Bitcoin Is Preparing for a Big Move | Mati Greenspan Vs. Erik Crown

Hey everyone. Today I'm joined by Mati Greenspan and Eric Crown to discuss the current direction of the bitcoin market regulation and the future relevance of cryptocurrencies. My name is Jackson and welcome to this week's crypto duel. First let's get your guys take on the crypto market. Specifically with regard to bitcoin. Are we headed up, are we headed down, are we headed sideways? What are the numbers and charts telling us?

Yeah, so bitcoin, this is daily bitcoin right here. Overall, you know, very little changed since we last spoken. To be quite honest with you, for better or worse. However, if you are asking about the more proximal action on bitcoin, just kind of what you expect or what I'm expecting for this week, we do have a pretty obvious sort of setup going on right here. And there's a few things that are of interest right now in the lower timeframes. Lower timeframe being a daily right now. And I am starting to see a lot of momentum also to start to turn back up. My favorite indicator, my personal indicator is the jewel and this actually fired off a decent buy signal a couple of days ago on the low. So. So I'm kind of split in the way that I'm looking at this because short term do I think that we have some upside? Probably yes. The way that I trade it would be mostly the same. I do think that if we take out Yesterday's high at 8350ish region on BitMEX I'd be looking for a move to test back up towards about 8,650, 8,700. But that doesn't really do anything for the greater picture. And I think that that's probably what this video is more focused on as far as the greater picture goes. Yeah know the levels that are relevant are still very much the same. 86, 50 to the upside and about 7870, 900 to the downside right here. You know, any sort of a short term play is just that. And I do believe that the way that we break last or sorry, yesterday's, you know, yesterday's doji right here or if you want to call it a shooting star, whatever you want to call it kind of acts as the same thing I do believe is going to be our short term direction and we're going to test, you know, the outside of the range, whichever way that we break it for. So for, you know, in this example I'd be looking for a test back up to 86, 87 if we do break north above 8350, and if we broke south below 8150, I'd be looking for a return back down to about 79, 79, 50 ish region. And realistically, that's probably the most unsexy answer realistically is sideways. So I am a little bit biased here to the upside just based off that. However, longer term, I am biased to the downside, especially as long as we're below 8,700, because death crosses are coming on the way. And I do put a significant amount of weight on all major moving averages, which are really shaping up to be quite bearish the longer that we stay below 8,700. So it is a little bit of a ticking time bomb. I believe if the bears were going to take full control, they would have done it a few days ago when they had their chance right here. The fact is that we're going more and more sideways here actually does bode better for the bulls. But I would expect to see a move probably a little bit later this week to test one of the outsides of the range. And at that point in time, we'll once again be able to maybe get that next breakout trade. If we do break north of about 8,700, I would target a move towards 93, 9,400 back up here, probably play out another, you know, another slow bounce. I suppose I would still be overall cautious. I am very, very defensive in this market right now. Even though I am slightly. I actually just flipped slightly long right now. I'm quite defensive in this market. And even if we did work our way back up to the mid to low 9,000, I'd still kind of be thinking to myself, like, you know, likely still a lot of resistance in that region. I'm not necessarily convinced that the downside is just over. And of course, we do break below 78 to 7900 right here. I would target that next move, as I've been speaking about, towards about 6900 and then be looking for a bounce around there. But other than that, again, it's kind of an unsexy answer. Probably mostly sideways here. And the lower timeframe range of about 200, $300 moves north or south is really the only thing that I'm playing right now.

How are you feeling about all that, Mattie?

So what you're saying, Eric, is that if it breaks below the relevant support level, you'd go short, actually.

Yeah, exactly.

Okay, so this is a bit of a difference between the two of us. Because personally I don't short gold and I don't short bitcoin as you can see in my portfolio. I do believe that it's correct to be defensive at the moment, but for what? For me, what that means is to lower my exposure on the long side. You want to talk about the big picture, we really need to zoom out a little bit on the charts over here because that analysis is spot on.

For what it is.

It's a very short term play if you look at the long term. However, all of what you are showing on your screen fits in this little area over here, which is since end of last month, we've been in a consolidation range which is actually a very low volume consolidation. If you look across the board right now, volumes are, I wouldn't say historically low, but they're incredibly low compared to what we've seen over the last two years. You can see that for example on Masari Crypto who tracks the top 10 exchanges. They're tracking about $200 million. For the top 10. That number has reached 4 or 5 billion as little as three months ago.

As well.

On the CME group, the CME group futures are kind of steady actually, but still pretty low. Bakkt is almost non existent. We're talking about three bitcoins traded today. And then even on the bitcoin blockchain we can see that over the last few weeks there was a significant drop in transfers on the existing blockchain. So when volumes are low like this, volatility is low. This is a high risk situation. Which means for me that I want to kind of cut my exposure. But for the long term I'm still definitely long, so.

Joe Wiesenthal, host and editor at Bloomberg, took to Twitter to voice some speculation about the use case and efficacy of Bitcoin. To summarize his rather lengthy tweet, he argues that there is no point using Bitcoin for legal transactions because you can just use a much faster payment system like Visa credit card. So the main use case for Bitcoin is to make transactions that big businesses and big governments don't want you to do. He goes on to add that because Bitcoin is propped up by symbiotic relationship between speculators and transactors, meaning that the more transactions that can be made, the more investors will be attracted and more investment leads to greater price stability which benefits transactors. His point is that because of this relationship, Bitcoin investors are essentially enabling transactions that are against the interests and possibly the law of the man. He then uses this argument to issue a warning, asking, how sure are you that down the road regulators won't come in and shut it all down. As two people who actually trade Bitcoin on a regular basis, what do you think about his perspective on Bitcoin?

I think he really destroyed his credibility with that last statement there. To say what's going to happen if the government comes in and shut things down shows that he hasn't really done the research into what this is and what he's talking about, which makes me think that his prior comments are likely unfounded. I mean, of course, there's some truth here as well, no doubt about that. But that last little quip there tells me this guy's maybe not the most informed. How would the government shut down Bitcoin legitimately, in the sense where they just completely stifled it? Of course, they can make it difficult. They could put in sanctions or whatnot with making sure that banks know exactly where your money's going. So if you were to send money to exchange or something like that, they could maybe track that. I could understand that. But even then, there's still no way to truly shut it down. So through that conversation, I'd have to first understand exactly what he means by that. And then second, Judge. Okay, is this founded or not? And I'd say at the outset, probably not.

What he was trying. I can kind of clarify, because I was quite part of this conversation. What he was trying to say is that because bitcoin is intended or its sole use is transactions against the man, that therefore we shouldn't necessarily be rushing to institutionalize it. That was kind of his main point. I actually wrote an open letter to Joe Wiesenthal that day, which, as you can see, he was kind enough to tweet out to promote the discussion. The letter is called where youe Going with that Gun in youn Hand? Of course, a play on words from Jimi Hendrix. Hey, Joe. And the point in my letter was pretty much that bitcoin is, yes, it does have roots in sticking it to the man. But I would argue that that's not. First of all. First of all, that's not the only use case. I've outlined several use cases that are not necessarily sticking it to the man. Related. But more than that, there are use cases that are sticking it to the man. Related, meaning giving it to the global economy, the big banks, et cetera, et cetera. But not necessarily illegal or illicit, meaning that as a free country, the United States should be able to have the option to kind of choose their own money and to kind of choose their own source of that and to choose the financial institutions that they choose to work with or to opt out if they so choose. And therefore, my conclusion, of course, is that if the United States truly stands for freedom, then they should be embracing a product like bitcoin that embolizes what freedom is. But overall, and as you can see, I put an analysis here, a chart from the tie IO which basically shows the point where Joe started his attack on Twitter. And actually the sentiment on bitcoin Twitter actually went up significantly. It had dropped because of the price drops. But actually, the entire discussion that Joe created around bitcoin actually seems to have served to lend a positive hand in the sentiment of crypto on Twitter. Right.

But as we all know, the sentiment gauges on crypto Twitter are notoriously inversely related to price action. The thing with that is, and I agree with you here, this person just sounds like, it just sounds like the traditional, just old man saying bitcoin's bad and you should not like it. I think it's just a very lazy, extremely lazy argument to just say, this is for sticking it to the man. He has a very clear person in mind, which I understand. And that's kind of the person that I want to distance myself from in this space. But you know what I mean, go.

Ahead and name America.

