SFOX Volatility Report Shows Market Moved From Uncertain To Mildly Bullish As Of July 2019
SFOX Releases New Volatility Report Showing That The Market Moved From Uncertain to Mildly Bullish
Litecoin, Bitcoin SV and Bitcoin are going to experience important events in the near future
SFOX, a prime dealer of cryptocurrencies for traders and institutional investors released a new volatility report in which their Multi-Factor Market Index moved from uncertain to mildly bullish as of July 9th. The information has been published by SFOX research team in a blog post on July 11.
SFOX Releases Volatility Report
In this report, the company talks not only about how the market is behaving but also about Facebook’s Libra project that was unveiled in June, about Bitcoin’s volatility and its performance, and about what to take into account in the future for the crypto space.
Back in June 2019, the previous edition of their monthly volatility report gathered data related to price, volume and volatility from eight major exchanges and liquidity providers. In this way, they were able to gather valuable information from digital currencies such as Bitcoin (BTC), Ethereum (ETH), Bitcoin ash (BCH), Litecoin (LTC), Bitcoin Satoshi Vision (BSV) and Ethereum Classic (ETC).
According to the company’s calculations, the SFOX Multi-Factor Market Index moved from uncertain to mildly bullish. The firm explains that they use proprietary, quantifiable indicators to analyze three market factors: price momentum, market sentiment and also continued advancement of the sector.
To have a final result, they use a formula that combines quantified data on search traffic, blockchain transactions and moving averages. The index moves between highly bearish to highly bullish with different intermediate results.
They explain that although Bitcoin’s price has been moving forward and growing in the market, it is critical to separate what technical data say than what trader psychology shows. SFOX focuses on sustained trends in terms of institutional development, renewed attention from the retail market and also long-term price indicators. These things have been very important to change the market sentiment to mildly bullish.
They also explain that in June there was an important upswing in crypto that was related to bitcoin. The only time that there was a much more strong price movement was back in November and December 2017 when the most popular digital asset was traded close to its highest point of $20,000.
The report shows that one of the reasons behind this market surge could be related to the fact that Project Libra was announced. Libra is the digital asset presented by Facebook, the largest social media network in the world. This digital asset was announced on June 18 and it aims at helping users process transactions, make payments and store money using their social media accounts and messaging applications such as WhatsApp or Messenger.
Although Bitcoin has usually been more stable than other virtual currencies, this time was different. Indeed, Bitcoin broke with this trend in which it was the least volatile digital asset in the market. The virtual currency registered 30-day volatility of 81% on June 30th and 89.13% as of July 9. Nonetheless, Bitcoin remains far from being the volatile asset it was during the bull market in December 2017.
The report released by SFOX reads as follows:
“The macrotrend of bitcoin’s volatility peaks decreasing since December 2017 highlights that better trading infrastructure and liquidity may, in fact, be stabilizing bitcoin and other major crypto assets, relatively speaking, leading to the continued maturation of crypto as an asset class.”
SFOX has also mentioned some things that are worth paying attention to during July this year. One of the first things is related to the senate and house meetings on Facebook and Project Libra that are going to take place on July 16th and 17th. This is very important for the market as a whole.
David Marcus, the head of Facebook’s Calibra wallet and the lead of the blockchain project Facebook is currently working on will be talking about the risks and potential benefits related to Libra. There are several countries and regulatory agencies around the world that are currently worried about Libra’s influence in the financial market.
In addition to it, SFOX considers that Bakkt initiating user acceptance testing for physically-settled Bitcoin futures through the Intercontinental Exchange (ICE) is going to help Bitcoin, or at least, it is going to have influence in the market. As they explain, even if the testing phase of the Bitcoin futures product doesn’t lead to an increase in institutional investments, the crypto market may react due to the large interest from institutions and other investors in Bitcoin.
Bitcoin SV is also going to increase its block size to 2 GB at the end of July, exactly the 24th. Although BSV experienced volatility, this could help gather attention from investors.
Furthermore, and one of the most interesting things in the cryptocurrency market in the near future, is related to Litecoin’s halving. The fourth-largest virtual currency in the market is going to be experiencing a reward reduction for miners. On August 5, miners are going to be receiving 12.5 LTC per block rather than 25 LTC as they were receiving now. As the date gets closer, Litecoin could see further volatility as the event gets closer.
Bitcoin has also registered a 30-day correlation with gold of 0.806, which shows how the prices of these two assets broke months of behaving without correlation or with inverse correlation. Bitcoin had the largest 30-day correlation with Ethereum (ETH) registering 0.939 correlation.
Among the digital currencies analyzed in this report, this was the highest correlation registered. The S&P 500 was also correlated with gold even more than Bitcoin with 0.883.
Litecoin has been the digital asset with the lowest correlation with other assets. Indeed, this virtual currency hit a negative correlation with Bitcoin of 0.466 and a negative correlation with Ethereum of 0.202. Bitcoin’s correlation with Litecoin saw the largest decline during the first days of the current month. Bitcoin Cash has also seen a large decline in its correlation with Bitcoin during the first days of this month.