Connect with us

Bitcoin

Discussing BTC’s next big move

Published

on


The price of Bitcoin (BTC) has been ranging between $9,800 and $10,500 for nearly a week after a short fall from almost $12,100 seen on Sept. 1. As BTC struggles to show any distinctive price movement, traders are generally cautious.

Over the medium to long term, traders expect Bitcoin to recover and perceive the ongoing consolidation phase as a healthy pullback. From July 16 to Aug. 17, Bitcoin rose from $9,005 to $12,486 on Coinbase, with a pullback arguably necessary to neutralize the futures market.

A large portion of Bitcoin’s daily volume comes from the futures market. Cryptocurrency futures exchanges use a mechanism called “funding” to achieve a balance in the Bitcoin market. The mechanism forces long contract holders to compensate short-sellers for a portion of their positions if the market is majority long, and vice versa.

Typically, when the rally of Bitcoin becomes overextended, it causes the futures market to get overcrowded and funding rates to soar. In the event of a pullback, it allows funding rates to stabilize, reducing the probability of a long or short squeeze.

Explaining short-term BTC bearishness

Speaking to Cointelegraph, Dennis Vinokourov, the head of research at crypto exchange and institutional brokerage provider BeQuant, and Guy Hirsch, managing director of eToro trading and brokerage platform, revealed that Bitcoin’s medium-term outlook is positive due to various fundamental and technical factors.

Following the rejection of Bitcoin at $12,000, analysts attributed many factors to the decline of BTC. As Vinokourov pointed out: “The aggressive unwind of crowded positioning related to DeFi assets” could have contributed to the decline. However, other factors like whales taking profit, miners selling off their stashes, and a major South Korean exchange Bithumb reportedly being raided by police all might have applied selling pressure on Bitcoin. Hirsch emphasized that in periods of low volatility, price drops can be intensified when fewer traders are in the market:

“Mining pools are moving higher than usual volumes of Bitcoin onto exchanges while looking to cover their overheads, and investors have recently been more reserved (even for the usual summer lull). Lower volumes mean volatility, and price drops can be more drastic than they normally would be during heavier trading sessions.”

Vinokuorov stated that the pullback could benefit Bitcoin in the months ahead, as price rejection is not a negative occurrence if the market were to calm down as a result. He also noted that the leveraged and speculative flow of traders would align after a consolidation period:

“Price discovery and consolidation following a strong run up is an indication of a healthy two way market flow. Price rejection is not necessarily a bad development, as it gives market participants an opportunity to take stock of the situation and look to align the interest of both leveraged/speculative flow and those of long-term holders.”

Bitcoin’s longer term outlook

Heading into the fourth quarter of 2020, analysts remain neutral or bullish on the price trend of Bitcoin, and an abundance of technical and fundamental factors could buoy the sentiment around BTC from November to December. Historically, BTC performed strongly in the last two months of the year. Most notably, BTC surged to a new all-time high in December 2017.

Potential technical catalysts include the closure of Bitcoin’s monthly candle above $11,600 for the first time since 2017, and reaching the $12,000 resistance level. Albeit briefly, it marked an important breakout after dropping to as low as $3,596 on BitMEX in March 2020.

Fundamental factors that could contribute to the uptrend of Bitcoin are strengthening infrastructure, rising inflation and the near-zero interest rates. A low-interest rate environment boosts the bull case of gold and potentially Bitcoin because it could lower the value of the U.S. dollar. Hirsch said:

“I do believe that this bearish sentiment is short-term, and there are some positive developments that support BTC’s continued growth, such as the Fed’s policy of near-zero interest rates for the considerable future.”

He also added that a Bitcoin breakout is possible in the near term if the perception of Bitcoin as a hedge against inflation improves. Throughout the past month, public companies and institutional investors have purchased billions of dollars in Bitcoin. MicroStrategy, a company listed in the U.S. stock market, invested $250 million in BTC as the firm’s primary treasury asset.

