Bitcoin (BTC), Ethereum (ETH), dApps: Have We Lost Perspective?

February 7, 2019 / by Bill Noble

It’s time to get out of the weeds.

For example, it is easy to spend time trying to figure out if Ethereum (ETH) is a buy on the pullback at $105. Or maybe the new moon pattern works, and it triggers one final avalanche lower. That could put the bottom below $80 (Figure 1).

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Yesterday, Vitalik Buterin sent a good message. He tweeted that smart contracts could be used for something like paying stock dividends. To us, this is a reminder that a “killer” dApp will be created in 2019 that creates efficiencies in capital markets.

Speaking of capital markets, there is also the Abra announcement to consider. Abra is setting up a smart contract to allow people in 155 countries to gain access to big U.S. tech stocks and certain ETFs using Bitcoin. So Abra is essentially giving the unbanked access to capital markets.

If this announcement had been made in 2017, it likely would have triggered a 10 percent up day in Bitcoin (BTC).  

We also noticed that Facebook (FB) is not fooling around about getting into blockchain to compete with WeChat in China — and perhaps to end the mockery over last year’s stock decline. One way you know Facebook means business is that it still has openings for blockchain skills on its careers page.

Facebook (FB) being serious about blockchain makes sense. Its stock is up against Gann resistance at $170 (Figure 2). Zuckerberg is a highly competitive individual, and we think he means business about creating a payment method of his own. As we said frequently last year before Facebook (FB) collapsed, big tech companies have to get into crypto and blockchain if they want to keep their stocks moving up — or at the very least cushion the blow on any downdraft.

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Tech giants like Facebook (FB) will need to pick up the pace. Reason: fear is returned to the equity market. The VIX fear index is bouncing off its bottom Bollinger Band, and a move to 20 seems likely (Figure 3). This will likely correspond with a scary downdraft in equities.

Bottom Line: The bear market in crypto and other risk assets has created so much fear that good news is being ignored. People have lost perspective on crypto’s potential contribution to capital markets. We want to say that’s a constructive development, but we are forced to wait for confirmation that the bear has run its course.

The Crytpo.IQ Trading Desk is ready. Strategies went into place this morning to start to take advantage of the next move. Alts are on their minds.

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