After a series of macro factors weighed heavy on Bitcoin and the overall crypto market in spring of 2018, positive announcements and technical factors have triggered a 17 percent rally in the overall market in the past week. Some global analysts are discounting this rally by saying that it is short-term and technical in nature and that key resistance levels, namely the $10,000 inflection point will reject all advances in July and August. We at Classiairus take into account the views of these analysts, and agree that the sudden and powerful rally was, at least in part, triggered by short-term and fear inspired technical day traders who can dominate short-term market trends. Technical analysis plays a minor but important role in our market views, by the way.
However, when one studies the longer-term underlying trends, there are changes taking place in that will surely have lasting impact that could very well drive Bitcoin to that key $10,000 level and higher. This are not short-term technical changes, but fundamental changes that impact banking and infrastructure platforms.To be clear, we are not as bullish as others who feel that Bitcoin could rally to $50,000 target levels by the end of 2018. We see a slow and steady rally that could take Bitcoin to $20,000 or perhaps higher over the next 6 months. Here is a list of July game changers below.
1. The Mastercard patent of July 2018. Mastercard was awarded a patent that enables customers to use fiat credit balances. This has meaning as it will allow for more timely validation of crypto transactions. Imagine the global impact if credit card companies are making it easier for transactions, especially for the upcoming Olympic Games in Tokyo in 2020.
2. The Regulatory Shock is fading. The shocks of heists and thefts forced the FSA in Japan and the SEC in the US as well as many other regulators to spring into action in April and May of 2018. The $530 million heist in Japan in January of 2018 was the key trigger. However, investors now see regulatory action as a long-term benefit.
3. More Cautious Investing. The March through June sell-off period forced investors to be more cautious when allocating funds. As a result the questionable coins dropped to 1 cent. “Markets are, in the end, always efficient” the saying goes.
4. Finally, the CFA Institute announced it was adding crypto to the CFA exam. This means that there will be thousands of financial and other professionals testing for the CFA exam with a crypto component. This forces the discussion that crypto is viewed as an investment asset.
These factors have changed our view, so we like owning more Bitcoin in the second half of 2018.