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QCP Capital Crypto Market Update – May 12, 2020

Commentaries & Views

The BTC event of the year has come and gone - and while there was some intraday volatility, those anticipating fireworks at the end of the countdown were no doubt left disappointed.

As long as price holds above 8k however, buying support will remain with the lingering expectancy of exponential post-halving upside. Yet with the 10k resistance now looming even larger - we expect that the longer price lingers here, the more likely we will see further near-term weakness - as inefficient miners sell out and pre-halving speculative longs close positions out. The intensity of last Sunday's liquidity-driven collapse was evidence that although this rally has legs in real spot buying, a lot of it is still retail leveraged-driven - and 8k is now a big level to watch for further downside liquidations.

With the halving behind us now, its also an opportune time to step back and take stock of the broader BTC macro picture - particularly in light of the accelerated institutional participation that has come to the fore. This past month alone we've seen the biggest guy in Quant - Renaissance Tech, and the biggest guy in Macro - PTJ both signal their interest in BTC participation. For the longevity of BTC, and for us to witness the "birth of a modern day store of wealth" that would embark on a decades-long bull trend - we've always believed that this transition from leveraged retail speculation to widespread institutional adoption has to take place. It is possible that we are standing right in that inflection point.

With 87.5% of BTC supply now already mined, just 2.625m BTC remain to be mined - and this size and scarcity of supply will be what drives the big long-term trend. As an example, just Renaissance Tech and PTJ's Tudor Fund alone manage a combined $200bn - and 2% of that, as PTJ declared his fund has roughly invested, is already $4bn - equivalent to almost half a million BTC at today's prices. If the traditional investment community continues pouring into the space, total market capitalisation could easily grow in multiples.

In the near-term, with spot price wedged between the big 8k-10k levels and while option premiums remain incredibly rich, selling short-tenor options (expiry within 2 month) is a good way to earn some great decay. We remain core long BTC and will be looking to ramp accumulation of BTC through option premiums as the bull-case gets stronger. However, in the near-term we've taken some profit ahead of halving and are looking towards 6k in spot for strong support.

In other news, QCP has recently joined the Binance family with their investment into our Indonesian exchange Tokocrypto. This partnership will be critical to scaling the digital asset class in the fourth most populous country in the world. In the backdrop of China taking a great leap into the future with digital Renminbi and the traditional investment community diving in strong, we are committed to seeing exponential growth and adoption in Indonesia and the Southeast Asian region. .

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.