Crypto market forecast: 22nd July

It was another tumultuous week in the crypto asset trading markets with the Bitcoin price dropping as low as ~USD 9,170 on Wednesday, and as high as ~USD 11,030 on Saturday, before eventually settling at the USD 10,500 level to close the week. BTC ended the week up ~3%. The number 2 and 3 assets on Brave New Coin’s market cap table, ETH and XRP, rose ~1% and 4% respectively, while the overall market cap for crypto rose ~4%. A strong mid-week price bounce helping to recover from sharp losses early in the week.

A major driver of the mid-late week gains were the unexpectedly bullish responses to Bitcoin related questions from US lawmakers during the recent Libra/cryptocurrency senate and congressional hearings. On July 17th, U.S. Republican Patrick McHenry referred to the BTC network as an ‘unstoppable force’ and said that corporations such as Facebook were trying to replicate the success and value created by the decentralized, permissionless network.

Bitcoin’s sustained long term price appreciation, its practical payment network utility in developing countries like Venezuela, and its value proposition as digital gold have been clear drivers of demand for the asset since its inception 10 years ago. It’s digital, distributed nature means it is difficult to regulate and block user access. This public acknowledgment from key US government officials that Bitcoin cannot be ‘stopped’ may have given crypto bulls the confidence to return to buying mode due to the positive political signals it created for the long term future of public blockchain networks.

Bitcoin’s gain during the congressional hearings was contrasted by Libra’s pain. David Marcus, head of Calibra, was grilled on Facebook’s unfortunate history of mishandling and misusing private user data. Multiple perspectives from the Senate Banking Committee and Congress made it clear that they view Facebook as unfit to handle financial data or have control over a part of the financial system. It soon became clear that ‘trust’ is a key concern. Lawmakers continue to make the case that the Libra launch should be delayed until the increasingly contentious regulatory concerns are addressed.

For market participants already exposed to the cryptocurrency investment space, the hearings were a vindication of Bitcoin’s (and other public cryptocurrencies) value proposition and long term prospects. However, the concerns raised around the expansion of large corporate entities into blockchain-based finance suggest that mainstream adoption and the wider integration of digital payment options will likely be ring-fenced whenever possible by regulators in large economies.

This week in Crypto events

22nd July – Bakkt acceptance testing

On the 22nd of July, and designed to coincide with the Apollo 11’s 50th anniversary, Bakkt will initiate user acceptance testing for its Bitcoin futures products. The product is listed and traded at ICE Futures U.S. and cleared at ICE Clear US. Bakkt’s eventual launch will open the door for a wave of new institutional Bitcoin investors who have held back previously due to regulatory uncertainty and exchange counterparty risk. These are the issues that the BAKKT futures product aims to solve, and a successful, well-received launch would be a clear bull flag for BTC markets.

25th July – Justin Sun lunch with Warren Buffet

On Thursday, Tron CEO Justin Sun, along with key industry figures like Litecoin founder Charlie Lee, eToro founder Yoni Assia, and Circle CEO Jeremy Allaire, will dine with billionaire mega investor Warren Buffet. Sun won the opportunity to dine with Buffett by winning a charity auction and views the lunch as an opportunity to explain the crypto value proposition to a skeptical Buffet. The price of Tron’s native TRX token has risen 18% in the last seven days. It was one of the big winners of last week’s midweek market rally.

The mid-to-late week market rally helped most assets end the week strongly green. The Bitcoin SV (BCHSV) network will complete the Quasar upgrade on July 24, which will increase the default block size hard cap from 128MB to 2GB. BCHSV was one of the week’s biggest winners rising over 52%.

A neutral weekly/daily close to the week’s trading means that crypto analysts are unclear on what BTC’s next move will be. Is the current price drop below the USD 11,000 level a bear trap or a sign of further sell-offs? Market reaction to BAKKT’s product testing on Monday (NA time) may be a key driver of the upcoming week’s volatility and price movements.