rally would have resulted in a drastically reduced wait for a profit. Holding Bitcoin for 317 days would have given a 75% chance of profit. You’d have a 60% chance of profit if Bitcoin was held for 35 days, and the likelihood that you were up over any single day was 50%.

If that sounds like a long time, comparable data for the stock market is exponentially longer. To contrast, an investor would have needed to hold their position for 23 years to achieve a sure profit on the S&P 500. This makes it clear that not only is Bitcoin safe, long term storage of wealth, but it is a reliable vehicle for your wealth if you are looking to turn a profit quickly.

It’s also notable that the analysis looked purely at the chance of profit and not the scale of that profit. When Bitcoin is on a bull run, the profits there dwarf those achievable on the stock market indices. A real-world example from this year is the Greyscale Bitcoin Investment Trust, which outperformed everything else so far in 2019 with an appreciation of almost 300% to date.

In addition to Bitcoin, Gold has also been an extremely strong performer this year and is presently a hot topic among traders. Bullish signs continue this week and leading investors have been speaking out on the merits of the precious metal. Mark Mobius, the founding partner of Mobius Capital Partners, appeared on CNBC earlier this week and recommended that investors hold 10% of their portfolios in physical gold.

The latest price targets have the Gold price reaching the $1,600 mark before the end of the year. As global trade policy uncertainty continues, Gold looks a solid bet to keep building on its bullish momentum.

INVESTORS UNNERVED AT MORE WARNING SIGNALS IN STOCK MARKET

Earlier this week, a powerful warning signal revealed itself as the stock market got turned upside down.

Value stocks, or those with low multiples and stable fundamentals, significantly outperformed their growth counterparts. This type of shift is unnerving to investors because “momentum stocks”, or those defined by their large growth expectations relative to the broader market, have outperformed value names in recent years. Rotation away from these stocks could result in a downturn for the broader market.

Over the past 5 years, momentum stocks have blown away their value counterparts. Most of the top-performing S&P 500 stocks this year are growth names. Seven of the 10 best-performing stocks in the benchmark — including Chipotle Mexican Grill, Advanced Micro Devices and MarketAxess Holdings — have a much higher valuation relative to the broader index, FactSet data shows.

Monday’s session was the complete opposite of the year’s trend, however. This, coupled with geopolitical trade uncertainty, casts a dark forecast over the markets for the coming months.

LEADING INVESTOR SAYS ‘GOLD IS THE WAY TO GO’

Mark Mobius, the founding partner of Mobius Capital Partners, appeared on CNBC earlier this week and recommended that investors hold 10% of their portfolios in physical gold.

“Physical gold is the way to go, in my view, because of the incredible increase in money supply,” said Mobius.

“All the central banks are trying to get interest rates down, they are pumping money into the system. Then, you have all of the cryptocurrencies coming in, so nobody really knows how much currency is out there,” he told CNBC’s “Street Signs” on Friday.

Mobius said that investors should place at least 10% of their portfolios in physical gold, with the rest invested in dividend-yielding equities. That’s especially true if the dollar gets weaker.

“People are going to finally realize that you got to have gold because all the currencies will be losing value,” he added.

Gold can retain its value much better than other forms of currency and is traditionally a safe haven during market volatility. A weaker dollar tends to boost the price of gold as global trade in the yellow metal is denominated in U.S. dollars.

“At the end of the day, gold is a means of exchange. It’s a stable currency in some way,” said Mobius.

Now is the time to take advantage of the rising price of gold and protect yourself from stock market volatility. Indicators are showing that these bullish trends will continue in the gold markets, giving you an excellent opportunity for immediate growth and providing protection for your assets against future economic downturns. Don’t miss out on this opportunity. Act now and reap the benefits.

Facebook Coin – A closer look

fbThis is the second initiative from Facebook after they tried to introduce Facebook Credits* (see below for the details) during 2011 and was not successful. This time it may translate into a success due to the following reasons. I am keeping the arguments on the centralization, stable coin and comparison with Bitcoin to a later post.

