The comparison and contrast of bitcoin (BTC) to the NASDAQ and USD has brought an early Winter thaw to the bear market of cryptocurrencies. Whether this lasts will rest on many factors, writes Bob Savage Sunday.
The backdrop of the worst week since 2011 for U.S. shares and another U.S. government partial shutdown all set the stage for alternative investments. Whether BTC and other coins can prove to be such requires better news for the digital assets space.
There are two stories:
1) Facebook (FB) developing its own cryptocurrency for WhatsApp transfers.
2) Swiss Federal Council opts for minimal regulation.
Both of these stories suggest ongoing growth for the cryptocurrency world into 2019.
The rally from near $3000 lows ($3158) in BTC back over $4000 builds hope for a 2018 top and bottom that leads to a less volatile and more constructive price action for the new year.
To understand the latest thaw in cryptocurrencies you need to note three drivers:
1) the correlation to technology shares broke down – as the NASDAQ is now in a bear market while BTC and others rallied 20% from their lows.
2) the fears of more bad news driving down prices didn’t materialize – as the recent headlines weren’t great but the prices stabilized.
3) as the doubts about Tether were reversed with a Bloomberg article and as Bitfinex introduces margin trading for USDT/USD.
While the first two factors may be sufficient to support the market – the need for clarity on the third point remains essential for a crypto Spring.
Tether (USDT) is the 6th largest cryptocurrency with $1.9 billion market cap and it accounts for 30% of all BTC transactions on platforms – according to Blockspur data.
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