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Three key reasons Dow plunge won’t cause a bigger Bitcoin drop below $10K

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The United States stock market plunged as the Dow Jones Industrial Average (DJIA) dropped 358 points in pre-market trading. The Bitcoin (BTC) price dropped to as low as $10,374 across major exchanges, but a larger pullback is unlikely.

The one-hour Bitcoin price chart. Source: TradingView.com

Three key reasons could buoy the near-term sentiment of Bitcoin. The potential catalysts are the likelihood of a stimulus package, BTC’s strong technical reaction, and the resilient $10,5000 support level.

A stimulus package is becoming more likely as a result

Throughout the past month, the Dow Jones has struggled to recover amid the resurgence of COVID-19 cases.

Various macro and political factors, including U.S.–China relations and the stimulus stalemate, added significant pressure on the Dow.

Since the Sept. 2 peak, the Dow has dropped 4.4%, according to Google Finance. Tech-heavy indices, like the S&P 500 and the Nasdaq Composite, posted larger losses of around 5.6%.

U.S. President Donald Trump’s unexpected positive COVID-19 test further rattled markets. The Bitcoin price dropped in tandem with the Dow in the past 12 hours after President Trump tweeted:

Although the news initially caused the markets to drop, it could cause the Republicans to reconsider the stimulus proposal.

On Oct. 1, the House Democrats officially approved a $2.2 trillion stimulus bill, including direct stimulus checks. The Trump administration and Republicans rejected it, stating that there many unnecessary elements in the deal.

But as the presidential election nears and the markets slump, it could cause the Trump administration to work towards the stimulus. When a stimulus gets approved, it will likely cause Bitcoin and the Dow to soar, potentially buoying BTC’s momentum.

Bitcoin sees strong technical rection

Bitcoin dropped to around $10,380 on Coinbase when the Dow plunged by over 300 points in the pre-market trading session.

Since then, Bitcoin has seen a relatively strong recovery. BTC saw wicks below $10,400 on lower time frame charts but rebounded swiftly above it. BTC is now consolidating under $10,500, which has acted as a critical support level since early August.

A pseudonymous trader known as “Benjamin Blunts” said BTC is more correlated to stocks than gold. Considering the strengthening correlation, if stocks rebound after the initial market reaction, it could relieve some pressure from Bitcoin. The trader said:

“I think, once and for all we can all agree that #btc is not correlated to gold and is correlated to equities, no chopping and changing whenever it suits our bias, this is how it is now.”

Realized correlation between Bitcoin and gold

Realized correlation between Bitcoin and gold. Source: Skew

The critical $10,500 support level

In the past two months, when Bitcoin consolidated just under a critical support level, it historically broke out.

$10,500 is an important level that might decide whether Bitcoin moves towards the $11,100 to $11,300 resistance range or the $9,600 CME gap in the near term.

Traders also suggest that the charges against BitMEX could turn out to be a non-event in the longer term. Cantering Clark, a cryptocurrency trader, wrote:

“In terms of order flow, while open interest took a beating on Mex for $BTC, I am not seeing much of a disparity between other exchanges LTF volume data and Mex. Pretty much still at parity for what the norms have been. Is this going to be a non-event?”

The confluence of analysts anticipating the BitMEX incident to have a lesser impact on Bitcoin in the near term and BTC recovering to the $10,500 support area maintains an optimistic medium-term outlook for BTC.





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Athena confirms plans to bring 1500 Bitcoin ATMs to El Salvador

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U.S. company Athena intends to supply El Salvador’s new crypto-based economy with 1500 Bitcoin ATMs, a company representative has confirmed.

The rollout will start small, trialing a few dozen machines to establish a business model. The Chicago headquartered firm plans to invest more than $1 million to install cryptocurrency ATMs, targeting regions where residents receive remittances from abroad.

Along with installing the new machines it will also hire staff and open an office to carry out operations in El Salvador.

Athena currently operates just two ATMs of this type in El Salvador, one at El Zonte beach as part of an experiment called “Bitcoin Beach” aimed at making the town one of the world’s first crypto economies, and the other in El Tunco, according to CNN.

Athena’s director for Latin America, Matias Goldenhörn, told Reuters that Salvadorian President Nayib Bukele had “presented us with a tough challenge of 1,500 ATMs, we will go for that, but in phases. We are a private company and we want to ensure that our development in the country is sustainable.”

On June 17, Athena posted about its plans to expand in the country in the wake of lawmakers passing a bill to make Bitcoin legal tender. The company tagged President Bukele asking if a thousand machines would be enough. He responded he had set his target on a larger figure.

Goldenhörn stated that the business model is likely to be different from that in the U.S., which currently has a total of 19,325 BTC ATMs according to Coinatmradar.