Based on the increasing demand for Bitcoin as a potential hedge against inflation as well as the tone around BTC set by Wall Street giants like Paul Tudor Jones, Hirsch believes another major upsurge is a possibility: “Federal Reserve’s attempt to prop up the economy might fuel investors to look more closely at Bitcoin for a number of reasons, resulting in a positive uptick for the largest digital asset.”

BTC enters uncertainty

But in the short term, technical analysts remain divided on the Bitcoin price trend, although agreeing that Bitcoin price action will slow down. A pseudonymous trader known as “Bitcoin Jack” said Bitcoin could be in a descending wedge that has a 50% chance of breaking out or down: “BTC testing the 128 DMA — historically often a level of support/resistance on trending price. Also testing HTF support — the LTF doesn’t have me convinced yet. If LTF can show strength I want more longs.”

The bullish scenario for Bitcoin in the short-term would lead to a retest of the $11,000 resistance level, based on the chart above. A bearish scenario would cause another drop to the $9,000s, potentially leading BTC to the $9,650 CME gap that has not filled yet. 

Since Bitcoin whales often mark tops and bottoms for BTC, there is a strong possibility that BTC may drop to as low as $8,800, which was identified as a buy area by them. A pseudonymous trader recognized as “Salsa Tekila” said: “If BTC does retrace 30–45% from top like 2017 (past performance doesn’t predict future), it would take us somewhere between $6,850–$8,650.”

But Hirsch said that in previous market cycles, Bitcoin rallied in early November, ahead of key holidays in Asia: “We’ve seen these rallies happen a number of times, and so I wouldn’t be surprised if a Bitcoin rally would happen this year too.” Furthermore, Vinokourov believes that Bitcoin may retest the $12,000 mark soon, since “the number of Bitcoins locked on Ethereum continued to rise even as the total amount locked across the ecosystem declined.”





Source link

Bitcoin

Institutions still predict $100K Bitcoin price

Published

on

By


Despite Bitcoin price cooling off in recent days, with the premier cryptocurrency currently hovering around the $32,000 mark, it is still showcasing strong technicals as well as a thirty-day price gain of nearly 40%. Not only that, but even since its recent dip — which has seen the digital asset fall from its recently established all-time high of around $42,000 to its present value — the top crypto is still in the green over the last 12 months, exhibiting a value spike of nearly 300%.

In this regard, since the fourth quarter of 2019, a number of traditional finance players have been predicting big things for Bitcoin (BTC), especially as governments all over the world continue to print money in the form of “economic stimulus packages,” leading to fears of inflation becoming more prevalent but also of a looming economic disaster that could potentially result in a global recession of unprecedented proportions.

For example, during the second quarter of 2020, the economy of the United States plunged at an unprecedented rate, with the global powerhouse’s gross domestic product, which outlines a nation’s total output of goods and services, falling by 31.4%.

In the wake of such developments — including an alarming rate of money being printed by central banks globally — many investment houses and banking institutions are now beginning to see a future for Bitcoin, especially as a hedge against monetary inflation, despite its current volatility levels.

Many institutions see BTC at $100,000-plus

Earlier this year, American megabank JPMorgan Chase’s strategy team, led by Nikolaos Panigirtzoglou, claimed that a theoretical target of $146,000-plus could be sustainable for BTC by the end of 2021, pushing the narrative that the digital currency seems to be a prime candidate for replacing gold as a long-term store-of-value, especially for a budding base of younger, more tech-savvy investors.

In a similar vein, new data released by Pantera Capital, an investment firm and hedge fund, reiterates JPMorgan’s sentiments surrounding BTC, suggesting that its price action is closely following the Stock-to-Flow model, thus reaffirming its faith in the digital asset hitting the $115,000 mark by Aug. 1.