You want to be reasonable, want to get carried away with like these just silly arguments that are, you know, they're mostly just based on emotions and whatnot. So this guy over here, you know, saying something that's just completely asinine, and then you got the, then you got the bitcoiners who are drinking too much of the syrup on the other side. That's what I really want to, you know, get away from. And it sounds like this person just hasn't really done the research into what it is. So I, you know, I'd have to say at the outset, I'm just not. It just sounds, it just sounds like a non event, really. How would I just love to. I'd just love to hear the question answered. How does the government shut down bitcoin? Like legitimately shut down to the point where you cannot use it no matter what.

He wasn't arguing that the government should shut down bitcoin. To clarify, and if you read his note, he was arguing against the approval of a bitcoin etf. He didn't say bitcoin should be shut down.

That's quite a simple thing then. I mean, does bitcoin need an etf. It does not. I think it's kind of. I think it's kind of grandfathered in that it will get one at some point. I mean, it's just headed toward that direction. You know, we're not just going to get CME futures for no reason. And now to talk about options on CMA as well. I don't even know they do options on cme, by the way. And on top of that, we just got backed and things are surely going.

In that direction still. They will.

Right? Right. It's coming out next year, though, as a. As they. As they let us know. But, yeah, you know, to me, that's showing that the traditional world is actually being. Being very accepting of Bitcoin. It's just a slow process as it, you know, as it kind of should be, because these things, new volatile technologies, you want to take your time with getting to know them. And I think that that's what the market's doing. I think that that is the right thing to do.

Cool. So let's switch gears a little bit and let's talk about some of the bigger names in cryptocurrency right now, specifically Libra and ton. So, as you probably know, Libra has been losing a lot of its members over the past weeks, including MasterCard, Visa, PayPal and Booking Holdings. And the ton ICO release has been delayed to February because of SEC problems. And now Mark Zuckerberg is going before the Senate tomorrow to discuss data issues with Facebook. How are these delays affecting the cryptocurrency space?

So the way that I've always known markets is that markets love certainty. And whenever you have an uncertain, just whatever conversation, the market hates that in this sense, the market kind of treats Libra in a similar vein to Bitcoin. And I know that people are going to really dislike that statement. But let me explain. The way that the traditional market kind of plays things is you do it through corollaries, you do it through the next best thing. And the way that the traditional markets looks at Bitcoin is that it is related to Libra just by the name cryptocurrency, essentially. So I believe that we've actually seen a lot of the positive momentum in price action over the past three, four months, obviously not the last month, but in that run up from what was it like June to where we were in September, essentially, that was also a lot due in part to Libra just coming into line. Because when the government or when the SEC or whatever Congress, whatever it might be, accepts Libra, it sets a standard and it makes crypto more mainstream just by that name being now accepted, I suppose, just by being spoken about. So kind of answer your question in multiple facets. I do think that a Libra kind of proven itself in a way and if it does have a good hearing tomorrow, I would expect a nice move to the upside, probably to the 9,000 actually if that were to happen. I don't think that that's necessarily all said and done, but a strong Libra would be good for Bitcoin. And I do believe that we saw a lot of the run up and also kind of some of the downfalls precipitated on just random news, parts of Libra's partners and kind of their overall acceptance as the story went on. The big thing with that is the big thing with Libra is that if Libra can actually pull through here, it makes Libra antifragile. And even though all these major companies, all these major names have left them, I think you said Visa, PayPal and then a bunch of other ones. While that's kind of a big blow, if Libra actually pushes on through here and survives that and then does what it sets out to do, that's going to be incredibly powerful. So it's going to be a very, very interesting thing to kind of monitor over the next six months, 12 months, whatever, whatever it ends up being. I'm not qualified to speak on like the legal aspect of that because I know nothing about it. But I can only say that I would expect the market to move off this. And this is why I'm kind of a little bit more guarded with the way that I'm doing my own analysis and my own trading right now. Just because, you know, you know, I can come up with some incredibly bullish things. I can come up with mostly, mostly bearish things actually. But I do believe tomorrow's event is going to be likely a big driver.

Matti, how do you feel about that?

