Dave has been working at DV Trading since 2013, primarily focused in quantitative research and development of futures trading strategies. For the past year and a half, Dave has been trading cryptocurrency at DV Chain.
Dave, thanks for sitting down with us. I have to start with the obvious: what do you think is happening with Bitcoin (BTC) right now? Why the recent surge in price?
There are a couple narratives going on right now and it’s always really easy to go back in time as price goes up and look at all of the good news to say “this is why.” One thing that kicked off the increase in price was the U.S.-Iran situation. We saw a little bit of a price movement and that got the momentum going. There’s also The Halving, which is coming up in a few months, where block rewards will be split into two. A lot of people are anticipating that there is going to be 50 percent of the selling pressure. They’ll try to get ahead and in on that.
By how much will the price of Bitcoin change by the end of 2020?
That’s the question everyone wants to know the answer to, but I don’t know. It’s always tough to make price predictions. I would say that it will probably stay somewhere around this range: $7,000 to $14,000. But, you never know. There’s always a catalyst that could drive things parabolic in one direction in this space.
“People are aware that it’s coming and they’re positioning themselves accordingly.”
Some are suggesting there has been an 18-month correlation between Bitcoin and Tether’s chart movements. Is this the case? If so, what is leading the trend?
I think that there is definitely a correlation. The famous saying is “Correlation doesn’t always imply causation,” but you would expect a correlation between the two. BTC/USDT is the biggest, most liquid, and most volume pair. If Bitcoin is going up by a lot, that means that people are selling a lot of Tether to buy it. You also have the fact that Tether is by far the most popular stablecoin, especially in Asia. Since you have capital flight and similar variables, you can sometimes see that correlation. It’s not necessarily negative or positive; the coins sometimes move together or against each other, depending on where the flows are coming from.
Other predictions include Bitcoin rising by 100 percent and more in 2020. Is this likely?
It was around $7,000 at the start of the year. I could easily see it go to $14,000. It might not be likely, but there could be a 50 percent chance.
“More companies will start accepting crypto, and payment companies can facilitate transactions on crypto.”
The Ontario Securities Commission (OSC) recently passed the prospectus for The Bitcoin Fund in late October 2019, which became the first publicly traded Bitcoin investment fund. How will OSC involvement in Bitcoin affect the Canadian cryptocurrency space?
I think it’s great. Everyone, especially people from the traditional finance space who have caught the crypto bug, have been clamouring for more regulations so that we can know how to operate. It’s great that the OSC has involved themselves, and obviously the approval of the ETF is good news for crypto. There are a lot of people that are waiting to get in and that is one avenue that foregoes the need to custody their own coins.
How will the incoming Bitcoin Halving affect the price of Bitcoin? Has it affected it already?
It’s hard to say, there’s a debate on whether the efficient market hypothesis holds and whether it’s already fully priced in or not at all. People have varying opinions on both sides. Obviously, our job wouldn’t exist if the efficient market hypothesis impacted Bitcoin completely, so I wouldn’t say that it’s fully priced in, especially given the way that flows seem to go. You’re definitely going to see a reduction in selling pressure. That being said, I don’t think it’s just going to blast off to the moon on the day that The Halving occurs, either. People are aware that it’s coming and they’re positioning themselves accordingly.
What do you think the global cryptocurrency space will look like by the end of 2020?
That’s a good question. People have been waiting for ETFs for forever. I don’t know if we’ll get one in 2020. We are getting one in Canada, so we might see how that goes and then maybe a copycat will happen in the US. Options were just launched on CMNE back so I think those will continue to become more liquid and offer another way for some miners and other real companies to hedge their BTC. As these types of things develop, you could see some dampening in the volatility as more market participants are able to hedge and sell.
You mentioned how the first ETF being in Canada will be a big jump in the global cryptocurrency space. How do you think that will help Canada stand out from an economic perspective in terms of regulation and democratizing cryptocurrency?
It’s good that Canada is the first to do it. Having an ETF is something that will entice a regular investor who doesn’t know a lot about crypto and has observed QuadrigaCX and Einstein. They can get exposure to crypto that way. The other thing is, once it’s in an ETF, you can put that in a tax-protected account, which some people who already have crypto would swap into.
Any other miscellaneous predictions?
You’ll see the DeFi space continue to grow. We’ve seen a lot of growth this year, and it’s close to a billion dollars now. It will continue to grow and become more efficient. Those rates will decrease and hopefully create more traction all around. More companies will start accepting crypto, and payment companies can facilitate transactions on crypto. That would be good.
Is Newton still the best place in Canada to buy bitcoin?
Yeah, definitely. It’s very transparent. You know exactly what the fee you’re paying is because there are no fees; there’s just the spread, which is posted on its website. Newton is backed by Balance, which is legit custody. It’s the big place to go to. Since we’ve had a few Canadian exchanges explode already, that is what Canadians are looking for.
This interview was conducted in mid-January 2020. A big thank you to Dave.
Happy trading! 💸