  1. Feasibility of massive adoption: Facebook, WhatsApp, and Telegram combined user base of over 2.7 billion. WhatsApp alone has more than 1 billion daily active users and crypto transfer can be a click of a button and trust is pre-established. Telegram biggest messaging applications in South Korea and Japan, Kakao & Line.
  2. Similar successful products in the market: Venmo has taken off in the United States by making it easier to send payments by phone. And in China, many consumers use the payment system that operates inside the hugely popular WeChat messaging system.
  3. Ease of opening a Facebook account compared to a bank account. Regulation and compliance is the next big puzzle to solve for Facebook.
  4. Coin backing with fiats making it more versatile: Unlike JPM Coin backed by USD alone, Facebook could guarantee the value of the coin by backing every coin with a set number of dollars, euros, and other national currencies held in Facebook bank accounts.
  5. Coin launch followed by Blockchain adoption making it a robust approach: As Facebook recently revealed their plans to integrate blockchain technology into Facebook Login and betting on blockchain technology by bringing data security aspects, it seems like the next level details on FC will be very interesting.

The big question facing Facebook is how much control it would retain over the digital coin. If Facebook is responsible for approving every transaction and keeping track of every user, it is not clear why it would need a blockchain system, rather than a traditional, centralized system like PayPal. Let us follow another interesting development.


* Facebook Credits was a virtual currency that enabled people to purchase items in games and non-gaming applications on the Facebook Platform. One USD was the equivalent of 10 Facebook Credits. Facebook Credits were available in 15 currencies including U.S. dollars, Pound, Euros, and Danish Kroner.  It was expected that Facebook would eventually expand Credits into a micropayments system open to any Facebook application, whether a game or a media company application. While the Facebook Credits website is still active, Facebook has announced that it is doing away with Facebook Credits in favor of local currency

Crypto adoption is next on the radar

Image result for bitcoin adoptionAs progress is made in solving bitcoin trilemma, Decentralization – Security – Scalability, the next focus area is increasing the adoption rate. With a lot of lull in the crypto market until recently, the subject of crypto adoption is being echoed by adversaries and supporters to prove their point of views. In this blog post, I will be taking a closer look at drivers of crypto adoption.

  • Samsung Galaxy S10 is unveiling the mass adoption of cryptocurrencies with future built-in and secure mobile technologies. Galaxy S10 is built with defense-grade Samsung Knox, as well as secure storage backed by hardware, which houses your private keys for blockchain-enabled mobile services. Would this take the crypto to the hands of mass? Here are the details.

    https://news.samsung.com/us/samsung-galaxy-s10-more-screen-cameras-unpacked-2019/

  • tippin.me get tips lightning fast. Twitter with 270million+ users has integrated tipping service on lightening network. Lightning Network is a technology built on top of Bitcoin that provides instant micro-payments almost for free. Tippin.me makes Lightning Network easier, by giving you a simple web custodial wallet to receive and manage Bitcoins through Lightning Network. Join now to start receiving tips and micro-payments right away, just sharing a link. There are a lot of features in the roadmap if this gets traction: integration with merchants, better wallet functionality, etc.
  • Lightning Network, beyond the above use case, is enabling Scalable, instant blockchain transactions for the future. The drawbacks to bitcoin’s decentralized design are that the transactions confirmed on the bitcoin blockchain take up to one hour before they are irreversible. Micropayments, or payments less than a few cents, are inconsistently confirmed, and fees render such transactions unviable on the network today. The Lightning Network solves these problems. Crypto users are soon experiencing scalable ad low-cost instant payments with an ability of cross-chain atomic swaps.
  • Making buying easy: As the avenues to buy Bitcoin gets easy and so the adoption. Since Virwox shut down its PayPal deposits in January 2019 it got really hard to obtain Bitcoins through a PayPal account. The two main methods that still allow you to buy Bitcoins with PayPal are, eToro – for those who only speculate on price and don’t need access to the actual coins and LocalBitcoins – for those who want to actually withdraw their Bitcoin to their own wallet
  • Spontaneous liquidity is becoming reality with Coinbase cash withdrawals to Paypal. Starting in December 2018, U.S. customers can instantly withdraw Coinbase balances to PayPal, providing even faster access to their funds through one of the world’s easiest and most widely-used payment platforms. These withdrawals are not only fast; they’re free and incur no fees.
  • Troubled Economies. One of the Satoshi Nakamoto’s vision for inventing Bitcoin was helping the troubled developing nations to get out of their misery brought upon them by their flawed centralized banking systems. Venezuela is one such country which has seen its financial economy go down the drains, the inflation has made their fiat not even worth the paper they are printed on. When all doors seem closed for Venezuela including petro coin (due to technical weakness), Bitcoin came in as the savior they were looking for. The government legalize the use of Bitcoin in the country and are looking to incorporate it in their financial system so that citizens can use Bitcoin in their day-to-day life.

