Oct 25, 2023

Rapid gains in bitcoin (BTC) are taking a bit of a breather, following renewed excitement around a U.S.-based spot bitcoin ETF approval.

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. Bitcoin is taking a little bit of a breather right now, but that's after it had some renewed excitement around the spot. Bitcoin. ETF joining us now to discuss is Oanda, senior market analyst for the Americas Eric Edward Moya. Welcome. Welcome back. Great to be back on the show. Thank you. Glad to see you. So this is kind of a weird uh I have to say it's a little bit of a weird rally uh in that it's doesn't seem to be 100 it seems on the surface to be surrounding uh centered on this. ETF digging a little bit deeper though it does. I I don't see necessarily across the board interest in stablecoins for uh the increase in Stablecoins that would generate the sort of purchases of Bitcoin what's going on right now. Uh That would lead to the prices to move this way. It seems that right now, there's um a lot of chaos happening on Wall Street. Um You have what the bond market volatility where we saw, you know, the 10 year treasury yield uh tentatively uh surge above 5%. Uh You have um um a steady dose of data that supports that the US economy is still strong as you were highlighting earlier. You know, Congress doesn't know what they're doing. It looks like we might be headed towards another tense moment in a month where we could have a government shutdown. I think most likely Republicans will be forced to have a support, a stop gap solution again. Um So, so it, it seems that there's the, this kind of, uh, fear that, well, where do I put my money? And, uh, it, it seems that, uh, equities, uh, you know, earnings have been, um, a lot better than, uh most people anticipated. Um, and, uh, the overall appetite for risk has somewhat held up. Uh, it seems that we're getting close to the end of the Fed's tightening cycle. Um, and crypto has been fascinating because the institutional interest has definitely, uh, percolated, um, retail. I think they're still looking at their wounds from FTX. I think there's still a lot of lost confidence in this space. But I mean, if you take a look at the price action, um, a lot of the, the, the big money, they're, they're saying, wow, look at this asset class, uh, Bitcoin um, has doubled this year. Uh, you have, um, often times, uh, you know, buy the room or sell the news type of reactions in crypto and there's a lot of optimism here that uh because you have the likes of Black Rock, you have, you know, you know, almost a dozen, you know, spot Bitcoin ETF S that it, it seems that there's confidence that, you know, some will get approved within the next couple of months that you've seen um uh you know, a fresh push. Um and, and, and to flows into this uh space. So I think there's, there's a lot of optimism that there will be some good news, but I think there's, there's a lot of doubts that this will lead to a sustained rally. I did do some of the macro events happening right now, particularly in the Middle East. Uh does that also and I, I do actually want to get to, you have a chart of Bitcoin. We'll get to that in a second. But uh do you think that that has any role in this? And namely you have the potential of Iran getting drawn into a conflict? Iran does a lot of its financing and has a fairly, I want to say, friendly ish attitude towards Bitcoin, at least when it comes to using it uh to move money around that, there's sort of a something happening right now in Bitcoin that might be sourced outside of traditional markets if you will. Uh And as a way to get money to move around in uh in ways that uh let's say regulators in the United States, Europe and Asia might uh frown upon uh very much so. And I think the, the, the fear is that if we do have a widening war, if this, this, if, if we do see in Iran involved, obviously, sanctions will spread. Uh if you have more people uh that um are, are, are getting involved in this war, you, you have the risk that uh uh their funds could be locked up. So the interest in, you know, having more crypto exposure to uh move money around is, is growing. So I think that that has um definitely probably played a part of uh some of the, the flows that we've seen. Um But, but I think overall broadly speaking, the, oh a widening war is, is, is, is bad news for risky assets. It's bad news for inflation. Um And I, I think what you, it'll be interesting to see because sometimes, you know, we depending on how, you know, the market is positioned to AAA de risking moment should typically be negative for crypto. And in this instance, it's unclear if that would be the case. So I, I think the, the one thing that a lot of people can agree upon is that the volatility is back, it's gonna probably continue to remain elevated and, and, and I think uh geo as we have more geopolitical risks on the table, it's, it's uh it's gonna be uh interesting to see if, if Bitcoin can emerge as somewhat of a, a safe haven as it has shown at times uh that it could be. All right, Ed, you sent along this chart, talk to us about what we're seeing here. II I think it's fascinating to see how, you know, this move up. Um You know, I think for it, it seems like the last few months people are saying, like, are we still in a crypto winter or are we, you know, has, has the retail investor, Um you know, are, are they starting to, you know, open up more accounts? Are they putting more money into crypto? And uh you could see that, you know, the price action completely supports that we are breaking out higher. I think there's, there's this belief here that you have a lot of uh potential long term catalysts that could be supported for a bullish move higher. You have the having events come April, you have um you