The month of May, that time when investors typically “sell in May and go away”, has been rough on stocks. The S&P 500 index is down 5% at this writing, but over in Crypto-Land, Bitcoin is poised to win the performance race for the month, booking an incredible, astonishing (pick your preferred adjective) return of 63% for only 30 days. There is still one more 24-hour trading period to conclude. The total gain could rise or fall, but Bitcoin is back, Crypto Winter is over, and new investors are salivating to get in on the action.
There have been as many as a dozen fundamental reasons given for the meteoric rise of BTC, but Bart Smith, head of digital assets at Susquehanna, suddenly came up with a new driver that has been hinted about in some quarters, but he told CNBC’s Squawk Box on Thursday that investors in China may be rushing to buy: “The first is the net effect of the trade war with China and the U.S. is that the Yuan is hitting a six-month low. Bitcoin was either a hedge or just an outright way to get capital outside of that country.”
Trump the “Tariff Man” rocked financial markets by instituting a raft of tariffs on Chinese imports and threatening more, as “the world’s two largest economies remain locked in a stalemate over trade.” Jeff Dorman, chief investment officer at Los Angeles-based digital asset manager Arca, echoed Smith’s sentiments and noted the falling Yuan: “Chinese investors and the overall population know this, and are worried about protecting their capital and their purchasing power. This leads to capital outflows, and Bitcoin and other digital assets are a ‘safe haven’ for them.”
Michael Novogratz, head of cryptocurrency merchant bank Galaxy Digital and a former Fortress hedge-fund manager, also remarked when interviewed by CNBC: “Bitcoin is not going to be a payment currency — it’s going to be just like gold. It won that lane.”
The crypto analyst community, which had withdrawn in January amidst the cold of winter and the constant pounding from critics that Bitcoin was doomed to extinction, has suddenly got its groove back. Social media crypto “giants” have come alive, tweeting a continuous stream of superlatives about all things crypto, while annotating a variety of technical chart presentations to confirm that the sky is the limit, as far as future Bitcoin targets might go. The latest change is that crypto executives of note and financial types that are higher up on the food chain are now waxing eloquently about Bitcoin prospects.
Here are just a few:
- Andy Cheung, the head of operations at OKEx, a leading Malta-based crypto exchange: “$20,000 is a conservative prediction for Bitcoin price in 2019, as I said last year. The rally won’t stop here, because more institutional investors are [entering] the market and the 2020 halving effect starts to take place. We are thrilled to witness such bullish trends and I look forward to a new high Bitcoin deserves. Bitcoin is not just a coin, but a spirit that [drives] the crypto-industry.”
- Tim Draper, legendary billionaire venture capitalist: “One bitcoin is still one bitcoin. It always has been and it always will be. There are only [going to be] 21 million of them and [investors] should probably get one. So, these [traditional] currencies are tied to political forces, or dictatorships. Even the USD, which really does [get affected] by political influence.”
- Max Keiser, Bitcoin bull and Wall Street veteran: “There is very little [BTC] supply between here and a new all-time high (ATH). $28,000 is still in play. The pullback from $20,000 to $3,000 will hardly be visible on the charts in a few years. Basically, a non-event.”
Yes, enthusiasm for Bitcoin and its altcoin brethren is alive and well again, having busted out of its winter hibernation cave and now aiming for the stars. Accolades are coming from many new quarters, but the tale of the tape is still important. Today BTC peaked briefly above $9,000, only to be pushed back down to $8,500 and change. Those analysts that trust Elliott Wave Theory are prophesizing more gain, but also a significant pullback, as the impulse wave goes its natural course. There may still be time to buy on the dips, or there may not. Tomorrow is a new day. Trade with caution.