A monthly report published by exchange platform SFOX (San Francisco Open Exchange) identifies an air of uncertainty within the industry about cryptocurrency’s place in the future of finance. With both bullish and bearish news events occurring over the last month, the price still appears to be in limbo around the $10,000 mark.
Conflicting Signals Leave Cryptocurrency Market Directionless
The report, published today by SFOX, focuses on various market and sentiment indicators observed over the last month. These include volatility indices, prices, trade volume data, as well as more fundamental developments surrounding the industry.
The picture the report paints is one of uncertainty. Despite cryptocurrency becoming more attractive to institutional interests – Bakkt launch and CME Group expanding crypto products, there doesn’t seem to be any fresh money flooding into the industry yet.
Even though it identifies an uncertain market, an in-house indicator, the SFOX Multi-Factor Market Index, did flip to “mildly bullish” this month. Previously, the indicator, which looks at market sentiment, price momentum, and developments within the sector, read “neutral”.
However, SFOX points out the following about the reading, which they describe as bullish:
“… while BTC and other cryptocurrencies are seeing sustained development and investor interest, there appears to be a new sentimental wave of uncertainty as the market remains unsure of precisely how crypto will fit into the broader global financial landscape of 2020 and beyond.”
The report identifies multiple news events during the month of August that have contributed to the uncertainty in the market. These include Vitalek Buterin saying that Ethereum was full and the alternative.me Crypto Greed and Fear Index switching to “extreme fear” on August 17.
Additionally, the report shows that inconsistencies with Bitcoin price rallies in connection with Chinese currency moves versus the dollar cast doubt over the utility citizens in the nation are finding in Bitcoin as a safe-haven asset.
Potentially creating more uncertainty around cryptocurrency’s place in the future financial system are the efforts of major companies to create their own digital currencies. Despite bringing greater attention to the space, there is no telling whether true cryptos, like Bitcoin, will ever be anything but a fringe interest alongside a fully-digitised economy of these company-backed currencies. The report identifies MasterCard’s recently advertising a job with the company’s blockchain division and Allianz Insurance developing a blockchain-based payment system of its own as developments that could impact crypto’s utility going forward.
That said, other massive names, Bakkt and the CME Group are in the process of expanding options for institutional investors to allow them greater exposure to the space. The long-awaited Bakkt platform will offer physically-backed Bitcoin futures contracts. By carefully ensuring regulatory compliance, it also hopes to bring transparency to the process of Bitcoin price discovery – something it believes will bring greater legitimacy to the industry.
Finally, the report identifies a few key dates to watch out for during the rest of September. These are the proposed date for the Ethereum Classic hard fork to Atlantis on September 13, the launch of Bakkt (September 23), and September 27 since it’s the last-trade day of both BTC futures and BitMEX futures. The researchers muse that this latter event might invite greater volatility than usual since it will be the quarterly close of these products.
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