Coronavirus Crisis: Time to Buy Bitcoin? | Naeem Aslam & Ian Balina

Gold is a safe have an asset. We've seen a massive surge. Treasuries, yes, we've seen that. Bitcoin, I haven't seen any momentum at all.

The technical analysis shows that right now is a very bullish buying opportunity for bitcoin as a whole.

If you just say that traditionally that the price just fell from 10,000 to 8,000 because of coronavirus, it doesn't make sense to me.

I think in the next 10 years, by 2030, Ethereum has a very, very strong probability to surpass bitcoin in market cap.

What's up YouTube? My name is Giovanni. Welcome to our weekly crypto market show. Today with us we have Naim Aslam, market analyst at avatrader and CEO at Token Metrics, Jan Balina. Welcome, guys. So the bitcoin market has been plummeting quite significantly in the last few days. We were just above 10,000 a few weeks ago and then now we are below 8,000. So is the bull market definitely finished?

No, I don't think. Look, I think it's difficult to define the bull market without any numbers in place. If we are speaking the bull market with respect to the moving averages, then everyone knows where the bull market stands. But I think we never, we haven't even seen the bull market yet because for me the bull market is only going to start once we are back above that 10,000, that psychological resistance level that we've been fighting in the past few months or so. But if you look at the bitcoin rally year to date, and if you compare this bitcoin rally with the previous years, you can clearly see that the momentum was really there regardless of whether that was a coronavirus impact and if any of that was or has anything to do with the coronavirus. But the momentum was certainly there. Now that momentum is fading off. Mm.

Jan, what's your opinion about it? Are we still in a bull market or what do you think?

I mean, so I think we're still in a bull market. So looking at the fundamentals of bitcoin, they're changing. So yes, the halting is happening, but also the technology is improving across the board. And I think this is just a healthy correction, but long term, very, very bullish on bitcoin and cryptocurrencies. And, and I think because looking at the technical analysis based on our data, based on running over 200,000 machine learning models on bitcoin and technical analysis, we're still in a bullish uptrend in bitcoin. So based on that, we're very Very optimistic on Bitcoin. Bitcoin right now ranks as the fourth best cryptocurrency based on our data and analysis.

Okay, so according to, according to you we are still in a bull market, but what is your definition of a bull market? Because Naeem just pointed out that it's very difficult to define what's a bull market.

Well, I mean yes, it's very tough to define a bull market but I would say positive momentum, trending upwards in terms of price and also just looking at the technical analysis. So whether it's the 200 day moving average or other different technical analysis. So for us we look at over 19 different indicators and looking at the past historical price action and then try to project based on neural networks whether or not Bitcoin is going to trend upwards. So for example, on our, on our 30 day price prediction models we predict Bitcoin's price will be higher in 30 days than the price is currently. So based on that and also based on the price action and the models, we're very, very bullish that Bitcoin will rise in price.

Naeem, what can you comment about what Jan just said about the prediction?

I think it is all with respect to the technical analysis, with respect to the simple moving averages and like I said the, the price failed to cross above the 10,000 mark or stayed above that mark. We just touched nearly 10,500 depending on what exchange we look at the data. But when I'm looking at my Bloomberg terminal look, the year to date gains are 24% and that is a very decent gain. It pretty much accurate what Ian is saying that the bull market, regardless of the bull market is here or not. But we're looking at a 24 gain year to date which is very handsome number especially if we start looking at the equity markets.

Yeah, of course. So you're saying basically we shouldn't be focused on bear bull market, we just should look at the year to date gains.

I think one should look at from the perspective of the risk to reward ratio. First of all that where was your entry point? What is going to be your exit point? For me I'm still holding on to the 100,000 mark. So I really don't care about these small movements in the market because I'm here for a long term and I believe in the technology, I believe in bitcoin. I think it is highly likely to touch it for number of reasons that we've discussed with you guys several times.

So what do you think about what Jan just said? Jan, you just said that according to your criteria, your analytical mechanisms, in 30 days we're going to see Bitcoin at what level?

At a higher price than it is. So at tokenmetrics.com, we leverage AI, artificial intelligence, plus also fundamentals and technology. But right now the models are heavily weighting technical analysis versus fundamentals versus technology when it comes to predicting the positive price action of a particular cryptocurrency, in this case for Bitcoin. So our grade that we give for Bitcoin is based over 91% based on just purely technical analysis. And the technical analysis shows that right now is a very bullish buying opportunity for Bitcoin as a whole.

Naeemi, you don't rely on technical analysis for making this kind of conclusions.

Like it's, it's all about technical, technical analysis to begin with. And that's what I was saying to you, that it really depends where we are in terms of a price action with respect to the moving averages and the price that whenever it touches that 100 or 200 day moving average, those are the critical points because it correlates with what the institutional investors look for in the traditional markets and the price is trading in around those levels. So let's just hope that we don't really cross below any of these important moving averages because of, if we do, then I'm not, I'm just going to be reluctant to add into my position, but I will be willing to add into my position the moment that we crosses the moment the price crosses back above these particular moving averages, the one that I've just defined.

Okay, but that leads me to the second question, which is the 200 days moving average was located just below the 9,000 benchmark. So 8.8k. So, so yesterday we broke through that 200 days moving average in a descending direction. So we dropped through it. What kind of consequences does it have if any?

Naeem, this is an uphill battle because when you are really struggling with the 200 day moving average, the first thing is that you should really get a huge, huge tailwind the moment that you touch the 200 day moving average, as I said, it has a significant importance. But if the price stays below that 200 day moving average on a daily time frame, I'm really not looking at as a buy opportunity until and unless the weekly time frame gives me, gives me an indication where we touch the 100 day moving average or perhaps the 200 day moving average because then there is an opportunity. But if price breaks below the 200 day moving average, I'm not buying it yet until and unless the price goes above the 200 day moving average on a daily time frame. And I will be only buying from a trading perspective if the price comes close to the important moving averages on the weekly time frame.

Jan, what do you think about this 200 day moving average? Is it something that you consider when you make up your conclusion, your analysis?

Partially so. I mean the 200 day moving average is used by trend traders. It represents a bullish trend when above and bearish when it's below the average. And, and staying below the average for a prolonged period of time will definitely cause more investors and traders to go on the sidelines and not really have any capital in the market. Now for us, we aren't really trend traders per se. I mean yes, that is part of our analysis, but we also factor in some fundamentals and some technology. So we factor in over 74 different data points into our entire analysis. So it's not just purely based on one particular thing, is based on what is the best strategy at the moment.

So that's just one of the factors.

Yes. Right. So for instance, right now in this current climate we're in, Our strategy is 90% technical analysis but a month later it can be almost half purely fundamental analysis. So our strategy is constantly shifting and evolving in real time.

Okay, so Naeem, you have been focusing lately on the VIX index which is a major indicator for volatility in the stock market which has been surging in the few days, the last few days probably because of the panic caused by the coronavirus. So what does the VIX index tell cryptocurrency trader? How can be significant for the strategy of cryptocurrency trader?

So let me correct you. First of all, it's not surging, it's exploding to the upside. The reason that I'm really saying that because if you look at the year to date gain for the Vix index, it stands at 154%. It is absolutely parabolic move. The price is well above the 33 mark when it comes to the Vix index. And Vix index only covers the S&P 500 index. If you look at the volatility for the European stocks, which is the symbol is V2X that is also sitting at 142% gain. Year to date I have not seen any of the major top coins even coming close to those levels. Ethereum is sitting at 100%. But what does that tell me about cryptocurrencies? It tells me nothing about cryptocurrencies because they don't track them. It's just a volatility index. It just tells you that how much fear is there in the market and what investors are willing to position. In fact, if you look at the current contract for the VIX index and compare it with the future contract, you see the, the curve is completely inverted. It's just like a inverted bond yields that we have. This, this is also inverting because. Why, why is that? Because traders are expecting this period of uncertainty to prolong from one month to two months or perhaps to a few quarters as well, perhaps towards the end of the second quarter. Because the more end that we're going to get, the more numbers out of China in terms of the economic numbers, we're going to see some real shocks to the economy. So for, for cryptocurrencies I think, you know, so far we haven't seen that sort of a diversion. So far we haven't seen the momentum really picking up for, for Bitcoin to be classified as a safe haven, which at a time I think it's just a very evolving situation when it comes to bitcoin classified as a, as a risk safe haven asset. Because right now I really do not see it. But couple of days ago we did see the momentum surging as the VIX was moving higher. But now the year to date gains really tells you the full story.

Because of the outbreak of the coronavirus, Bitcoin has been dropping together with more classical assets like stock and bonds, while traditional safe haven assets like gold was still bullish. So this is kind of contradictory with the narrative of Bitcoin being a safe haven. Do you naeem, still believe in that narrative? If you ever believed in that.

