Digital Asset Space
Bitcoin started the month off at $8520 crossed $13,000 and closed at $11,100. At the beginning of the month, it went down to $7800 then paced its way back up to $9,000 over ten days. It built a base while gaining favor during a period of negative interest rates meanwhile gold was barely altered from $1,300 an ounce.
The developing argument is that the trade war is driving Chinese investors into Bitcoin. It is too premature to know for sure but signs are starting to show. We do see this mentality having legs and even growing over the next few years. For example, during the Hong Kong protest of extradition, local bitcoin prices were trading about $100 higher than the global average.
Facebook's coin, Libra, will go live soon and it's possible it pays users a small amount of interest depending on who backs it. If parked at the Fed Reserve the rate to FB could be 2.35%. Right now traditional banks do this and pocket the money. That amount of "welfare" is projected to be $36 billion this year. Still, we think the FB coin will lead to a benefit for Bitcoin because of its stable coin nature. Those with excess Libra will get long Bitcoins because of its scarcity and investment properties. There is one regulatory body that could hold the Libra back but FB has so much power it’s likely we see something launch. If it does get halted by regulators we anticipate there could be a knee jerk pullback. Financial Action Task Force came out saying exchanges must pass information about their customers to one another when transferring funds between firms. Therefore, sending between exchanges would be disabled thus Facebook's Libra would not be able to defer the KYC/AML risk to exchanges. However, it seems they’ve found a loophole and if successfully launched it is likely it will become the largest digital currency platform ever. Plus Goldman Sachs' CEO hinted they might launch their own coin.
Binance is making structural moves that will enable it to serve the U.S. market in a regulatory compliant manner while adding fiat-to-crypto. This is good news. It could be possible that this reorganization gives them a window to throw Tether out for good. ICAP, an interdealer broker, is opening a bitcoin futures broker desk saying "we believe it's important to invest in the early stages of a growing market. ICAP also understands that this technology could disrupt or impact other asset classes where we currently operate, so we feel it's important to be informed." Grayscale said that in Q1'19 inflow from hedge funds jumped to $24m vs just $1m the preceding quarter. A majority of Grayscale's inflows go to its GBTC with trades at a premium to Bitcoin. Simply put, you want to buy the underlying asset, not a trust.
The second half of this month saw heightened volatility to the upside. Long holders rejoiced and those looking to enter the market were left puzzled. This is a reminder that digital assets move fast and if you have intentions to invest it's wise to be properly set up in advance.
If you know of anyone who could use help investing in digital assets in a brokerage or IRA let them know they can call me. Here is my personal number 561-523-5955. Thank you!
Digital Asset Investment Management is a licensed Registered Investment Adviser specializing in Bitcoin for 401k's, IRA's and Traditional Brokerage accounts. Learn more at www.daim.io