The biggest event of the Blockchain calendar, Consensus 2019, took place this week, sending Bitcoin to a 2019 high of $8,386 yesterday. Today, the price has retraced from its recent high and is down nearly 8%. Now, the question which many investors are asking is if it was the Consensus event itself that moved the price this far?
Well, not really.
This is because the momentum was already building before the event and Bitcoin’s volatility has been on the move for the past few weeks. Speaking strictly about the conference, its most pleasing aspect was that there were more banks and serious enterprise solutions in attendance. This is a sign that the industry is maturing and due to this reason, it has started to attract the right kind of crowd, more suits!
Deloitte, IBM, Microsoft and Tata, all names which we are familiar in our traditional world, had a major presence with one common aim: to provide a solution for the industry. According to Deloitte, the volume of companies using the blockchain has doubled in the past couple of years. Their focus is to support their existing clients with appropriate blockchain solutions and also provide an advisory service in this area for new business. Their blockchain advisory division is booming.
The most dominant theme during the conference was tokenization of real estate and custody solutions. I like BitGo’s new custody solution which which improves the settlement process. ConsenSys also announced new partnerships during this even.
In my opinion, the overall problem in the industry is a lack of interoperability. Everything needs to talk to each other in an effective manner to create real value. Until that happens, I think it is extremely hard for real value to emerge. I am not discounting the fact that most enterprises actually prefer a permission-based protocol rather than permissionless and they identify that scalability is a big hurdle
Going back to the Bitcoin price, many investors are asking themselves if they should buy Bitcoin at its current level?
Well, the approach is still the same, look through the lens of risk premium. I define the risk premium as the premium paid compared to the previous low (which could have been a better entry point). Keep an eye on the moving averages, 200, 100 and 50-day averages. The price is trading well above these indicators and this confirms that the trend is strongly skewed to the upside.
Another important thing is that the 50-day moving average has crossed above the 200-day moving average, and this is a sign of bull momentum.
I think as long as the price stays above $5360, the level where the 50-day moving average is trading, the current retracement could be another good opportunity for investors who have been sitting on the sideline.