“Initially we are going to bring dozens of machines, (we’ll) test what the business model is like in El Salvador, which will probably be different than in the United States,”

Related: Athena Bitcoin installs the first Bitcoin ATM that operates with dollars in Argentina

El Salvador’s Bitcoin adoption plan has already experienced pushback from the World Bank, which refused to assist the country in its transition, citing “the environmental and transparency shortcomings” associated with the digital asset.

On June 22, Cointelegraph reported that an opposing political party filed a lawsuit alleging the new Bitcoin law could be unconstitutional and harmful to the country.





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PlanB feeling ‘uneasy’ as 41% of his followers tip $100K BTC won’t happen this year

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PlanB, the brainchild behind the Bitcoin stock-to-flow model, has revealed he is feeling “uneasy” about his renowned price predictions due to the recent downtrend in markets.

The stock-to-flow (S2F) model, which has predicted BTC prices with some degree of accuracy over the past two years, has been called into question by some of his followers in a recent Twitter poll.

The anonymous analyst surveyed his followers on June 21 asking them what price they thought BTC would reach by the end of the year. He used the results to compare them to a similar survey in March when market sentiment was overwhelmingly bullish.

Of the 124,595 respondents to the latest poll, 41% thought that BTC prices would remain below $100K by the end of the year, which would invalidate the S2F model. That’s two and a half times the 16% in the previous poll who thought the lazer eyes crowd would be disappointed this year.

PlanB who originally published the price predictor in March 2019, pinned a message admitting that even he feels a little “uneasy” when BTC prices deviate from the model. However, the analyst noted that the model had managed to hold previously in March 2019, again in March 2020 when the pandemic caused a global market meltdown, and once more in September 2020.

Preston Pysh, the founder of The Investors Podcast Network, commented that it was difficult for a model to account for a blizzard of bad news that has accelerated the market downturn.

“You mean your model doesn’t account for 40%+ of mining rigs getting banned & forced to turn-off & relocate to various parts of the world…and with no forward notice to companies/entitles for the extraordinary expense to their heavily denominated BTC treasuries/retained earnings.”

The model is a calculation of a ratio based on the existing supply of Bitcoin against how much is entering circulation. The scarcer the asset becomes due to the four-year halving cycles the higher the price. PlanB’s model predicts an average price of $288K over the next three years.

Related: $288K BTC price ‘still in play’ says PlanB as Bloomberg champions Bitcoin halving

At the time of writing, Bitcoin had gained 2.9% over the past 24 hours to trade at $34,450 according to CoinGecko. The asset is currently 45% down from its all-time high of $64,800 on April 14.





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Bitcoin in uptrend but BTC may never beat gold’s $10T market cap — ex-NYSE head

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Bitcoin (BTC) is on a “lower left to upper right trend” and its volatility should not scare investors, the former head of the New York Stock Exchange says.

In an interview with CNBC on June 23, Thomas Farley revealed long-term convictions about Bitcoin and dismissed concerns over BTC price losses.

Bitcoin: Going up, but not “up only”

Coming a day after CNBC pundit Jim Cramer admitted that he sold his Bitcoin stash, suggesting that BTC/USD was going as low as $10,000, Farley provided some much-needed mainstream bullishness.

“With respect to the recent price moves, I’m kind of sanguine about them — Bitcoin’s a very volatile asset class, in part because it’s a new asset class,” he told the network.

“I have no doubt it’ll go up, it’ll go down over the long term — I still think it’s a lower left to upper right trend and I think we’re going to see that play out over five years.”

With mining upheaval coming from China still on everyone’s lips, popular mainstream criticism of Bitcoin’s energy usage was also swiftly cast aside as a temporary issue.

“I think this kerfuffle is an interesting conversation, but by and large I think it’ll be resolved because I think the blockchain at its core adds to its efficiency and in fact will add to energy efficiency over time,” he continued.

Less convinced on gold. vs. Bitcoin

When it comes to Bitcoin as “digital gold,” however, Farley was more conservative in his predictions.

Now firmly beneath a trillion-dollar market cap, Bitcoin must transform in order to take on store-of-value safe-havens.

Related: Joining the ranks: Bitcoin’s correlation with gold and stocks is growing

“I think the upper bound for now is gold, which is about a $10 trillion market cap,” he added.

“In order for Bitcoin to one day exceed gold, it’ll have to be more of an accepted form of currency — I’m not sure, frankly, if it ever gets there.”

Proponents argue that Bitcoin, by its very nature, faces just a matter of time before eclipsing gold thanks to the latter’s ultimately infinite supply and inability to beat Bitcoin in all aspects of “money.”

The precious metal saw a major sell-off last week after comments on policy from the United States Federal Reserve.

To beat gold, Bitcoin would need to trade at more than $533,000 with the current supply.