Gold is sitting at seven year high. The last time we touched a level of 1689 was back in 2013. So I think gold has been performing enormously well. There is absolutely no comparison between that and the, the price action or the momentum that we're seeing in terms of bitcoin. Again, the move, the movie has been very much like it's, it's been literally vertical and in, in, in some of our recent research on Forbes we did mention that the price is likely to break the 1600 mark when it was trading at 1500 and now we're moving towards the 1700 mark. Now going back to your question of the safe is in Bitcoin classified as a safe have an asset. Look, WIX is a safe have an asset. We've seen a massive surge. Gold is a safe have an asset. We've seen a massive surge. Treasuries. Yes, we've seen that. Bitcoin, I haven't seen any momentum at all. Yes, as I said for the first few days when the coronavirus, when Apple issued its warning, we did see some momentum picking up. But after that the key levels were tight and the momentum just completely faded away. So right now I think it is a very critical time. If the price breaks above the 200 day moving average then yes, the momentum can come by then we can, we can say that yes, bitcoin is also acting as a safe haven asset. But I think. Right, but the blood on the street is just too much and everyone is just looking for a traditional assets rather than bitcoin.

Jan, what do you think?

Well, Bitcoin has multiple narratives and each one is always competing with the other one. Bitcoin and cryptocurrencies are a riskier asset class. So not all investors want to invest in riskier asset class especially when stocks and bonds are declining. Now Bitcoin was in value during the US Iran tension with Donald Trump last month due to currency concerns. So in my opinion, I think bitcoin being a hedge against currency risk is a bigger narrative than Bitcoin being a hedge against stocks and bonds.

I think. Let me add something a little bit to this. I think when we talk about Bitcoin as a safe have an asset we're really talking about in. In relation to central banks and their monetary policies. Right now we don't have that fear in the market. Right now the fear in the market is about influence of coronavirus and the global growth. We're not running towards a recession territory. It's not something to do with the monetary policy because people bank of China is doing pretty much everything that they can and then they're willing to do more. I think it's only when we have something more in the, in the monetary policy, something going wrong in the monetary policy. Then yes, we could see the momentum coming in because obviously bitcoin, the entire, the entire fundamentals are based against the traditional monetary policy that the central banks are running. Then we could see that the momentum coming in. But right now it's more about some slowdown in global growth rather than a recession fear.

So that basically means that you agree with Jan, you think that there are multiple narratives and that you should distinguish a crisis like the one that we had in January with the US Iran tensions which had to do.

The tensions which were between years in Iran they were again, that had nothing to do with the monetary policy. When I'M talking about monetary policy. I'm talking about negative yield. I'm talking about central banks printing money when they don't have the equal amount of reserves sitting in them or they don't know when others are just willing to pay for the debt just because it's a US dollar. I'm talking about that narrative. I'm not talking about some small war because US is never going to do it. Looking at this situation right now and whatever that momentum was, that momentum was just based on it. Okay? Investors are just diversifying from buying, buying assets which are under US control, meaning they could be under sanctions, there could be a lot of restrictions. So because of that they argued they are going to an asset which has less restriction and Bitcoin sits on top of that ladder. So that the momentum was driven because of that, not because of the monetary policies or between the two friction, the friction between the two countries. It was more driven by the sanctions and how to go around those sanctions.

Bitcoin is a letter for that to add to that. I mean, so I think it's basically safe to say that Bitcoin is a hedge against political and currency risk. Correct?

Correct. Yes.

So in this case, global pandemia doesn't fit into this definition. I understand your point of view. There is a lot of media discussion on this coronavirus and how coronavirus is actually impacting Bitcoin. So at the beginning of the crisis we saw that coronavirus corresponded somehow to kind of an upward trend for Bitcoin. Then there were a lot of media coverage that were saying, oh, coronavirus positive for Bitcoin. Now in the last few days we saw a totally different scenario with Bitcoin going down with stock and bond. And we saw the media saying, well, the coronavirus is actually scaring the investors out of Bitcoin. And that of course two contradictory point of views, two contradictory narratives. And Vitalik Buterin today claimed that 95% of the articles associating the rise and fall of Bitcoin with a specific events are post hoc rationalized. So what do you think about it? So should we stop trying to link price movements to specific events?

