Bitcoin to Face a Downward Break | Crypto Markets

Hi everyone. Today we have our traditional crypto markets with Mati Greenspan. I hope you missed Mati as we did. How was your vacation Mati?

Oh, it was fantastic. Thanks a lot.

Great. So before we start, let me remind you that on Friday we announced a competition. We asked you to guess the bitcoin's price today at 7:00am Eastern Time and we have a winner. So the bitcoin's price at 7am on coin360.com will was $10,256 and the user with the nickname begonecrypto guessed it would be $10,254.01. So please contact us by email in about section to claim your prize which is $50 credit on Cointelegraph merch store. Good job Bigon. Crypto. You are really big on crypto, Matti. Bitcoin has been stuck in the mid low 10,000 range for about a week. Can you give us an overview of the current market situation? Is it still possible to see an ascending pattern?

All right, so the pattern that I pointed out on Twitter this morning is actually unfortunately a descending pattern. We can see that huge rally up from the beginning of the year and it has stalled as you mentioned. Right now we have support just below 9,500 and the, the resistance here is actually going down. We can see that, that the highs are getting lower. This is a descending triangle formation. In technical analysis, the base case or the most likely scenario is a downward break. Luckily enough we do have a nice indicator right below which is this blue line over here. This is the 200 day moving average. We've discussed the 200 day moving average many times in these interviews and it is a key indicator for bitcoin. And, and I believe that that could, if we do see that scenario play out or we see a downward break, I believe that that blue line is very likely to cause some sort of a support.

Awesome. And what about, what about altcoins? What's the situation at the moment?

I think that altcoins are still following bitcoin for the most part. We had some nice movement in EOS over the last 24 hours, though it's not really clear exactly why. But for the most part we're looking at bitcoin as the leader and altcoins just kind of following in the wake.

So last week ripple apparently transferred 500 million XRP from its escrow wallet, which is a quite enormous sum given that XRP price has been in downtrend. Men in the community are worried about the company's continuous dumping of the token. The company in turn says that they are investing in firms that could help the ecosystem growing. What is your stance on this issue?

On the one hand, Ripple has an advantage that they have an enormous treasury chest that they can use to invest in the future of Ripple. On the other hand is every time that they take some of that treasury out, they're actually hurting the price because they're not holding US Dollars on the side, they're holding billions of XRP tokens. Every time they take half a billion tokens out, they have to then sell those on the market and that reduces both the value of XRP and in turn their treasury chest. So overall this is basically a downward pressure, especially in the short term. I mean, if you're thinking about long term, if they gain, you know, worldwide adoption and are seen as the de facto way to transfer or to do settlements between two banks that, you know that that's a very long term bullish scenario. However, in the short term, as every time that they take some money out of XRP in order to invest in the future, they are going to pull down the price a bit.

Last week Fred Wilson, the co founder of venture capital firm Union Square Ventures, expressed criticism towards Ethereum. He said that Ethereum has shown the way to so many important things. Smart contracts, programmable trust, free computing, potentially proof of stake and a lot more. But it remains hard to build on. Scaling, scaling issues abound and many developers are looking elsewhere also. Not long ago, Vitalik Buterin admitted that the Ethereum blockchain is almost full. What do you think of these criticisms? Do you still see the potential of Ethereum?

I definitely see the potential of Ethereum in the long term. Ethereum is probably one of the biggest places where people are able to do decentralized fundraising and that's an amazing thing. And as our friend said, that opens up the way for new business models and new new models for raising capital. I do believe that it has. Obviously if it's almost, if the blockchain is almost full, that means that a lot of people are still using it, right? So let's not, let's not lose sight of what's happening in real time. Obviously they do have scaling issues. I do believe that they will get over those scaling issues eventually. However, when we're talking about decentralized networks, this is right now, the gold standard of them. What worries me as far as investing in Ethereum, very similar to what we saw in XRP is a very high rate of inflation. At the moment we're seeing about 13,000, 13 and a half thousand new, new ETH is created on a daily basis. And I don't think that the demand from developers is, is just that strong at the moment. So right now what I see for, for Ethereum, especially at this point in time is, is a strong rate of, a strong rate of inflation. After the huge run up in price that we saw in 2017, obviously we saw a huge, huge ride rise in the usage of the network, which translated into higher value per token. I don't think that we're seeing that same, that same level of the network growth at the moment to support that high level of inflation.

Can you see the same issues affecting Bitcoin at the moment or you think these are just problems belonging to Ethereum?

Well, Bitcoin at the moment has a much lower rate of inflation than Ethereum does and I think that Bitcoin actually has shown very strong fundamentals lately. So first of all we can point obviously to the hash rate which is about six times times higher than it was at the height of the all time high in 2017 as well. I mean, even if we're looking just at the short term, this is the estimated USD transaction volume on the Bitcoin network is right now $1.4 billion per day approximately. And that's about as high as it's been since July. So we can see that bit people are still using Bitcoin for its intended purpose of transferring value from one person to another.

In an analysis on stablecoins released by JP Morgan, the company pointed out some risks which a global cryptocurrency like Facebook's Libra would pose. In particular, the analysis says the network could fail in periods of stress. Quoting JP Morgan. The risk of payment system gridlock, particularly during period of stress, could have serious macroeconomic consequences. What do you think about this risk? Is it existing?

It's not an existing risk until there's an existing currency. I mean, right now it's a very hypothetical situation. How will, how, how would they even know how much usage it's going to see? And how will they even know how much usage that, that blockchain could handle? At the moment, there are two things that are very far. Let's see them, let's see them get their, get the regulatory approval that they seek. Let's see them get that out. Let's put the blockchain up and then they can talk to me about, you know, scaling issues or whatever. Right now it's just way too early to even be talking about that. But on the other I mean, even going further down that path, why are we, why are we even talking about, you know, Libra coin at all? It's very difficult right now to be investing in it. Right. It's a stablecoin, first of all, an asset backed stablecoin. So at the moment, I mean we have, we've set up in Etoro a Libra portfolio which is basically tracking public companies that have committed to being the masternodes of the Libra blockchain. But short of buying those stocks, it's a very difficult investment opportunity to be discussing right now.

So another risk pointed out by JP Morgan is related to the possibility of negative yields on Libra's fiat currency reserves. This scenario becomes even more likely if we consider the global trends are going towards further monetary easing policies. So do you share these concerns?

I find it very funny that JP Morgan is bashing Libra. Obviously we know that JP Morgan is coming out with their own JPM stablecoin, which is back to the US dollar. Perhaps Libra's model of having an asset backed stablecoin, right, rather than having it pegged to a specific, specific currency, is that they have, you know, more stability so that they're not only exposed to one currency. On the other hand, I myself have raised questions about how that asset backed platform is going to work. What it seems to me is, is that actually opposite of what JP Morgan is saying in your quote is that the people who are managing that fund actually have a larger incentive to seek out higher yielding investments because the yield on those investments actually go to the people who are managing the fund. So from an asset manager's perspective, their incentive is always to seek out the highest possible yield. Now JP Morgan is talking about a world where, or a trend where we see yields on assets, generally speaking, going down and some are even negative. I find it very hard to believe that we'll be in any sort of world where they will not be able to pick out some high yielding assets from all of the global assets that are out there.

So these were the latest market updates with senior market analyst Mati Grinspan. Thank you for watching and see you next week. And always remember to like subscribe and HODL cointelegraph. Like subscribe and Hodl.