Finance Monthly July 2019 Edition

10 www.finance-monthly.com NEWS - MONTHLY ROUND-UP WHAT’S BEHIND THE NEW BULL RUN AND WHAT’S TO COME? Bitcoin’s decisive break above the psychologically important $10,000 mark – with $11,000 breached over the weekend and insight again this week – is being driven by in- stitutional investors and the afterglow from Face- book’s Libra news, de- spite the regulatory and political pushback against Mark Zuckerberg’s global money plans. Below Finance Monthly hears commentary from interactive investor cryp- tocurrency analyst Gary McFarlane on bitcoin passing $11,000 over the weekend. The recommendations, as expected, from the global G7-instituted Financial Action Task Force, which will see crypto exchanges and others required to provide full know-your- customer (KYC) details on clients and all parties to crypto transactions, has done little to dampen bitcoin buying. Other top altcoins – all other coins barring bitcoin – are struggling today. Two notable exceptions are decentralised applica- tion platforms Ethereum (its Ether token is the sec- ond-most valuable cryp- to), and one of its many ri- vals, Tron, whose founder and chief executive Justin Sun recently won the auc- tion for lunch with legend- ary investor and crypto sceptic Warren Buffett at a cost of $4.57 million. Other factors in play behind the bitcoin rally Geopolitical tensions, no- tably in the Middle East; the realisation that his- torically unprecedented loose monetary policy by central banks is not being reversed any time soon, the China-US trade war encouraging bitcoin’s use as a conduit to ef- fect capital flight by some Chinese investors; record high trading in distressed economies such as Tur- key and to a greater ex- tent Venezuela and some other countries in Latin American; and talk of an outright ban on crypto by the authorities in India. These are all helping to pro- pel the bitcoin price higher, providing, as they do, a range of examples of its use case as a store of value, no matter how peculiar that may sound for such a crash- prone asset. Is the fourth para- bolic bitcoin price upturn upon us? Talk is now turning to the possibility of “the fourth parabolic”, which postulates a rise in the bitcoin price be- yond the previous all-time high at $20,000 in Decem- ber 2017. With end of year targets of $40,000 from Wall Street analyst Thomas Lee of Fundstrat Global Advisors and commodity trader Peter Brandt saying $100,000 for next year is a possi- bility, which would align to the run-up to block re- wards halving from 12.5 to 6.25 in May 2020 for bitcoin miners, it is start- ing to feel like 2017 all over again. That might sound fanci- ful in the extreme but on past form, it is a possibility – and so is a crash from wherever any potential new all-time high might form. When bitcoin first sur- passed $10,000 on 29 November 2017 it only took 17 days to reach its all-time high near $20,000, but past perfor- mance is of course not a reliable guide to future performance, especially where crypto is concerned. New FOMO? Judging by Google Trends searches for ‘bitcoin’ haven’t surged yet in the way they did last time round: Decem- ber 2017 scores is 100 and we are currently registering 16. It suggests current buyers are those who have previ- ously been in the market and were waiting on the sidelines for a new entry point. That could mean there is plenty of near-term oxygen to drive this market higher, but as always with crypto, it will be a high-risk rollercoaster ride. The fear-of-missing-out (FOMO) impulse, for now, is more in evidence among in- stitutional buyers.