Bitcoin: A Good Risk/Reward Investment? | Crypto Markets


So Mati, Bitcoin growth has been slowing down
lately and prominent trader Peter Brandt expressed some concern that if current parabolic fase
is violated we could expect either an 80 percent correction of seven months advance or a smaller
correction with definition of a new parabola. What do you think about this analysis. Do you agree. So first of all I disagree with the premise. I don’t think that it’s been slowing down. I think that it’s been kind of well we can
say that crypto has been cooling off. I mean we saw some massive gains this year
so far and we can take a look at the rising trend line since April 2nd we had that big
pop on April 2nd and this is basically a very very steep incline. So the fact that it’s been kind of consolidating
lately this basically shows that it’s taking those massive gains and kind of etching them
into the actual the actual value of the currency. This morning I tweeted out a nice triangle
formation that was coming where we could see it was coming to a head around eleven thousand
three hundred about an hour after I tweeted this though we didn’t see a breakout to the
upside but that’s really on the short term. Overall what I think that Peter was trying
to do was give us kind of just a worst case scenario. And I know I’m pretty familiar with Peter
Brandt’s analysis and his trading style and what he always likes to stress is the asymmetric
risk that that lies in cryptocurrency. So meaning that you have 100 percent risk
on the downside and on the upside if we do see a parabolic rise you know you could see
bitcoin going to fifty thousand a hundred thousand dollars or even more so a lot more
than hundred percent. That’s that’s a good that’s that’s a very
good risk to reward scenario for high risk investors. So I would like to ask you now about the Deutsche
Bank latest decision to shrink its investment bank operation. This decision led to a cut of 18000 jobs. So why do you think Deutsche Bank took the
decision and what do you think is gonna be the impact on the crypto world. What happened with Deutsche Bank in my mind
is that they’ve basically cut off their investment arm and the trading loss of the trading desks
at Deutsche Bank and those trading desks have been largely unprofitable over the last few
years. We have to realize that we’re right now in
a unique situation that we’ve never seen in history as far as the global economy where
central banks around the world have kept interest rates artificially low. Most many of them at zero some of them even
below zero. So what happens is that the bond market is
basically taken all of the yields and dropped them to the floor following the central bank. So right now an investor who sees you know
a 2 percent opportunity over the course of a year that they’re just getting hungry over
that. And in my mind this is basically it means
that there isn’t a lot of meat on the bones as far as global investments are concerned. So you know an investment bank like Deutsche
Bank usually they make their money off of those yields they make their money off of
you know lending money and if they can get you know 5 percent or 6 percent they’re doing
great. But the global environment just doesn’t allow
allow for that because you have central banks who are buying bonds that have even a negative
negative yielding interest. So what it basically means is that you know
following the financial crisis you know we’ve been in kind of an emergency mode and we talked
about or the central banks were talking about exiting that emergency mode. But since the start of 2019 they’re actually
going in deeper providing more and more liquidity into the market which is pushing down yields
further and further and further. So in that environment it’s very difficult
for any investment bank to really make money because that’s where they make their money
from. So talking about crypto exchanges lately major
cryptic changes like Huobi and ErisX have been implementing high frequency trading which
is the type of trading that allow clients to trade at much higher speed than regular
clients. So can you actually expand a little bit on
the advantages of high high frequency trading and maybe tell us what you think about the
future of this practice in the crypto trading world. Yeah. It’s an interesting progression no doubt. I mean high frequency trading has been available
in traditional markets for a very long time. It’s it’s a particular particular advantage
for algo trading and robot trading. It’d be interesting also to understand how
exactly they offset that. Obviously it’s not going to be really possible
to have a high frequency trade in bitcoin that’s settled in real time because we know
that Bitcoin is not settled you know quite that quickly. You know a Bitcoin transaction can take you
know 10 minutes and hours sometimes two hours depending on the fee that you allocate. Whereas high frequency trading we’re usually
talking about milliseconds so very likely those brokers will need to take some of the
exposure onto their book. But what it shows is that the market is now
mature enough where those brokers can come in and do that acting as a market maker for
those high frequency traders. So in general I think that it’s a very good
sign that the market is more stable now and I believe that having that option will also
bring more stability to price because robots and Al goes they’re generally getting price
feeds from several different locations. So now that they can act on those arbitrage
opportunities a little bit quicker or even much quicker in some cases they basically
take out the arbitrage opportunities which means that the price across all brokers should
remain more stable going forward. So you pointed out that peer to peer bitcoin
trading has spiked to reaching a level which you haven’t seen since the last November. So what do you think is the significance of
this indicator. Yes. So Local bitcoins is a website where people
can trade Bitcoin with each other so peer to peer. This Web site is coindance which basically
tracks the volumes that are happening on Localbitcoins and you can see this little spike over here
which brought us up to sixty five point six million dollars within a week. This is the largest volume that we’ve seen
since since November. And basically we have to also remember that
Local bitcoins recently reduced some of the options for let’s say peer to peer trading
versus fiat money and stuff or cash cash trading. They’ve reduced their options in Iran I believe. So it’s interesting to see that their volumes
have been increasing pretty gradually since the start of the year. But what’s most interesting to me about this
chart is that we can see the overall level since 2017 so if we take a look around here
this is where bitcoin volumes first surpassed 50 million dollars per week. That’s in September of 2017. And as you can see very clearly it hasn’t
really gone much below that level since that time. So what we’re seeing here is that Bitcoin
once upon a time was trading on a very low level. And at this point we can see the maturity
of the market how much these volumes have grown. Now if we do see another spike like like we
saw in 2017 you know we’re on this this assumption that there’s a parabolic run happening and
a massive leap forward in adoption this could very easily happen again like it’s happened
in the past where we see OK peer to peer volumes suddenly at you know 5 billion and then come
down relaxation down to you know half a billion or whatever it is at the time. So I think that this is a very clear sign
that people are using bitcoin for its intended purpose which is to transfer value store value
and trade it peer to peer. Cointelegraph like subscribe and hodl.

15 Replies to “Bitcoin: A Good Risk/Reward Investment? | Crypto Markets

  1. Awesome explanations. Btw do any other headphone users hear the audio flipping from left to right? Especially around 3:50. Super disconcerting

  2. I think I will listen to Peter over a guy who wears a hat that literally says "Reckless", A Pink Shirt & a Fake Bow Tie!

  3. I don't care about the accent of the interviewer, good and reinvent questions are what I'm interested in. I don't care about the attire of the analyst, just good analysis. The video was informative, thank you cointelegraph.

  4. It's being manipulated by fund Managers like Peter Brant and many many others and cahoots with exchanges
    It's not a real price. I'd say the true price is 8000

  5. The word is getting out. People are FED UP of bankers, fiat and wars. Bitcoin and Crypto is the future and there’s nothing they can do about it.

  6. yes bitcoin is risky and very much profitable, confusing game for a newbie which is why i invest with a financial expert.

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