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Here’s the Reason Why Bitcoin’s Price is Stable Despite Macro Turbulence

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  • Bitcoin’s price has been incredibly stable throughout the past couple of weeks
  • Even bearish news developments that would have – in years past – catalyzed far-reaching selloffs have done little to shake its present strength
  • Analysts are now widely noting that the traditional markets will be a guiding force for BTC going forward
  • Which direction they begin trending mid-term will likely influence the benchmark crypto
  • One on-chain analyst is now putting forth an interesting observation that explains why bearish news developments have not been impacting BTC

Bitcoin and the entire cryptocurrency market have been facing some immense turbulence throughout 2020, with the first part of the year greatly favoring bulls. In contrast, the rest of the year primarily consisted of consolidation.

BTC has yet to establish any short-term momentum either, as the crypto’s price has been stuck between $10,200 and $11,200 for the past couple of weeks.

This stability has been somewhat surprising, as there have been multiple bearish technical developments that have done little to provide BTC with any downwards momentum.

One on-chain analyst is noting that this is the result of new investors pouring into BTC at an unprecedented rate, absorbing the heavy sell pressure coming from larger players within the market.

Bitcoin Remains Stable as It Trades Below $11,000

At the time of writing, Bitcoin is trading up marginally at its current price of $10,630. This marks only a marginal decline from where it was trading at earlier on in the week.

The cryptocurrency has generally been trading in the mid-$10,000 range for the past couple of weeks. Any attempt to break this range has been futile.

Where the asset trends next will likely depend on whether $10,200 or $11,200 are broken first, as these two levels have been established as its mid-term range boundaries.

On-Chain Analyst: New Investors Have Absorbed Selling Pressure from BTC Whales 

The recent news surrounding BitMEX is the type of thing that would catalyze intense selloffs in the past, but somehow Bitcoin has avoided seeing any type of far-reaching price decline.

Willy Woo, a prominent on-chain analyst, believes that this is due to immense buying pressure from new investors who are entering the market. He said:

“Fundamental buy pressure from new HODLers is undeniable right now. But for short term traders, sell walling on derivative and spot exchanges shows whales are in price suppression mode. It may whipsaw randomly a bit, but the long game will win.”

If this is the case, then Bitcoin’s mid-term outlook is incredibly bright, and it may only be a matter of time before its price is able to ascend.

Featured image from Unsplash.
Charts from TradingView.





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Bitcoin

Bitcoin may lose $30K price level if stocks tank, analysts warn

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The ghost of stock market crash is back again to haunt Bitcoin (BTC).

It happened last in March 2020. Back then, the prospect of the fast-spreading coronavirus pandemic led to lockdowns across developed and emerging economies. In turn, global stocks crashed in tandem, and Bitcoin lost half of its value in just two days.

Meanwhile, the U.S .dollar index, or DXY, which represents the greenback’s strength against a basket of top foreign currencies, has now climbed by 8.78% to 102.992, its highest level since January 2017.

The huge inverse correlation showed that investors dumped their stocks and Bitcoin holdings and sought safety in what they thought was a better haven: the greenback. 

More than a year later, Bitcoin and stock markets again wrestle with a similar bearish sentiment, this time led by a renewed demand for the U.S. dollar following the Federal Reserve’s hawkish tone.

Namely, the U.S. central bank announced Wednesday it will start hiking its benchmark interest rates by the end of 2023, a year earlier than planned.

Lower interest rates helped to pull Bitcoin and the U.S. stock market out of their bearish slumber. The benchmark cryptocurrency jumped from $3,858 in March 2020 to almost $65,000 in April 2021 as the Fed pushed lending rates to the 0%-0.25% range.

Meanwhile, the S&P 500 index rose more than 95% to 4,257.16 from its mid-March 2020 peak. Dow Jones and Nasdaq rallied similarly, as shown in the chart below.

Bitcoin, Nasdaq Composite, S&P 500, and Dow Jones rose in sync after March 2020 crash. Source: TradingView.com

And this is what happened after the Federal Reserve’s rate-hike announcement on Wednesday…

Bitcoin and the US stock market plunged after the Fed’s rate hike update. Source: TradingView.com

Meanwhile, the U.S. dollar index jumped to its two-month high, hinting at a renewed appetite for the greenback in global markets.

U.S. dollar index jumped up to 2.06% after rate hike announcement. Source: TradingView.com

Popular on-chain analyst Willy Woo said on Friday that a stock market crash coupled with a rising dollar could increase Bitcoin’s bearish outlook. 

“Some downside risk if stonks tank, a lot of rallying in the DXY (USD strength) which is typical of money moving to safety,” he explained. 

Michael Burry, the head of Scion Asset Management, also sounded the alarm on an imminent Bitcoin and stock market crash, adding that when crypto markets fall from trillions, or when meme stocks fall from billions, the Main Street losses will approach the size of countries.

“The problem with crypto, as in most things, is the leverage,” he tweeted. “If you don’t know how much leverage is in crypto, you don’t know anything about crypto.”

Burry deleted his tweets later.

Some bullish hopes

Away from the price action, Bitcoin’s adoption continues to grow, an upside catalyst that was missing during the March 2020 crash.

On Friday, CNBC reported that Goldman Sachs has started trading Bitcoin Futures with Galaxy Digital, a crypto merchant bank headed by former hedge fund tycoon Mike Novogratz. The financial news service claimed that Goldman’s call to hire Galaxy as its liquidity provider came in response to increasing pressure from its wealthy clients.

Related: Hawkish Fed comments push Bitcoin price and stocks lower again

Damien Vanderwilt, co-president of Galaxy Digital, added that the mainstream adoption would help Bitcoin lower its infamous price volatility, paving the way for institutional players to join the crypto bandwagon. Excerpts from his interview with CNBC:

“Once one bank is out there doing this, the other banks will have [fear of missing out] and they’ll get on-boarded because their clients have been asking for it.”

Earlier, other major financial and banking services, including Morgan Stanley, PayPal, and Bank of New York Mellon, also launched crypto-enabled services for their clients.

Is Bitcoin in a bear market? 

Referring to the question “are we in a bear market?” Woo said that Bitcoin adoption continues to look healthy despite the recent price drop. The analyst cited on-chain indicators to show an increasing user growth and capital injection in the Bitcoin market.

He also noted that the recent Bitcoin sell-off merely transported BTC from weak hands to strong hands. 

7-day moving average of coins moving between strong and weak hands. Source: Willy Woo

Woo reminded:

“My only concern for downside risk is if we get a major correction in equities which will pull BTC price downwards no matter what the on-chain fundamentals may suggest. Noticing USD strength on the DXY, which suggest some investors moving to safety in the USD.”