One thing that the J.P. Morgan’s digital coin has brought to the crypto space is a positive month for Bitcoin. I will discuss this in more detail later. Let’s focus on some facts about the price action fist.
The crypto-currency king is on track to secure its first positive month since July 2018. The trading action for the past two months shows that downward moves were not supported by volume. The six consecutive months of sell-off were the longest losing streak since 2014, when we had five consecutive months. The tide may be about to change.
The question is what has triggered this change in momentum?
It is the price action and the price action alone. The bitcoin price had been way oversold. It was widely expected that this monthly string of consecutive losses could not last forever. As long as the Bitcoin price closes above the 3405-level: the open price of this month (which is the same as the closing price of last month), the sell-off pressure is likely to ease off. Perhaps, this could encourage more buyers into the market.
With the wind of change blowing, the fundamentals are likely to improve in the coming months for the cryptocurrency space. The hopes are pinned on the improvement of the transaction volume for on-chain transactions. This will attract growth because of a larger number of industries becoming part of this infrastructure.
Another stability element for the Bitcoin price comes from the second biggest coin. The Ethereum price has stayed above the critical mark of $100. This is critical for the Bitcoin price because Ethereum is the most broadly used protocol by enterprises. The fact that the recent low of $100 (formed on February 6) was much higher than the previous low of $80 (formed on December 14), produced an early indication that the price may be moving higher. However, the price still needs to clear the level of $158 before we can be confident about the uptrend. In terms of volume, things are looking great for Ethereum. The volume has soared from $2.07 billion (as of February 17) to $5.02 billion as of today.
Now let’s focus on some of the major fundamentals that are also behind the current momentum in the bitcoin price. The Japanese Amazon Rakuten is considering accepting cryptocurrencies as a form of payment. In addition to this, Argentina announced that they are going to accept Bitcoin payments for goods sold to Paraguay. All of this makes the sentiment more positive.
A Bitcoin ETF may become a reality in 45 days, and this is also behind the current momentum. The NYSE is looking for five distinct Bitcoin ETFs for both bull and bear market and it filed for the permission last year. If the decision comes back positive in the next 45 days, which the market is hoping, it will involve institutional money. Such a development will be positive for the markets.
To finish off, it is all about JPMCoin as I said earlier. The Wall Street giant announced last week that it is going to use its blockchain Quorum for its digital coin for cross border payments. The bank decided to peg the coin to the dollar at 1:1 ratio in order to bring stability.
When it comes to cross-border payments, only one coin comes to mind: Ripple and the digital currency XRP. The comparison between the XRP token and JPMCoin will flare a serious debate. To start with, the decentralized element pretty much knocks the J.P. Morgan’s coin out of its place. But the upper hook of JPMCoin in terms of its capacity of moving $5 trillion in wholesale payment each day takes the wind out of XRP token. But at the end of the day, the fact is that JPM using the digital coin for cross-border payment only strengthens the entire space. And for me, JPM jumping in this space is not a matter of competition between XRP and JPM’s coin, but it only fosters the very concept that these digital coins are the future.
The bottom line is that fundamentals are shifting positively, and the selling pressure lost its momentum with no substantial backing of volume. This leads me to believe that all that negativity which we have been facing in the industry for the past five months may be coming to an end.