I thought it was very interesting, specifically on the legal aspect how just yesterday or the day before, I believe Libra kind of took a change in direction. We heard David Marcus announced that they would be open to, rather than having a basket of currencies, actually have more of a stablecoin type of model where depositors in the US would hold US dollar stablecoins. Depositors in the UK for example, would hold GBP stablecoins. And I think that that actually gives the entire project a lot more of a clear path forward as far as regulation is concerned. First of all, it's something that's already being done by several large financial firms where they have tokenized fiat currencies. And those are completely legal. And as well, it's done by major financial institutions throughout the world who continuously print US Dollars. Of course they don't call it JP Morgan dollars, they just call it US Dollars. But actually having that kind of clarity and saying, okay, these are the dollars that Facebook actually introduced, I think that that could actually give the entire project from a regulatory standpoint, much more stable footing. I was very curious about the companies who pulled out because I didn't really understand why would they pull out at this point, at this early stage, it doesn't seem like they have much to lose by staying in. However, if the project does go forward and does clear that regulatory hurdle, I do believe that Facebook will not have any problem finding 100 companies that are willing to plop down $10 million on something that seems very, very sure is going to happen and be immediately open to all of Facebook's users. They would be silly not to.

Yeah, agreed. This sets a precedent for the overall market and I think that it directly affects bitcoin as well and just cryptos in general. So something that I'd definitely be paying attention to as this kind of unfolds here. Like I said tomorrow, if we see if there's just a good sentiment going into this meeting, which I'm sure will be live broadcasted as well, so if you want to watch, you certainly can, then I would imagine that that's going to likely show up in the market.

Well, in either way, we'll be able to tell very clearly what the effects of Libra on Bitcoin are. Last time we were in a rally, we saw Libra. You know, the Libra hype and bitcoin rising together. But there were many other narratives of bitcoin surrounding it at the time. Now, where we're looking at a very low volume environment, if we do suddenly see some sort of huge price movement, positive or negative, in reaction to those hearings, I think we'll have a much better understanding of how Libra affects Bitcoin and vice versa. Right.

And everything that I look at from a charting perspective is suggestive that we do see some pretty massive price action precipitated on tomorrow's event. Volatility, as Matti said, is extremely low. If I bring up my screen share just once again, there are just so many confluences here showing that we are in decision phase for a multi thousand dollar move relatively very soon. Looking at historical volatility, percentile and just about every Time frame, it's extremely low. We are lower than where we were from the breakdown from 10,000. Where we are right now, this was just about a week ago, two weeks ago, right here. We're even at about the same area from historical volatility, percentile standpoint, or, sorry, even lower than what we broke out from March, by the way, as well. But we're basically at the same kind of read that we saw from the 6,000 to 3,000 drop right here. So I do believe that we're going to be looking at a major massive move. Momentum oscillators are suggesting some bullishness in here. But, you know, like I said, I would actually be extremely bearish here if it wasn't for my own indicator, the jewel. And I'd be happy to put on some pretty massive shorts. But looking at this right here, I mean, we do have some death crosses on the way, and it makes it very difficult for me to be bullish as long as we're below 8,700. So I do believe that the event tomorrow is going to give clarity on this situation. And the way that I'm gonna be trading is just whichever way that we break from this consolidation. It's very simple here. I mean, this is not like crazy technical analysis. Just above 8650 or below our current lows at like 79. That's gonna be the next major move. To the downside, I'd be. I'd be looking at targets into the upper six thousands to the upside, I'd be looking at targets into the mid to low 9 thousands and perhaps beyond. So right now, you know, if you. If you're not in position right now, I don't think that that's. I mean, that's a pretty noble decision, to be quite honest, as realistically. All you have to do is just wait. Just wait another day, and once you have clarity on the direction, then, you know, just jump on the win team, essentially.

But what would happen to the cryptocurrency market if the regulatory challenges are insurmountable?

Fizzle?

Yeah, it'd be devastating. Could bitcoin survive on its own without that? I'm sure that it could, but it certainly put a massive damper in the progress that's been made thus far with kind of joining the traditional world from the crypto world, which I know the true crypto fiends are going to hate that statement.

I'm going to hate it right there.

But here's the thing, man, here's the thing. At the end of the day, I do believe, I strongly believe that the best solution here is kind of combine the good parts from cryptocurrency land and the good parts from traditional land and then you're probably just going to merge together and that's the way forwards. That's kind of how I see what's going on right now, especially with Libra, especially with the fact that we're, you know, we're talking about an ETF still. The fact that we've already gotten futures on a major US exchange, I mean CME is, you know, one of the best ones. And we're talking about options coming on there, you know, coming into next year and then more and then batch and all that good stuff. So I. That I believe is setting up the stage for this integration.

