Digital Currency Revolution Series: Cryptocurrencies outpace energy and bullion markets in 2019

Of late, Bitcoin and other major cryptocurrencies have outperformed the energy and bullion commodity spaces, such as gold crude and some mainstream asset classes in 2019 so far. The pioneer cryptocurrency Bitcoin (BTC) is booming up with considerable returns especially in 2019, surged approximately by 150% this year so far. 

BTC’s price corrections this year weren’t significant, instead witnessed significant growth, either as Bitcoin continued to consolidate its position, with many analysts predicting that the digital currency might reach its previous high of $20,000 soon.

The trading activity in CME’s BTC futures contracts registers a record highs for May; average daily volume surged by 36% since April.

Whereas the major trend of crude has been little apprehensive trading. The price trend of global benchmark, WTI futures, dropped considerably more than 15.91% and Brent tumbled about 12.71% last month, evidencing its worst monthly performance of 2019. Last quarter (Q4) of 2018 and the current quarter (Q2) of 2019 has gone in the favor of bears.

Fundamentally, weaker oil prices pose a challenge to the OPEC (Organization of the Petroleum Exporting Countries). Later this month, the association and its Russia-led allies, in addition, will assemble in Vienna to reassess the global demand/supply equation for the rest of the year.

Prices had spiked as much as 33% during this spring upon the pact to curb oil output late last year. However, the potential economic slowdown in China and apprehensions about the Trump trade policies are threatening oil price prospects (sanctions on Venezuela is extra pressure).

Crude oil prices tumbled yesterday, with Brent closing below the $60/bbl level at $59.97/bbl. Brent slid -3.7% on the day while WTI fell -4.0% to $51.14/bbl. Rising US stockpiles in all three important inventories – crude oil, petroleum, and gasoline – sparked the selloff yesterday, which were further catalyzed by bearish trade sentiments from Trump’s ambiguity. All three inventories are now closing on a 5-year seasonal high, with US crude oil and US petroleum potentially setting a new seasonal high before the end of June. We expect bearishness to persist in the short-term until further clarity from OPEC.

For now, the concerns on shrinking global demand for oil, crude market participants have got challenging questions about supply as to how much banned Iranian oil is reaching foreign refiners?

While Gold prices are also oscillating between $1,326 – $1,266 levels during the current year so far, the prevailing trend hasn’t gone anywhere but stuck in this tight range with some tepid rallies as the precious metal is getting little cushion US Fed as the Federal Reserve most likely to be on hold but the absolute level of USD interest rates remains supportive of short-term capital flows to USD.

UST 10Y yields plunged 2.26bp to 2.12%; the UST yield curve flattened 0.83bp to 9.43bp inverted, led by a decline on the front end of the curve.

Huge turbulence has been observed among entire cryptocurrency gamut as compared to conventional asset classes. The volatility in cryptocurrency space is subject to the regulatory developments and technological glitches/hacking scams.

Most noticeably, cryptocurrencies are extensively correlated. Just, for instance, Bitcoin price affects its peers such as Bitcoin cash and Litecoin prices.

Currency Strength Index: FxWirePro's hourly BTC spot index is inching towards 123 levels (which is highly bullish), and hourly USD spot index has bearish index is creeping at 15 (mildly bullish) while articulating (at 13:34 GMT). 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex