Cryptocurrency Trend Table (UTC time)
In the second week of 2020, coinciding with the rising tension between Iran and the United States, Bitcoin (BTC) transaction volume and prices rose significantly. BTC reached a peak of US$8396.74, and despite subsequent downward pressure on the BTC price, transaction volumes continued to rise. BTC ended the week above $8,000, and if transaction volumes are sustained, we may see BTC prices climb further in the coming week. As can be seen from the top table, we have now included data for each of the cryptocurrencies for which we offer perpetual futures contracts on AAX’s Futures Markets.
Cryptocurrency and other markets
As to our weekly correlation analysis, where we assess potential dynamic relationships between crypto and non-crypto markets, we can see that compared to the previous week Ethereum’s (ETH) price movements were slightly less correlated with the price of BTC.
BTC Market Panic Index
Based on the CBOE calculation method for the S&P VIX index, we used the near- and next-term put and call BTC/ETH options to calculate the VIX trend chart for this week (the lower the VIX, the less panic there is in the market). Although the price of ETH was still considerably correlated with BTC, their VIX indices are not aligned. Whereas sentiments around BTC seem to have been somewhat unstable, the level of panic in the ETH markets has been consistently dropping. This can be read as increased optimism which could potentially impact the price of ETH positively in the week to come.
News of the week
On the 3rd of January, 2020, the US announced it had assassinated General Qasem Soleimani, a high-profile Iranian military leader. In the days that followed, tensions in the region were high. On the day itself, the price of BTC suddenly dropped by 3,5%, after which it rose by 22%, breaking the psychological barrier of $8000. Discussion around BTC’s function as ‘digital gold’ have resurfaced as well.
As reported in some publications, including Coindesk and Nikkei, some investors see BTC and similar cryptocurrencies as a safe-haven asset, that falls outside the scope of sovereign authorities and is not subject to the usual inflationary processes to which fiat currencies are subjected. Some commentators noted that as political and macroeconomic tensions continue to worsen, more investors are expected to channel at least some of their wealth to decentralized assets such as BTC.
In terms of policies and regulations, the EU ’s fifth anti-money laundering Directive (AMLD5) has officially entered into force. All cryptocurrency projects in European countries must implement KYC procedures as stipulated in the document to achieve anti-money laundering (AML) and combating the financing of terrorism (CFT) objectives.
AMLD5 is an amendment to the fourth edition of the Anti-Money Laundering Directive, which was issued on June 19, 2018. It gave stakeholders until January 10, 2020, to comply. Three cryptocurrency companies, including Bottle Pay, have stopped operations. Deribit, a crypto derivative trading platform based in The Netherlands, announced that it would transfer its operations to Panama. There are also companies actively embracing the decree. For example, Bitpanda, a long-established cryptocurrency investment platform based in Europe, stated in an email to users that it has fully complied with AMLD5 requirements.