And Fidelity making their rollout.

Yeah, absolutely.

I'll give you a possible scenario that might just happen in the future and I hope for your sake it doesn't. Let's say Mark Zuckerberg tomorrow gets completely sloshed in Congress and confidence in the Libra project goes down. The tube traders like yourself are happy to take a breakout to the downside and then that ends up being a complete bear trap. Okay, so this is exactly what happened in the ETF decision, the Winklevoss ETF decision of March 2017. The ETF was highly anticipated, much hyped and then completely squashed by the sec.

Right. But hold on, hold on, let me stop you there. Hold on, let me stop you there.

What was followed by it's not happening. Seven month, nine month rally.

One of the greatest rallies of all.

Time where the crypto trader said, we don't need your etf. We don't need your Wall street product. We don't need any of that. Great, we have Bakkt on board. Come on board. Great. We have Fidelity on board. Come on board. But other than that, we're moving forward.

This market is extremely immature and extremely young. That would be the wrong, in my opinion, the extremely wrong stance to be taken. That's a possibility.

I'm saying that's all right.

Possibly, perhaps, yes. But again, the way forwards is by more mainstream adoption, whether people like it or not. I know the traditional crypto person hates hearing that, but the best thing is to meet somewhere in the middle. That's how you get real adoption. That's how you get mainstream people into this game, which is, I believe the true purpose of Bitcoin is to really become something bigger. Not just for, not just the super niche type thing, but something bigger. And come seeing and including everyone in the world.

But don't forget, with that, with greater institutional adoption comes greater price stability. Which means that all those crypto traders who are hoping for those thousand dollar movements hold on movements. Those movements go away as the larger institutions hold on.

Let's just take that one step further. I'll go into the charts just one more second here. I'd have to extremely disagree with that. So cryptocurrency land is a very unique place right now because you have an extremely volatile asset that moves in sometimes thousands of dollars per day and you can trade up to 100x leverage on exchange binance. Now you can do 120, 25x leverage, which no one needs by the way. But here's the thing.

Yourself my friend.

Yeah, there's a little bit of that going on. But what Matti's saying over here is that priceability would be bad. I would actually disagree. It would be so far fetched for, you know, in the future that that would even become an issue because we trade, you know, we trade like legitimate fiat currencies with which trade, well, quite literally in like four decimal places to the right as you can see over here. I mean we're looking at an extremely, extremely small amount of moves, but many, you know, you can make a living trading this right here. There's plenty, there's plenty of opportunity because you have that leverage. Because you have, you know, you know you can, you can still trade those moves. It's always a percentage gain. So as far as that statement goes, I think traders wouldn't care. Traders trade forex all day and I'd imagine that Bitcoin would be no different. In fact, I think it'd be much more readily accepted by traders because now we're going to have. It would also imply that we have more liquidity. So you can get your fills. One of the biggest issues with Bitcoin right now and the biggest issue with institutions coming in here is that you can't get your fills. Why is Baks doing no volume? Because no one's trading there. No one's trading there. And how do you get more people to trade there? Well, you need more liquidity. How do you get more liquidity? You need more people trade trading there. It's like a chicken or the egg type thing. My point is, is that that is just the natural progression and it's not going to really change anything for the traders. It's only going to change things for people who are like using degenerate amounts of leverage and need a move like that in order to produce a respectable amount from their trading. For people, professional traders, it would just be interpreted as forex. And remember, we're talking about forex, which literally moves in 0.01 of a decimal with each and every tick. And we're talking about Bitcoin which moves literally in half dollar ticks, like not even multiple decimal place to the right. We're talking about half dollar ticks and you could see a $50 move in the span of 10 minutes and it doesn't really change anything. So I'd say that would be so far and well away. And then we also kind of have, we've already set a precedent with forex anyways, so I think it's kind of a non event really.

That was Mati Greenspan and Eric Crown bringing you the latest in this week's crypto market. Thank you everyone for watching. My name is Jackson and always remember to like subscribe and comment Cointelegraph like subscribe and hodl.

Sam.