Naim, when we discussing about specific events, if it is monetary policy, if it is something to do with the sanctions or politics as Ian defined, then yes, I think Vitalik is completely out of his head if he's saying that. Because the, the entire phenomena is pretty much based on these two, these two fundamentals. But if we are, if he's specifically referring to coronavirus, I concur with him. I Think all those news, they don't really make sense. I think coronavirus is to an extent very much hyped by, by the media and I sadly, I can curve it. Donald Trump, when he said yesterday we, that the media has made this issue even bigger than what it is. But the unfortunate situation is that the number of people losing their lives, the number of people suffering from this particular virus are still constantly rising and that's just because of the lack of vaccine. So I think bringing bitcoin and associating bitcoin with the virus itself, it just doesn't make any sense for me.

Jan, what do you think?

I agree. I mean, so we personally don't invest or trade on specific events. There are professionals that are more versed in that field. However, the coronavirus has not shown to be correlated in our analysis with bitcoin or crypto in general because bitcoin is a global asset class with numerous global events happening in tandem. And it's very hard to pinpoint one particular event as being the catalyst. I think Perhaps indirectly the equities market's having a huge sell off where over $1.7 trillion was lost in a few days. And I think crypto could be really just playing off of that. However, I think in the long term picture, I don't really think there's any correlation with coronavirus or events like that.

Okay, so as far as I understand you both agree that the recent fall in price didn't have anything to do with the coronavirus, but do you at least believe that because the stock fell because of the coronavirus, then bitcoin also fell? Naim?

No, no, I don't. I think like stock is just losing momentum because of the economic growth. Bitcoin just lost momentum because it failed to, to continue to move its journey upward of 10,500. That's, that's pretty much it, I don't think. But perhaps, perhaps you can say that only retail investors lost their interest because of this, this fear of coronavirus and because of that they are not interested in investing right now and they're more interested in finding vaccine or finding solutions for themselves, how to prevent themselves from the cross coronavirus or how to stay away from any of the public chatter or whatever you, or conferences, whatever that is. Perhaps those sort of elements could perhaps have some sort of impact on the, on, on the price. But if you just say that traditionally that the price just fell from 10,000 to 8,000 because of coronavirus, it doesn't make sense to me.

No, you said that some events related to monetary policies are actually affecting Bitcoin. So that means that you don't believe that Bitcoin is totally uncorrelated.

No, certainly it is not totally uncorrelated. Certainly because remember the foundation of Bitcoin is laid on this particular agenda that central banks are controlling the monetary policy and they're manipulating the currencies. So it's not completely uncorrelated. In fact there was a time when we seen, when we, when we saw this really strong correlation between gold and, and bitcoin. But right now that correlation doesn't even exist. Rather than saying that the coalition is negative, I think the coalition doesn't even exist. I mean as far as I can see on Bloomberg chart I see no correlation between the S&P 500 index and the bitcoin price. I see no correlation between gold and bitcoin price. The only thing that I can see is that yes, Bitcoin is sitting at a 24% and year to date gains. And you, you, you, you should be still happy about that because if you look at the equity markets, they've already entered into correction territory. S and P is down by 10% from its all time high. Dow is the same, NASDAQ has followed the same. And probably there is more to come because you know all of these indices, the, the, the, the Dow Jones was the first index which crossed below the 200 day moving average and S and P was somewhat lagging behind that. So I think we're going to see more sell off if that means more sell off in Bitcoin. No, not, not necessarily. I think if we should see the other civic risk, Bitcoin, if it is a safe event, we should see the momentum shifting to the other side.

Jan, do you agree?

Partially. I mean, so I think everything he says definitely does make sense, especially when speaking about institutional investors. However, looking at the retail investors, especially those in crypto, I think they definitely do have a tendency to overreact, especially with events. So whether seeing the huge loss of capital in the stocks and bonds or being impacted by the coronavirus, I think they're able to short term want to move capital on the sidelines. When it comes to crypto, we definitely have to factor in the psychology of retail investors not, not doing everything textbook because most of retail investors and traders lose money. So we can't expect them to do sound trading or investing. We almost have to expect the opposite.

I don't see where Ian doesn't agree with me because I didn't say that the retail investors, whether they are in the equity markets, whether they are in the crypto markets, they don't lose money. Most of them they do, especially if you're trading CFDs, 70 or even more percent of the investors that lose money because they don't stick to the discipline or just stick to the, the trading plan. And that is the, that is the nature and the beast of being a retail investor because you don't have that discipline that institutional investors would have. But as, but, but saying that Bitcoin is slightly different with the retail investors, then I don't, I, I don't know what to add to that because all what I can say is that, okay, if retail investors are fearful about the coronavirus, the momentum, they are less likely to be focusing on what they should be investing in right now because their focus is going to be more about how to find the safety for themselves and for their families. And actually the stance is very much similar for the equity investors as well. So I really don't see this shift in narrative between the two.

