Crypto Market Forecast: The week ahead, 29th April

It was a challenging week for the crypto ecosystem with two major negative news events injecting a healthy dose of fear, uncertainty and doubt into the markets. Despite sustained selling pressure, market benchmark Bitcoin showed strong resilience, easily defending the $5,000 price level and ending the week down a minimal ~1%.The second and third largest assets on Brave New Coin’s market cap table, ETH and XRP, fell ~8% and 9% respectively over the last week, while the entire crypto market slid ~4%.

The initial and most significant FUD event stems from a petition filed by the New York Attorney General for the New York State Supreme Court in Manhattan. The petition states that Tether, the company behind the popular USDT stablecoin, provided connected crypto exchange Bitfinex with a US$850 million loan from Tether’s reserves, in exchange for shares of Bitfinex as collateral. It seems that Bitfinex needed the loan when funds equivalent to this amount were allegedly seized from the exchange’s payment processing partner Crypto Capital by legal authorities.

Due to Bitfinex and Tether’s lack of historical financial transparency, there was some immediate market anxiety following the release of the filing on Thursday April 21st and a period of short, sharp market wide selling. Market sentiment appears to have recovered quickly, however, with crypto assets stabilizing over the weekend as it became clear that there was more to this story than repeats of the usual Tether/Bitfinex insolvency accusations.

The news continues to have an effect on crypto markets. The BTC/USD pair on Bitfinex is currently trading at a significant premium, at least $300-$500 above the prices on other major BTC/USD markets. This is likely because Bitfinex traders currently view BTC as a more valid withdrawal option versus the US dollar because of concerns surrounding the robustness of Bitfinex’s fiat infrastructure, thus creating excess demand for BTC on Bitfinex. More unusual patterns connected to USD and USDT trading on Bitfinex appear likely to send skewed demand/supply signals to crypto trading markets in the near term.

In wider ecosystem news, last week a number of news stories linking crypto to the traditional finance and tech sector drew excitement from some market observers. Popular online stock broker TD Ameritrade appears set to launch spot BTC and LTC trading to its multi-million retail customer base with partner ErisX.

A secondary FUD event came from India, with ET the first to report that the ominous sounding draft bill, “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019", has been circulated to relevant government departments. China has famously threatened the banning of bitcoin and cryptocurrency mining on multiple occasions and it appears India is moving in a similar direction.

Industry rumours suggest Samsung is moving closer to the crypto space. The Samsung Galaxy S10 comes with a crypto wallet and the company has invested $2.9 million into crypto asset wallet manufacturer, Ledger. Now, several outlets suggest the electronics giant is building its own blockchain on Ethereum and the company may issue its own ‘Samsung coin’. Considering the enthusiasm of the South Korean crypto investment space, updates to the news story may trigger speculative buying in the short to medium term.

Upcoming crypto events

29th April- Beginning of the TRON-USDT incentive plan

Beginning from this Monday any users who make the switch from USDT-Omni to USDT-Tron will be rewarded with 20% interest APR for new USDT-Tron holdings for the next 100 days to encourage swapping. Tethers on the Tron blockchain, which uses a Delegated-Proof-of-Stake (DPoS) consensus model, appear set to offer a version of USDT with faster onchain settlement and cheaper fees, albeit at the loss of decentralization and censorship resistance. An immediately popular USDT-Tron and new issuance could provide a boost of liquidity to the crypto market given the popularity of USDT trading pairs.

1st May- Stellar.org website redesign

The Stellar blockchain, home of the popular XLM token, relaunches its main website this Tuesday as part of its core product delivery goal roadmap. A new website could attract new buyers and retail interest to the network and appears set to arrive with a new plan for content, an internal dashboard, and blockchain exploration tools.

Following a strong start to the week for large caps, the market nervousness on Thursday led to strong double digit pullbacks for most assets. Monthly charts for assets like BTC, BNB and LTC remain green suggesting this week’s losses may simply be a pullback with bullish accumulation ongoing.

After crossing the $5,500 price level on Wednesday, bullish sentiment increased and the possibility of a short term ~$6000 price target looked increasingly likely amongst the analyst community, before the Tether/Bitfinex news put those targets on hold for now.

Long and medium term signals, however, remain bullish. An excellent report from Bitcoin Economist Tuur Demeester, presents a variety of strong, data-focused and historical pattern based arguments to suggest that the Bitcoin market is now in heavy accumulation after bottoming in late 2018.