Crypto Market Forecast: W/C 2nd November 2020

This week in crypto markets Bitcoin soared as prices across the rest of the digital token space faltered. The Bitcoin price rose ~5% in the last week and now trades near the USD14,000 level. BTC is now up over 90% for the year and is touching levels not seen since January 2018.

At the same time the Ethereum price fell by 4% and the Ripple Price fell by 5%. The overall crypto market cap rose by ~2% for the week with Bitcoin dominance now at 64%.

During an October 28th interview with Yahoo finance, legendary hedge fund investor Raoul Pal described Bitcoin as the “best trade he’s ever found” and the “world’s most pristine reserve asset”. Pal’s assessment is backed by a recent period of commanding performance. BTC isn’t just rising in US dollar terms, it has broken out against the EUR, GBP, AUD, the IMF’s Special Drawing Right (XDR), and rival reserve asset Gold.

In an investor note released on October 23rd, JP Morgan – the largest bank in the US by total assets – said Bitcoin has a "considerable" upside in the long-term as it competes better with gold as an alternative currency. Suggesting that with millennials set to become the most important market participant in the next few decades, their preference of Bitcoin over gold should set the cryptocurrency up for success. The bank adds that "even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the Bitcoin price.”

In the shorter term, Bitcoin is succeeding against what Raoul Pal is describing as a global economic “dead patch”. A fiscal stimulus has been lacking in the US and the European economy appears at risk of another economic slowdown as wide-scale lockdowns look set to return to its major economies.

Globally, Coronavirus cases are spiking again, economies are shutting down, and governments are faced with few options other than delivering huge fiscal stimulus programs. This will boil down to more money printing which will devalue fiat currencies across the board, driving appeal for fixed supply, scarce assets like Bitcoin and gold.

Within crypto markets, “money is rotating back from altcoins into BTC” says Kelvin Koh, a general partner at the Spartan Group. Typically, after major alt-season cycles, like the one enjoyed by the defi token space in the summer of 2020, capital tends to flow back into BTC as traders seek to consolidate profits. The Defi Pulse index, which is a market cap-weighted index of leading Defi native tokens including LEND, YFI, COMP, and SNX has fallen ~39% in the last 30 days. Over the same period, the price of Bitcoin has risen by ~30%

Crypto news for the week ahead

November 2nd – FTX exchange launches equity trading

Crypto exchange FTX has announced that it has partnered with CM-Equity, a regulated German financial institution, to offer tokenized versions of popular stocks like Tesla (TSLA). The spot tokens are backed by shares of Tesla stock custodied by CM-Equity and can be redeemed with CM-Equity for the underlying shares if desired. Traders will have to go through level 2 KYC on FTX and submit KYC and compliance requirements to CM-Equity.

November 2nd – Crypto.com MCO token swap

Crypto.com will begin the process of winding down its native MCO token by asking users to swap them for CRO tokens. The swap is part of a move that will see the Crypto.com ecosystem streamlined down to using one token (CRO) with combined functionality. The Crypto.com App will handle all technical requirements involved during the MCO swap process.

Top 10 Crypto Summary

Bitcoin (BTC) aside, it was a difficult week of trading for large-cap assets on the Brave New Coin market cap top 10. This week there was a new entrant into the top 10 – USD Coin (USDC) a stablecoin backed on a 1:1 basis with the US dollar and managed by a membership-based consortium. USDC is built as an open standard smart contract that can be easily integrated with wallets, exchanges, and DeFi protocol.

Bitcoin Price Chart

The Bitcoin price continues to climb to new heights in 2020 and enjoyed a pickup on the 12th anniversary of its whitepaper on October 31st. Data provider CryptoQaunt points at inflow transaction count of all exchanges hitting a three-year low as a bullish factor. This may mean that with less Bitcoin available for selling, price is being more aggressively pushed upwards as demand for BTC grows.