A new financial year brings promises of recovery, the reality of a second wave and the first fresh calendar following Bitcoin’s third halving.
Call me pessimistic, but 2020 really hasn’t been the greatest of starts to a new decade. The new financial year hasn’t really done much to change that either, with Bitcoin doing its best crab impersonation and COVID-19 sticking around to partner with the seasonal flu. Regardless, there’s always interesting happenings to be found and this past fortnight was no exception.
So, why not break out that fresh new planner and pencil in some time to sit down with this edition of Analysed.
Bitcoin Market Summary
Bitcoin continued to do a remarkably strong crab impression, with a fortnightly entry of $9,184 USD and fortnightly end of $9,289 USD. A standalone spike nearing the $9,500 USD level was the only real major price movement beyond the usual outliers, however, exchange rates remain favourable to Australian investors.
This lack of immediate return post-halving will likely begin to filter through markets, especially if the likes of the Dow or S&P 500 pick up momentum, with softer hands likely to cash out and pursue more immediate gains.
Traditional Market Overview
US markets spent the previous fortnight making reliable gains, with the S&P 500 erasing the previous month losses and returning to 3,185 (+4.3%) despite the resurgence of COVID-19. While illogical, one might consider this a consolidation phase with hopes that Q2 earnings in August are better than expected.
The ASX 200 experienced a turbulent fortnight, beginning a rapid climb from 5,815 to 6,057 by end of week, however, continued market pressures caused by lockdowns, COVID-19 and uncertainty regarding continued government support soon took effect causing a drop below 6,000, ending with gains of only +1.78%. Considering the current trajectory of a new-found second wave, it’s likely we will continue to see market instability or increased government intervention in markets.
Australian markets hit what some may consider a slight snag during this last fortnight – a resurgence in COVID-19 in Victoria has effectively put the state back into lockdown and cast serious concerns across business and financial sectors. The majority of other states continued to follow federal easing plans, with borders opening in the week just gone. With the changeover in the financial year, more than one million Australians have flocked to claim early tax returns as of July 9th according to Federal Treasurer Josh Frydenburg. The new financial year also presents the opportunity for Australians to withdraw an additional $10,000 from their Superannuation fund if they have been affected by COVID-19.
Digital Yuan Draws Attention Bank Of America
China is ahead of the market and retains an impressive first-mover advantage in the race to develop a viable state-controlled digital currency and market system according to a June 30 report from the Bank of America.
This in effect brings the spotlight on the nation-state race to enter the digital currency market and establish dominance (though the presence of decentralised offerings and the Lindy-proven pioneer Bitcoin may throw a spanner in the works).
Thailand, South Korea and Singapore are also evaluating the viability integrating their own digital offerings with a yuan-denominated payment system. This would represent a major shift in digital asset price denomination, with the yuan becoming a viable default option (vs. the current USD benchmark).Nation-state digital currencies will likely continue to trade similarly to a dollar-linked stablecoin.
While many are not predicting this as a sign of the end times regarding USD hegemony, it is a sign that we may be getting close.
Eurodollar markets in particular are struggling to capture USD liquidity despite the Federal Reserve seemingly printing non-stop during these last few months with emerging foreign markets bearing the brunt of this deflation.
As mentioned in prior editions of Analysed, M2 money velocity and supply correlation continues to be an extremely intriguing market driver – particularly when we consider the emergence and championing of these “new era” currencies as a secondary option.
Fed Chairman Jerome Powell previously commented on the potential of a digital dollar in late 2019 expressing uncertainty on the benefits of such a system despite consumer preference already migrating away from hard cash transactions. This may go down as another major miscalculation on the Federal Reserves’ part, though only time will tell.
It should be noted that the vast majority of digital currencies proposed by state powers are state controlled and effectively just digital tokens. They still operate on the current fiat system and retain the same problems, merely cutting out the printer as an effective middleman. It’s no paradigm shift, instead just a deeper entrenchment of existing power structures (in this case the CCP; with a potential digital USD, the Federal Reserve or issuer).
Schiff, Cuban To Predicted To Buy In At $50k
Feel free to call me out for speaking about something that happened outside our analysis dates, but this development was too good not to mention. In a tweet on the 26th of June financial commentator Max Keiser (@maxkeiser) made the rather bold prediction that renowned Bitcoin critics Peter Schiff and Mark Cuban would enter the market in a big way when certain conditions were met. While not a make-or-break moment, one could consider the market entry of influential critics amongst the most bullish.
Particularly on Schiff, Keiser surmises that “The longer @PeterSchiff waits to buy #Bitcoin, the bigger the panic-buy” with $50,000 USD being the magic number that breaks his ideological back. Included in the tweet was a user poll, with 28.6% predicting the buy-in to be at $25,000 USD and 27.7% predicting $200,000 USD.
Keiser followed this newfound momentum by branding anti-virus pioneer turned international fugitive turned crypto influencer John McAfee as the “King of Scammers”; noting late entry into Bitcoin and a rather checkered history in the sphere.
One has to wonder if we’ll see these predictions come to fruition, and if they do, what else will come with them?
Elon Musk’s favourite digital paperweight Dogecoin spiked more than 1,900% on the back of a series of viral TikTok videos while Australia is seeing compounding COVID-19 case growth, proving that even something you thought was gone and dead can still come back with a vengeance. Let us hope that COVID collapses as quickly as Dogecoin almost certainly will.
Stack Sats and take care,
Jamie Grohman for Analysed by Amber.