Wednesday, October 5

Since last October, I have predicted the Bitcoin prices would begin to escalate sometime in June. The prediction was made in October and December when I spoke for Blockchain Solutions Asia and the Davos Blockchain Forum in Kuala Lumpur.

I also penned some articles that covered on the possibility of next rise in mid-2019 based on the wave count and correlational influence from Dollar fundamentals.

In June, we first saw gold prices climbing up to a six-year high at US$1,438 per pound and silver prices hitting US$15.55 per pount at a three-month high.

The major reason is due to the fall in Dollar and the expectation of Trump-Xi meeting in G20 meeting. However, we have discovered another valid reason that has spiked bitcoin.

Bitcoin and major cryptocurrencies are traded against the US dollar as benchmark. Naturally, it is normal to perceive that a potential fall in the US dollar over long-run will provide lifting support for Bitcoin and its crypto “buddies”.

On a separate study, the recent tension in Middle East has magnified the fear of investors while crude oil prices pick up again!

On June 20, Iran’s military force shot down a US unmanned drone flew into the space of Straits of Hormuz. US President Donald Trump became furious and ordered an attack on Iran. Though the military order was retracted immediately, he further threatened the “obliteration” of Iran should they attack on US instrument again! Following that, the US government imposed a new sanction on Iran’s Supreme leader Ayatollah Ali Khamenei from accessing the international financial system and nine other military commanders that are believed to be involved in the drone attack.

By no surprise, Iran rebuked the sanction by calling it a mental sickness in White House administration. The diplomacy between the two countries will be embroiled into disputes and “frozen”. Since the US drone was downed, WTI crude oils have escalated from US$54 per barrel to almost US$60 per barrel for month-end closing.

In our study, whenever a squabble between US and Iran that hikes with new sanction, bitcoin will take a jump. This could be due to the favor in using bitcoin as an alternative payment or transaction that could exchange commodity.

Broadly speaking, being sanctioned means a ban from accessing the international financial system like SWIFT, beside other measures like travel and custom checks. Since last year, The European Union and Iran have planned to devise a new financial payment system called INSTEX to bypass the US sanction. This system will roll out soon by year-end and on the condition that Iran pledges to be a nuclear-free country.

Nevertheless, the almost instantaneous transfer and payment of Bitcoin through e-wallets and bypassing banking compliances are definitely much favored by many decentralized traders. Moving forward, we foresee the trend of Bitcoin will continue to rise till year-end with targets set at U$D20,000 and USD40,000 levels. Once the bulls runs to the “plateau” at US$20,000 area, many small-time investors will be ignorant to perceive a double-top and begin to liquidate and short the market. When the prices break up and rocket to the moon at US$40,000 region, that’s when many short traders will become “broke” and turn into new long positions!

Bitcoin is a crazy horse. You need to be a calm and intellectual investor when participate in this “Game of Thrones”. It could make you a huge success but it could break you as well!

The comparison of bitcoin and ethereum is exactly identical to gold and silver – in other words, the days will come when we shall see silver outrun gold’s bullish trend. Therefore, it may be wise for you to plan a small portfolio in ethereum if you have missed the recent rise in bitcoin!

A cheaper cryptocurrency doesn’t means its virtue is inferior. It simple means a better affordability if you are a smaller player. Be cautious and prudent in your investment plan. Do your homework and don’t rely on hearsay!

Dar Wong is a veteran in global financial markets based in Singapore. The opinions are solely at his own. He can be reached at dar@pwforex.com.