*data taken at 9:56, 19/06/2020
Written by: Yves, Head of Trading at Wirex
The Bitcoin price reached a new month low this week touching the $8900 level on June 15th, and bouncing back the same day above $9500, and to $9596 the next day (source: Bitstamp). Since then, it looks like the market has entered a stagnating regime around the $9400 levels as volatility and traded volumes are reaching new lows.
This week’s sharp movements are still in line with the movements observed in traditional Equity markets, especially after further cash injections were announced. Indeed, the June 15th recovery of the Bitcoin price was indirectly fuelled by the Fed’s announcement of further buybacks of corporate bonds in order to "support market liquidity and the availability of credit for large employers.”. It is certainly an indirect effect as, again, the direct condition for a Bitcoin appreciation is not the Fed’s whereabouts, but the Equity market itself.
There is now no doubt that institutional integration has been driving the BTC/USD sharpest movements these last few months as a press release from Fidelity Investments confirmed on June 9th that “Mode U.S investors are finding appeal in digital assets vs. a year ago”. Among 800 investors surveyed, Fidelity reports that 27% of Fidelity’s US clients and 45% of their European clients own digital assets in their portfolio. The higher interest in Europe could be due to the fact that there is more drastic taxation in the US. In contrast, Switzerland or Germany appear to be much more lenient.
When reading the press week after week, it feels like the digital economy is embracing very different actions to conquer the real economy, and this is despite the money laundering scandals or the tightening legislation (e.g. India) that can seriously shake a country’s digital progress. Digital players can establish themselves as donators (traditional or unconventional) and a problem solver as it can offer alternative means of payment for economies that are on the brink of collapse (e.g. Turkey).
Although the XRP/BTC price remains close to historical lows, Ripple is still proudly on track to expand in 195 countries by 2021. It is pro-active in Asia, more recently in India, issuing a 30+ pages report untitled “The path forward for digital assets adoption in India”. The report pinpoints wishful changes for digital assets in the current legal environment, namely:
- amendments to the existing Foreign Exchange Management and Securities and Exchange legislations.
- an exemption from the Payments and Settlements Systems Act.
- and a broader application of the existing Prevention of Money Laundering act.
All of which are meant to facilitate cross-border transactions and the support of the digital ecosystem by Indian Banks. Ripple can argue that a cross border transaction with India can be almost instant, when a traditional bank to bank settlement can take several business days to complete.
On the Wirex retail side this week, there’s been a growing positive interest in digital assets, namely in BTC (ratio of BTCs bought to BTCs sold is close to 1.5), in XRP (ratio at 1.87), and XLM (ratio at 3.0) and less in ETH (1.18). Overall, last week, Wirex customers have been net buyers of digital assets on the Wirex platform.
In general this month, the WXT interest has also been growing on the platform, underlining to some extent our customers growing interest in the Wirex digital markets. The WXT/USD price remains stable around the 1 cent mark.
The above is an opinion piece and therefore should not be taken as financial advice. Please do your own research thoroughly when looking at Cryptocurrency.