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Crypto Market Forecast: W/C 12th October 2020

A curated weekly summary of forward-focused crypto news that matters. This week - Square buys 4,709 Bitcoins, the UK's FCA bans crypto derivative sales to retail investors, Bitcoin price passes through $11,000 as its hashrate hits an all-time-high, and Monero prepares to hardfork.

It was a bullish week of trading in crypto markets as the Bitcoin price rose ~6% and soared past the USD 11,000 price level. The second-largest and third-largest assets on the Brave New Coin market cap table were also on the move, with the Ethereum price up ~6% and the Ripple Price increasing ~3%. Following the lead of Microstrategy, publicly listed payments company Square announced last Thursday that it had purchased 4,709 BTC for USD 50 million – an investment representing 1% of the firm’s total assets. Announcing the purchase, the company said, “cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose.”

The announcement had an immediate impact on markets with the price of BTC rising by 3% on Thursday alone. Compared to Microstrategy’s investment, the Square investment seems more aligned with the company’s business model and corporate philosophy (check here for more on how whales move the Bitcoin price).

The Cash App, a mobile payment service developed by Square has been offering Bitcoin buying and selling services since the summer of 2018. Square announced in a shareholder letter that in Q4 2019 almost 50% of the Cash App’s revenue had come from Bitcoin services. Jack Dorsey, the CEO of Square and social media platform Twitter has been profusing since early 2018 that Bitcoin will become the world’s single currency and said recently in an interview with Reuters that he views Bitcoin as the “best manifestation” of an internet native currency.

Crypto markets were also able to shake off news that the UK’s Financial Conduct Authority (FCA) had published its final rules on October 6th banning the sale of derivatives and exchange-traded notes (ETNs) that referenced particular types of crypto assets to retail customers. The FCA says it views these products as ill-suited to this group for several reasons, including an “inadequate understanding of crypto assets by retail customers” and a “prevalence of market abuse and financial crime in the secondary markets (e.g., cyber theft). The ban covers unregulated transferable cryptoassets which includes well known digital assets like Bitcoin, Ether, and Ripple.

The announcement is another setback for the crypto derivatives space following the charges against the Bitmex exchange and its operators made by US authorities for violating anti-money laundering laws. Following the charges, last week the 100x Group – one of the entities in charge of managing the operations of Bitmex – announced that the three indicted co-founders -Samuel Reed, Arthur Hayes, and Ben Delo would no longer hold executive roles and staff has been reshuffled to replace them with immediate effect.

Crypto news for the week ahead

17th October – Monero network hard fork upgrade

Privacy oriented cryptocurrency network Monero (XMR) undergoes a mandatory network upgrade by hard fork this Saturday. The upgrade aims to make transactions lighter and faster and will introduce important new features like the new ring signature construction CLSAG which will reduce the transaction size by ~25% and improve typical verification performance by ~10%. XMR has been a strong performer in the last week rising by ~18%.

14th October – Elrond Network introduces new staking model

In a move that is described as the first phase in the transition from the network’s bootstrapping period to a sustainable growth model, the Elrond network will introduce an updated delegation smart contract. There will now be an incentivized queue for token delegation with rewards for time spent in the queue and opportunities to reserve a spot in the queue. The price of Elrond (ERD) has fallen by 22% in the last week.

Top 10 Crypto Summary

Crypto Market Cap

It was a week of healthy gains for most assets on the Brave New Coin market cap top 10. Chainlink (LINK) was the week’s top gainer and appears to be enjoying a reversal after what has been a difficult six weeks for the token. The price of LINK remains down ~38% since the 31st of August. This week Chainlink announced a new Request for Proposal (RFP) for projects to integrate their blockchains into its oracle network and a partnership with Radix a layer one blockchain protocol built for DeFi.

Bitcoin Price Chart

Bitcoin Price Chart
The Bitcoin price gains this week have been backed by strong fundamental metrics on the network. Bitcoin hashrate hit a new all-time high on Friday, touching 17,000 exahashes for the first time on its hourly chart. Hashrate has risen almost 40% since the Bitcoin halving which drastically cut miner revenues. Onchain analysis firm glass node also reports that the number of whales (or entities holding at least 1000 BTC) has increased substantially suggesting confidence from large investors that the price of BTC is set to rise.


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