Bitcoin’s value ascent in relation to the S2F model. Source: Pantera Capital

The S2F model that was developed by PlanB looks at BTC halving events that take place roughly every four years and how they play a direct role in spurring the currency’s value roughly six months after each cycle. In this regard, one can see that following each of the previous three halvings, Bitcoin has shown remarkable growth. For example, after the May 2020 halving, the price of 1 BTC rested at $8,000, only to shoot past the $15,000 threshold after exactly six months.

Raiffeisen Bank too employed the S2F model in a recent report to ascertain where Bitcoin might be headed in the near future. According to the company’s research team, price targets beyond the $100,000 mark or even $1 million may be possible to achieve. “The fact is, now that the value has more than tripled in 2020 and momentum remains strong, future further gains should not surprise us,” the study reads.

Other prominent players from the realm of traditional finance who have projected big things for BTC in the short term include individuals such as Andy Yee, public policy director for Greater China at cross-border payments provider Visa, who believes that this rally is different from the one in 2017, as it marks a shift from high-speculative, nonfunctioning tokens toward Bitcoin and Ether (ETH).

Similarly, Thomas Fitzpatrick, global head of U.S.-based financial giant Citibank’s CitiFX Technicals market insight product, allegedly wrote in a private report — which was leaked online — that by December, Bitcoin has the potential to scale up to a price of around $318,000.

Fanciful projections or imminent reality?

Even though the S2F model was at first one of the few technical indicators signaling Bitcoin’s astronomical rise, it now seems that an increasing number of experts and analysts are beginning to see the technological and monetary proposition being put forth by BTC and other cryptocurrencies.

Sam Tabar, co-founder of Fluidity — the company behind the AirSwap trading platform — and former head of capital strategy for Merrill Lynch told Cointelegraph that everyone needs to remember that the optimism surrounding BTC at this point is not just fluff, as speculation is now backed by real substance, adding:

“Bitcoin is not ruled by any one person or government. Instead, it is ruled by the simple laws of supply and demand. […] In essence, Bitcoin is two sides of the same coin: On the one side is a global currency, and then the other side is digital gold.”

As a proxy for a global currency, the friction of buying crypto has been significantly reduced, as it’s easier than ever before to acquire Bitcoin. Similarly, as a proxy for gold, Tabar opined that Bitcoin is being used as a hedge against the U.S. dollar, especially as the newly elected President Joe Biden looks to spur U.S. dollar spending in order to prop up the economy against the effects of COVID-19 lockdowns.

Providing a more technical breakdown as to why institutions are betting big on Bitcoin, J. P. Thieriot, CEO of asset trading platform Uphold, told Cointelegraph that unlike traditional dollar debasement havens like gold and other commodities, Bitcoin has zero elasticity on the supply side.

He highlighted that if/when the price of gold reaches $3,000, marginal gold mines will once again fire up, with the same dynamic being applicable with oil and every other non-math-based unit of account. Thieriot believes that “The unique lack of supply-side elasticity means that, price-wise, BTC will respond more precipitously than things like gold, to the exact same drivers.” He further added:

“BTC is in the early stages of its rollout. As it metamorphosizes from fringe curiosity to portfolio must-have, it’s pretty logical to assume that inflows will grow. If I were a bookie, I’d say the over/under for Dec 31, 2021 midnight… is $85,000.”

Lastly, the ever-increasing institutional demand seems to be changing the digital-asset market, which in turn is driving many banks to make seemingly outlandish price projections in relation to BTC. For instance, more funds are now looking to enter the crypto game, and recently, American firm Osprey Funds announced that it will be launching its over-the-counter crypto solution, Osprey Bitcoin Trust, which will likely rival Grayscale Bitcoin Trust.

Investor sentiment surrounding BTC is high

When looking at the market sentiment surrounding Bitcoin, the digital currency is increasingly showing correlations with the core functions traditionally afforded by traditional fiat currencies for their users — that is, it has become a unit of account, a standard of deferred payments and, lastly, a tangible long-term store of value.