Yeah, I understand. At the end of the day, I also wonder how can people that are seriously scared because of the coronavirus take care of investing into Bitcoin before actually taking care of more basic needs? That's for you, Jan. So in a recent video you said that Bitcoin is not going to be the first cryptocurrency in 10 years from now. You said that in 10 years from now, probably Ethereum is going to replace Bitcoin as the first cryptocurrency because you said that if the whole derivative market is going to move into blockchain. So we're gonna, if we're gonna have like derivatives on the blockchain, probably all these derivatives will be on the Ethereum network and not on the Bitcoin network. So why, why do you, why do you think so?

So let me take a step back. So I had the pleasure of attending Ethereum DEFCON in Osaka, Japan last year and I saw the future of crypto. The Ethereum developer community is large, it's growing at a rapid pace, and I think it could surpass the developer community of Bitcoin in the next 10 years. So that's really the first point. The second point is Ethereum has been innovating at a faster pace, in my opinion, than Bitcoin. One of the catalysts of the last bull run in 2017 and towards the first month of 2018 was were ICOs neutral coin offerings, which were basically done on the Ethereum protocol. And in the next bull run, one of the next catalysts in my opinion, will be defi decentralized finance, which will also happen on Ethereum. So Ethereum is innovating at a much faster pace in my opinion. And they have better governance, they have a leader. And being able to really innovate and come to a consensus across the entire community is something Ethereum is doing at a much better pace than, than Bitcoin is. Bitcoin is slow to change. Yes, Bitcoin has great technology, but Bitcoin's main use case is being digital gold, being a store of value. But if we look at the total market cap of, of gold, for example, it's about $10 trillion. If we look at the total market cap estimated for derivatives, it's over $500 trillion. That's over a 50x difference. So in my opinion, I think defi, assuming they're able to figure out the compliance issues that it has, so kyc, aml, fatfa, all that, if they're able to solve that, if they can even just capture a small fraction of the derivatives market and bring that onto a blockchain, the leading blockchain that's going to win that use. Case in my opinion, is Ethereum. And if all that money comes onto Ethereum, then I think factoring that in + the developer community, plus the innovation and the pace they're innovating, I think in the next 10 years, by 2030, Ethereum has a very, very strong probability to surpass Bitcoin in market cap.

What do you think Naeem? Do you also see Ethereum in 10 years as bigger than Bitcoin in market cap?

I think innovation is the key and as long as the community is completely focused on innovation integration, more importantly, because anyone can innovate, but who can integrate into the system and how easy it is for users to adopt that is the key for having a higher market cap value or having the number one spot in terms of Bitcoin. Right now I think Ethereum is more of a technology where everyone is looking at it and then trying to find a way to have a real applications. But when we are speaking of Bitcoin, it is a commodity, it is more of a store of value. And I think this stance is just going to remain in place. This is going to be set in stone in looking from five years from now. And I think if you wanted to, if you wanted to store your money in a safe place, then you would use Bitcoin for that and then that would be narrative among investors.

Naeem, what do you think is going to be the impact of the halving. Is the halving priced in or not? And why?

I think it's always priced in because it's like buy the rumors, sell the news. That is what pretty much happened because in the previous incidents we didn't see much of a market reaction in terms of a price action when it really happened. Because the moment that the speculation starts coming in, the price is pretty much moved in. It's a given factor.

What about you, Jan? Is there?

I agree. I mean basically buy the rumor, sell the news. I think short term it's priced in. But long term I'm definitely optimistic and bullish that bitcoin is going to increase in price just based on the fact that the fundamentals are changing, the supply and demand is changing. But short term, I think it's definitely priced in.

I think in the long term everyone should be bullish on bitcoin price. And if you, if you don't hold a long term bullish view on bitcoin, you shouldn't be in this space. Anyway.

I would say trying to trade the halving as a, as an event driven investor I think is definitely difficult. That's something I definitely personally would not do. So if anything, I definitely do agree. Buy the rumor, sell the news. So a month or two before and after the halving, probably not. So if you do plan to take profits, I did definitely think it would be a good time to take profits and not really have any, not really have too much capital at risk during that big event. But obviously long term I think this is definitely a big, big improvement for bitcoin.

Thank you Naim and Yan. It was an amazing discussion. See you next time. You guys always remember to like subscribe and HODL Cointelegraph.

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