Bitcoin Rallied Amid a “Catastrophic Economic Event” in Big Boost to Bull Case
One of the longest standing narratives is that Bitcoin is a “safe haven asset” or “store of value,” an asset that should outperform equities and bonds when there is a recession, geopolitical tension, or otherwise abnormal events taking place that would not be defined as “good.”
Although the narrative has come under fire as of late due to weakness in the cryptocurrency market, BTC recently made an astonishing technical feat that some are taking as a sign it is a store of value.
The past few months have been harrowing for the global economy, to say the least. Due to the outbreak of COVID-19 around the world, governments have been incentivized to shut down industry and force citizens to stay at home, resulting in a global recession expected to be the worst since the Great Depression.
Bitcoin and the broader crypto industry haven’t been spared in this economy, with the cryptocurrencies plummeting 50% within a single day in March and industry companies laying off staff en-masse.
Yet, just weeks after the initial panic has passed, Bitcoin is actually up against the dollar, outperforming many other assets over the same time period.
As observed by Travis Kling — CIO of crypto hedge fund Ikigai and a former Point 72 portfolio manager — the cryptocurrency actually posted a positive performance “amid one of the most catastrophic economic events in history”:
“The price of Bitcoin increased 0.60% from the end of February to the end of April amidst one of the most catastrophic economic events in history,” he said before adding that the asset is a “store of value.”
The price of #Bitcoin increased 0.60% from the end of February to the end of April amidst one of the most catastrophic economic events in history.
A store of value.
— Travis Kling (@Travis_Kling) May 1, 2020
What’s crazy is that analysts are coming to the conclusion that the way things are trending for Bitcoin and for the macroeconomic environment, BTC is poised to continue to outperform in the months ahead.
To mitigate the effects of the COVID-19 lockdown, central banks and governments have been forced to go into overdrive, implementing increasing dovish monetary and fiscal policies to bail out people and companies.
The U.S. Federal Reserve, for instance, has increased its balance sheet by over $2 trillion in the past two months, activating a number of credit facilities to ensure that companies and individuals don’t go under in these trying times.
This trend of record-level money printing increases Bitcoin’s chances at rallying higher, analysts say. As best explained by Dan Morehead — a Wall Street trader-turned-head of one of the first crypto funds, Pantera Capital:
“As governments increase the quantity of paper money, it takes more pieces of paper money to buy things that have fixed quantities, like stocks and real estate, above where they would settle absent an increase in the amount of money. The corollary is they’ll also inflate the price of other things, like gold, bitcoin, and other cryptocurrencies.”
Photo by Sean O. on Unsplash
Bitcoin Broke A Key Technical Pattern It’s Vulnerable to a Drop Toward $8K
Bitcoin is struggling to gain bullish momentum above $9,200 against the US Dollar. BTC price is currently declining and it could continue to slide towards $8,400 or $8,200.
- Bitcoin is facing an increase in selling pressure below $9,200 and $9,000.
- The price is trading below the 100 hourly simple moving average and it could dive towards $8,400.
- There is a key bearish trend line forming with resistance near $8,900 on the hourly chart of the BTC/USD pair (data feed from Kraken).
- The pair could correct in the short term, but it is likely to continue lower towards $8,400 or $8,200.
After a sharp downside correction, bitcoin found support above the $8,400 level against the US Dollar. BTC price recovered nicely above $8,800 and $9,000, but it faced a strong selling interest near the $9,200 level.
A high is formed near $9,201 and the price is currently declining. It broke a key bullish trend line with support at $8,980 on the hourly chart to enter a bearish zone. BTC even settled below the $8,900 level and the 100 hourly simple moving average.
A low is formed near $8,629 and the price is currently attempting an upside correction. Bitcoin is trading near the 23.6% Fib retracement level of the recent slide from the $9,201 high to $8,629 low.
On the upside, an initial resistance is near the $8,900 level and the 100 hourly simple moving average. There is also a key bearish trend line forming with resistance near $8,900 on the same chart.
The trend line coincides with the 50% Fib retracement level of the recent slide from the $9,201 high to $8,629 low. If there is a successful close above the trend line, 100 hourly SMA, and the $9,000 resistance, the price could recover further.