Alongside all the above parameters, crypto wallets, transaction volumes, computing power, ETFs and Futures, games, arts, web searches for bitcoin terms, and industry hirings, shows bitcoin and crypto adoption is on an upward trajectory.

#RegulationOf Cryptocurrencies

Crypto Regulations

Cryptocurrencies are undoubtedly the point of investment contention and hence a lot of attention on regulating them. Top 5 USA regulating bodies – SEC, CFTC, IRS, FinCEN, and OFAC and other bodies around the globe are on the job to define a robust regulatory framework.

Recent Facebook stock dip by ~20% in a day losing $120 billion in a day (close to Bitcoin market cap) making rounds on the subject of volatility. If internet 2.0 stock is that volatile, internet 3.0 cryptos are in infancy and only can grow stable is the argument. Ok, let us say we have to deal with crypto volatility over a period of stability. But.  what about regulating Cryptocurrencies? Defining Crypto regulations is a next big thing to boost confidence.

As a holistic solution, proposing a three-pronged approach to evolve a Cryptocurrencies Regulatory Framework,

I. Key Players / Stakeholders of Crypto Marketplace:

  1. Exchanges: As crypto buy & sell transactions happen here, mandatory KYC/AML is the ideal first step in regulating crypto. Crypto to fiat and vice-versa conversions can be audited. Taxes reconciliation can also start here.
  2. Wallets: All crypto transactions won’t occur on exchanges. Wallets (hardware, web, mobile) plays a role and tracking wallet addresses is a nightmare. Regulators should find a way to get a grip on crypto to crypto transactions and technology should aid them.
  3. Mining: Miners are another key player to touch upon in evolving regulations and the considering following aspects of mining could be a starting point.
    • Resource Usage Regulations: A single country cannot regulate mining and nodes can be shifted across borders (borderless) in a way. While the power consumption rates can be tracked by local regulators, carbon emission controls and ROI targets of natural resources may be logical checks to start implementing. But how is crypto mining different from gold mining if compliant to resource usage guidelines?
    • Mined Coins & Transaction Fees: The other aspect of crypto mining in finding blocks and approving transactions thereby either earn income from trading mined coins or collecting fees for transactions clearance. This would be an area of regulators could focus.
    • Way Forward: As cryptocurrencies mining progress beyond proof-of-work to proof-of-stack and other formats, the legality takes a different path overcoming the current concerns.

Refer to article for a viewpoint on future of mining regulations.

4. ICOs: While SAFT and Howey Test are initial frameworks available, the holistic framework to regulate ICOs is still in work across the globe. While the clarity on utility vs security of a token being issued via ICO is getting clarity, the complete fold of ICOs into the regulatory framework is yet to shape up with broader acceptance. One question the regulatory bodies is, is the regulatory uncertainty is putting brakes on a promising technology innovation?

II. Modes of Use: Fundamentally like fiat, cryptocurrency could be sued for payment & transactions, a store of value, or a trading vehicle. All three have to encompass in finding a solution. Beyond the usage patterns, a holistic solution may need to touch all “modes of usage” of crypto.

III. Blockchain Layers: Lastly, which layers of Blockchain should be targeted to define regulations? Viewing from the foundation layers of Blockchain namely infrastructure, protocol and application/services, regulations apply to the topmost application layer which interfaces with the users/adaptors of the cryptocurrencies for trading products and services.

Crypto communities are eagerly waiting for regulatory framework the tighten the fraudulent activities and scams and at the same time promote the future promise of 21st-century currencies. Establishing legislation that stimulates growth for businesses and protects consumers is no mean feat, but it is certainly a task that regulatory bodies around the globe can’t ignore.