know, possibly we could get an ETF announcement in the next couple of months, let's say, um if not sooner and, and I think there's, there's um when you consider what we're going to see happen in the bond market, there's probably gonna be some moments where we see extreme stress. Uh The the treasury has announced that they have to have a lot more issuance. Um The feds not buying uh Japan and China are defending their currencies. Uh So what we're going to see is that there's probably gonna be a lot more uh upward pressure on yields and it'll be, that's gonna be, I think the deciding, you know, factor on whether or not we see cryptos rally. If, if, if cryptos are viewed as an asset class, that is going to provide some diversification away from that chaos, then you could see um if the institutional money believes in that, uh then you can make the bold case that prices can go much higher. Can you can you just kind of go over the, the, a couple, a couple of the things on the chart there, some of the, you know what? It's rather colorful. I those aren't by accident. Uh and a couple of the, the lines below just sort of explain that to the folks. II, I believe that's a Mac D line, isn't that? And that's not mcdonald's. No, no, this is not my uh my son as a six year old drawing of um what he likes to do. But um no, um uh right now, what we're seeing is there's a, a complete uh sign here that we are breaking out higher. Um There's a relative strength and slow stochastic indicators that are being displayed. And uh you, you could see that we are starting to see some overbought conditions uh shown on the bottom one, the RSI. But II, I think what you, you would typically with crypto and Bitcoin specifically, you can remain in overbought territory for quite some time. And I think there's a, this belief here that if, if we, we see steady momentum, steady interest grow. Um And this ETF uh potential um could, could trigger that. Um there, there could be further momentum and upside here for crypto over the short term. All right, we have uh the crypto fear and greed index. It is of course, a key gauge of investor sentiment. It's at 70.6. This is the highest since November 2021. What's your reaction here? What are your thoughts? II, I think this is an interesting indicator. I mean, like just like most indicators, uh you know, you have to take it with a grain of salt, it's just one signal. Um Some people like to use a moving average with this particular uh uh index. Um But II, I think you, you, you, you can remain in excessively uh greedy territory. I think, you know, when we saw what happened a couple of years ago when Bitcoin was at 19,500 uh you know, the reading was above 90 you know, eventually we, we, we saw, you know, Bitcoin, you know, triple uh so, you know, you, you can really stay in, in these extreme territories for some time. But II, I think it's gonna be important to see whether or not um you, you, you, you continue to have um upward momentum once we finally get um some sec clarity on what, what they're doing with um these ETF applications. And, um, I think with their overall, it, this is, this is an index that, um, well, I think a lot of people will, will focus on, but I think it's important to understand that just because we're, we're, you know, very greedy territory doesn't mean that, you know, that, that, that's the end of the rally it. You know, when you, you, you mentioned that that uh above 90 for back in November uh of, of 21 that's generally when we had all that US t sloshing around and buying up Bitcoin and, and, and that was sort of all of a sudden this explosion and in algorithmic stable coins, we know what happened there. Uh Recently, we've had also a, a rise in US DT but a decline, oh, it's a steady decline in US DC. Is there something to be said about where stablecoins go that they need a place to, to be parked ultimately? And that, that has an effect on the crypto markets? I think stablecoins are going to be uh very um important to focus on and also digital uh central bank currencies. Um I think anything that draws attention to the space is, is um typically um positive. Um but, but um I think overall right now, we, we're, we're starting to get more regulatory clarity. Um I think we're gonna start to have a better sense of crypto adoption. Uh I think the Stablecoins will play a bigger part. In that. Um But, but for, for, for, for now, I think you're, you're, you're probably gonna see, we need more crypto projects. We need uh an expansion of that. And this is a difficult environment right now. Everyone's, it's, it's tough to raise money. It's tough to refinance. It's, it's, this is a, a difficult space for a lot of crypto companies. So it's gonna be important to see growth in the space innovation. And uh right now that's uh really haven't seen too many breakthroughs. I think this year. And this is the time of the show where I ask you for a prediction, if we do get that spot, Bitcoin ETF approval by January, like many analysts are predicting, what do you think will see happen with the price of Bitcoin? I think to the lead up prices will continue to rise. I think there's the potential that we could test above 40,000. But, but I'm convinced that given the macro backdrop, given uh the, the uh lack of retail interest that has come through. I'm fearful that we could see, um you know, prices kind of revert back to where we are right now. So, but I think there's still potential for possibly 10 20% more upside over the short term. But then I, I think prices will come, you know, back to around these levels. Ed Thanks so much for joining us this morning. Always a pleasure having you on. Thank you that was a Wanda senior market analyst for the Americas Edward Moya.

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