The main resistance is near the $9,200 level, above which the bulls are likely to aim a test of the $9,500 resistance in the near term.
Conversely, bitcoin price might continue to move down below the $8,700 level. An initial support is near the $8,600 level, below which the price could dive towards the $8,400 support.
If the bulls fail to protect the $8,400 support, there is a risk of a larger downside thrust towards the $8,200 level or the $8,000 handle in the near term.
Hourly MACD – The MACD is showing negative signs in the bearish zone.
Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is currently close to the 40 level.
Major Support Levels – $8,400 followed by $8,200.
Major Resistance Levels – $8,900, $9,000 and $9,200.
Author: Aayush Jindal
Bitcoin Price Analysis: BTC/USD Pullback From The $9,000s Eyes $8,000 Before Another Breakout
After entering into the $9,000 range last week, Bitcoin renewed the investors’ interest and especially with the block reward halving around the corner, the desire to join the market continues to grow. Bitcoin rose to a new April high at $9,466, however, this marked the end of the bull-run as Bitcoin plummeted to test support at $8,400. Intriguingly, a minor recovery ensued with bullish traders pulling Bitcoin towards $9,000.
The weekend session has been stable with the upward price action limited under $9,000. A short term support has been formed at $8,600. BTC/USD is dancing at $8,750 after losing more than 1.7% of its value on the day. The trend is in the hands of the bulls especially with the Relative Strength Index (RSI) falling from the overbought region.
On the upside, Bitcoin is facing growing resistance at $9,000 and the descending trendline. It is apparent that another break into the $9,000 range would refresh the investor interest. At the same time, speculation surrounding the halving set to take place in less than a week, could result in a rally. More upside action is anticipated if the Bitcoin rises above the descending channel.
On the contrary, the prevailing action is bearish and the longer BTC stays under $9,000, the stronger the bearish grip becomes. A situation such as this would demoralize the bulls, who would start to lose traction and result in the price plummeting. There is a high chance that Bitcoin would retest the confluence support formed by the 200-day SMA and the 61.8% Fibo at $8,000 before a significant recovery comes into play. Other short term support areas include $8,600 and $8,400.
Spot rate: $8,747
Relative change: -167
Percentage change: -1.7%
Bitcoin Price Analysis: BTC/USD Pullback From The $9,000s Eyes $8,000 Before Another Breakout
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Bitcoin Weekly Green Candles Echo End of Last Bear Market
Since the mid-March COVID-19-induced cryptocurrency market crash which wiped over $100 billion off the markets, Bitcoin has recovered over 115% to current levels. Meanwhile, other technical signals are looking predominantly bullish again.
Bitcoin hit a weekend top of $9,200 resulting in the close of the seventh green weekly candle in a row. Industry observer Zack Voell [@zackvoell] noted the propitious candle, stating:
“Bitcoin just closed its seventh consecutive weekly gain. This hasn’t happened since April 2019 when the last bear market ended.”
The last time BTC saw seven successive green weekly candles was between March and April 2019, as crypto markets dragged themselves out of a prolonged bear market which lasted fifteen months.
During that time, BTC went from $3,700 to $5,300 over the seven-week period before a red candle finally showed up on week eight to slow its progress. This time around, Bitcoin surged from $4,000 to over $9,000 in the same period of time, indicating that the momentum is much stronger.
BTC is now trading above both the 50 and 200-week moving averages, which is also a bullish signal on the long-term time frame. It is crucial, however, that the asset makes a new higher-high above $10,500. Only then will the current downtrend be considered reversed.
If BTC fails to register a new high in this rally, it will likely mean that it will need to drop back to explore support levels.
There are also other positive technical indicators bolstering the price. According to BitInforCharts, BTC has been steadily approaching its all-time high again.
BTC’s hash rate is currently at 128.6 EH/s, which is a touch below its previous peak of 133.2 EH/s according to this measurement. On-chain market analysis provider Glassnode has registered an even higher hash rate, claiming BTC has already reached a new all-time high.
Hash rates are indicative of network health, which is a very good sign just a week or so before Bitcoin’s third halving. There are wider concerns of weaker miners capitulating, however, the higher the prices remain, the less likely this is to happen.
Author: Illustrations by A. Gnetova and G. Phan