Also, over the course of 2020, an increasing number of e-commerce platforms added support for Bitcoin and other cryptocurrencies as a method of transaction to pay for goods and services. PayPal, for example — a company that boasts a 28-million-strong merchant base — now allows users to buy, sell and store cryptocurrencies via its platform.

On the subject, Paolo Ardoino, chief technology officer of crypto exchange Bitfinex, told Cointelegraph that consumer sentiment around Bitcoin is overwhelmingly bullish right now and that people who are celebrating the rise of various altcoins and other off-chain solutions owe their success to the flagship crypto, adding:

“The king of crypto is the base layer for an emerging alternative financial system. Bitcoin is providing a solid foundation for a staggering array of projects, some of which will fundamentally change the nature of money by the end of the decade.”

Thieriot believes that the sentiment driving BTC is a result of previously unseen levels of currency debasement generated by the monetary response to COVID-19. Beyond retail speculation, he believes corporations are looking to hedge their fiat exposure, evidently seeing some relative advantages of Bitcoin over traditional havens like gold and subsequently jumping in. “The early jumpers have been handsomely rewarded, and so the trend is likely to continue,” he added.

Lastly, Tabar highlighted that one of the more recent signs of growing consumer sentiment and institutional acceptance regarding BTC has come in the form of recent filings made by BlackRock, an American multinational investment management corporation with $8.7 trillion in assets under management as of the end of 2020. A quick look at the filings showcases a strong use of crypto-oriented language alluding to the company’s funds potentially engaging in “futures contracts based on Bitcoin.”





Source link

Continue Reading

Bitcoin

Altcoins rally while Bitcoin bulls are thwarted by resistance at $34K

Published

on

By


Bitcoin’s (BTC) tumble below $30,000 was short-lived as the top cryptocurrency found a new wave of support, including a $10 million ‘buy the dip’ moment from MicroStrategy. 

Data from Cointelegraph Markets and TradingView shows the strong inflows have helped lift BTC 4.92% to a daily high at $33,866.

As the prospect of the Biden administration passing massive stimulus packages to help get the United States economy going again, conversations about Bitcoin becoming a reserve currency are beginning to pop up again.

Although Bitcoin’s recent volatility has some analysts saying BTC is a cyclical asset rather than a hedge, the price recent movements have caught the eye of retail investors who have shown a renewed interest in cryptocurrencies in general.

Daily cryptocurrency market performance. Source: Coin360

Even the Bank of International Settlements has acknowledged that digital currencies may have use and the organization has outlined plans to roll out a variety of central bank digital currency trials this year.

Now that the Bitcoin fear index has flipped from “Extreme Greed” to “Fear,” some investors appear to be taking Warren Buffet’s advice of “buying when there is blood on the streets”.

Institutional investors are wary of future regulation

According to Chad Steinglass, head of trading at CrossTower, Bitcoin’s correction may have initially been triggered by critical comments fromU.S. Treasury Secretary Janet Yellen.

Prior to Yellen’s comments, Bitcoin was experiencing a “post-correction consolidation” and was “rangebound between $34,000 and $38,000” with traders “waiting to see which side of the range would be challenged or broken.”

BTC/USDT 4-hour chart. Source: TradingView

Steinglass further explaind that Bitcoin’s next steps will be determined by the actions of institutional investors. He said:

“$31,000 was a pocket of strong support, so at least not everyone is selling. We’ll have to wait and see if that wall remains, or if institutions continue to accumulate. If they do, it’s likely that the trend will re-establish itself and continue. If they move to the sidelines waiting for more regulatory guidance, then their lack of buy flows will be acutely felt.”

Altcoins bounce back

Many of the top altcoins also recovered nicely from this week’s correction. Polkadot (DOT) rallied 7.09% to a daily high at $18, while Chainlink (LINK) posted a double-digit gain and topped out at $22.31. Tezos (XTZ) has also seen a surge in interest which boosted the altcoin by 15% to $3.36.

The overall cryptocurrency market cap now stands at $949.8 billion and Bitcoin’s dominance rate is 64.4%.