Positive consolidation or will the first setbacks follow?

Thought of the week

After the strong “Bitcoin weeks”, the focus has now shifted to altcoins. This is the classic second phase of a bullish cycle. This illustrates that the digital asset market is broad-based and not dependent on individual assets, although Bitcoin is definitely the undisputed most important asset in this sector!

Digital Asset News

On November 2, the Swiss National Bank (SNB) launched the Helvetia Phase III pilot project for a wholesale CBDC (wCBDC), i.e. a digital central bank currency for major banks. The project is being carried out by the Swiss stock exchange SIX and six banks, including Hypothekarbank Lenzburg, Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, UBS and Zürcher Kantonalbank.

As part of the pilot project, the SNB will issue digital francs to participating banks. These banks can then trade the digital francs among themselves via the SIX platform. The aim of the project is to investigate the technical feasibility and potential benefits of a wholesale CBDC for the Swiss financial system.

“With this pilot project, we want to better understand the opportunities and risks of a digital central bank currency for major banks,” said SNB Chairman Thomas Jordan. He added:

“The results of the project will help us to make an informed decision on whether and to what extent a wholesale CBDC is an option for Switzerland.”

Switzerland is thus once again showing itself to be forward-looking and ensuring further adaptation of digitalization and blockchain technology.

The Bitcoin price has already closed October with a gain of 29%, making it both the second-best month for 2023 and an 18-month high.

Meanwhile, looking at the macroeconomic environment, Morehead is concerned about another asset class, as he believes the stock market is “massively overvalued”.

“The stock market is overvalued because the price/earnings ratio is still the same as it was when prime rates were falling, yet we now have high prime rates that are continuing to rise,” as the financial expert explains. He adds:

“If you take as a reference the average 50-year risk premium on a 10-year bond paying 5% interest, then the stock market should actually be 23% lower than it currently is.”

Morehead is referring to the poor macroeconomic situation in the US, which has kept key interest rates at their highest level for more than two years.

From this it can be concluded that there can always be setbacks, sell-offs and negativity!

Market participants must not stumble into blind optimism, as this often leads to major risks!

Former FTX CEO Sam Bankman-Fried was found guilty on all seven counts by the jury in his criminal trial in New York after approximately four hours of deliberations.

Bankman-Fried was found guilty of two counts of investment fraud, two counts of conspiracy to commit investment fraud, one count of securities fraud, one count of conspiracy to commit commercial fraud and one count of conspiracy to commit money laundering.

He will return to court on March 28, 2024 for sentencing by New York District Judge Lewis Kaplan. The prosecution will recommend a sentence, but Judge Kaplan will have the final say.

Bankman-Fried’s offenses each carry a maximum sentence of between five and 20 years in prison, with the offenses of investment fraud, conspiracy to commit investment fraud and money laundering each carrying a maximum sentence of up to 20 years.

In a pre-trial press conference, U.S. Attorney for the Southern District of New York Damian Williams called Bankman-Fried’s crime “a multi-billion dollar fraud scheme designed to make him the king of cryptocurrencies” and one of the largest financial frauds in American history.

Digital Asset Market

From a chart perspective, Bitcoin continues to hover around the high for the year between ~$34,400 and ~$35,500. Ideally, the incipient consolidation will allow a strong and solid support zone to be established at these levels, from which altcoins can continue to experience positive price developments on the one hand and, on the other, Bitcoin can experience further upswings in the event of subsequent positivity.

At present, the global financial markets also appear to be slightly optimistic about the final weeks of the year. Regardless of the prevailing catalysts, this could lead to a long-term strengthening of current price levels. Overall, the signs are therefore “bullish”, although setbacks after such rises must always be factored in.

The next price targets in the event of a positive trend: ~$36,300, ~$37,100, ~$38,500
The next price targets in the event of a negative development: ~$33,500, ~$32,000, ~$30,500

Bitcoin currently offers no entry points for traders who shy away from risk. Strategies that are currently applicable are likely to use a dollar-cost-average or other accumulation principle to achieve an average price over time. Otherwise, in the current phase, Bitcoin only offers entry points with increased risk. This is one of the reasons why many market participants are switching from Bitcoin to altcoins, as the risk/reward ratio is still much more favorable there!

Weekly overview

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