Financial market research and analysis

Our analysts have their fingers on the pulse of the world's financial market news.

CFD trading is high risk and may not be suitable for everyone.
Facebook cryptocurrency Libra validates bitcoin
  • Libra will expose 2 billion Facebook users to crypto
  • Stablecoins like Libra don’t compete with Bitcoin
  • Bitcoin back in a bull market

Today Facebook is set to release a whitepaper about its new cryptocurrency dubbed Libra. Libra could mark the beginning of the end of Bitcoin, but we don’t think so. Libra’s release is bullish for cryptocurrencies.

The whitepaper should give specifics about how Libra will function and offer more on its intended usage by Facebook. It is probably fair to assume Facebook will use Libra as a cheaper means of payment on its platform, similar to what it is already doing with WhatsApp in India. Transactions will also be perfectly trackable via the blockchain to aid Facebook in its targeted advertising.

Libra will expose 2 billion Facebook users to crypto

Because of its huge network of over 2 billion users, Facebook products cast a wide net. Libra will breed familiarity of cryptos to a much wider audience. Two billion people will now be much more open to Bitcoin and other altcoins. The situation is comparable to when Amazon began its prime video service and its implications for Netflix. Amazon bringing streaming to the mainstream was a bigger upward force to Netflix shares than any negative effect from competition.

The exposure of this many people to cryptocurrencies should spur regulators into action. The wild-west of unregulated cryptocurrencies has less chance of mass-adoption. Can-kicking big decisions like how to regulate cryptocurrency ETFs are more acceptable while cryptocurrencies are a speculative niche. Regular usage by 2 billion people means regulation of cryptocurrencies is needed asap.

Stablecoins don’t compete with Bitcoin

As a stablecoin, Libra will be tied to the value of a basket of real-word currencies. This means its own value will not be open to speculation. If traders want to speculate on the positive influence of Libra on the world of crypto, the most obvious route is via Bitcoin.

The different properties of a stablecoin compliment rather than compete with cryptocurrencies like Bitcoin, Ethereum and Ripple. Being pegged to regular currencies make stablecoins less volatile and more suited to payment processing. The value of cryptos like BTC and ETH is derived from the eco-system (ie user community and products/applications that drive usage and volume. Michel Harding, a crypto expert and research fellow at Lancaster University says that Libra “Possibly reinforces bitcoins position as a digital gold and makes it less about remittance.”

Crypto architecture being put to use by Facebook increases the likelihood of mass adoption of the other cryptocurrencies and the unique benefits that their ecosystems offer. For example, it is probably fair to assume that decentralisation and privacy will not be features of Facebook’s Libra.

Bitcoin bull market

Bitcoin is back at its highest price in over a year and is up over 140% in 2019. Since regaining 6,000, traders have set their sights on the big 10,000 level. We see the retracement from 9000 to 7500 as complete. The news on Libra is to some extent baked in already but sets a nice backdrop for a push through 10,000.

Bitcoin daily bar chart year-to-date




18-9-2020

USD/JPY sub-105 and UK retail sales
MARKETS US stocks fell in volatile trading on Thursday amid renewed pressure in shares of major tech companies. Conflicting messaging on the coronavirus vaccine front and uncertainty around further stimulus also weighed on sentiment. European equities fell aro… Read more

16-9-2020

Buffett-backed Snowflake IPO & Fed Preview
MARKETS The Dow Jones ended roughly flat on Tuesday, pressured by a fall in financials and a u-turn in Apple after the tech giant launched a new services bundle and hardware. The S&P 500 was up 0.52% while the Nasdaq added 1.21%. Apple rose 0.2% but had be… Read more

14-9-2020

Brexit bill first debate & tech stock sell-off
Markets The major U.S stock indexes fell for the second week in a row, as technology stocks experienced their worst pullback since March. The market was volatile in a holiday-shortened week, with the Nasdaq posting a 4% decline on Tuesday followed by a nearly… Read more

18-5-2020

Gold hits 7-year high after Powell Warning
Fed Chair Jay Powell has warned the US economic recovery might last through the end of 2021. The Fed is normally too optimistic in its forecasts so the outlook feels bleak. Still, warm weather is encouraging countries to continue exiting lockdown. If the flu s… Read more

14-5-2020

Powell predicts more pain to come but no NIRP
A warning from the top of the US central bank that there’s more pain to come isn’t going down well across markets. Fed Chair Jerome Powell warned yesterday that more stimulus will likely be needed in the US to fend off the economic damage done by virus and pol… Read more

13-5-2020

“Suffering and death” warning hurts markets
A sense of caution has taken hold across markets. Shares, riskier currencies and oil are pointed lower. There’s a reassessment of the likely timeline for economic reopening. Our sense is markets juiced up by higher liquidity may have gotten ahead of themselves… Read more

12-5-2020

Bitcoin halving, dollar breakout on second wave fears
Market sentiment remains fragile. There’s a lot of emphasis being placed on the virus numbers in economies that have been gradually reopening.  Wuhan, the City in China where it all began reported its first ‘cluster’ of new cases yesterday after lifting restri… Read more

20-4-2020

US oil lowest since 1999, European shares diverge from Wall St
Another oil crash US crude prices have plummeted over 15% to the lowest since 1999. The 21-year low came as sellers were trying to get ahead of the expiry of the May contract tomorrow. Open interest was five times the average. A condition of Super Contango in… Read more