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3 Bearish Cases for Bitcoin amid US Election Suspense

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Bitcoin logged an overnight rally Tuesday as its price hit $14,000 for the second time in just three days.

The flagship cryptocurrency’s latest gains came amid then-ongoing voting round to elect the next US president. Earlier polls favored a win for Democratic nominee Joe Biden, a candidate that promised to boost government spendings to aid the US economy through the coronavirus pandemic.

The prospect of more US dollar liquidity pushed its bids lower. Bitcoin, which remains negatively correlated to the greenback, rose 6.38 percent to $14,081 as a result. But entering the Wednesday Asian session, the cryptocurrency started paring a portion of its intraday gains.

Bitcoin corrects lower as suspense over the next US president builds up. Source: BTCUSD on TradingView.com

A sell-off near $14,081 pushed its prices to as low as $13,756. The plunge coincided with Donald Trump invalidating a smooth victory for Mr. Biden. The Republican candidate won central electoral states, including Texas, Ohio, and Florida, coming significantly closer to outrunning his Democratic rival.

At the time of this writing, Mr. Biden was leading Mr. Trump by 225-213. One needs 270 electoral college votes to become the next US president.

As uncertainty over the election looms, Bitcoin is looking more cautious in determining its next bias. Against its long-term bullish outlook, here are three reasons that could push the cryptocurrency lower in the coming sessions.

#1 A Contested Election Meets Bitcoin

Despite Mr. Trump hinting to run ahead of Mr. Biden, his potential loss in the running election season would not come with easy follow-ups.

The sitting US president has not ruled out the possibility of contesting the election should he lose. He has earlier raised concerns about vote fraud in the states that have adopted ‘voting by mail.’

If such a situation arises, it could lead to social unrest. Furthermore, it would further delay the second coronavirus stimulus package, an aid that Bitcoin bulls treat as the key to the next price pump.

According to Brett Steenbarger, a legendary trading psychologist, a contested election would send Bitcoin lower because of its growing exposure to the S&P 500.

“The last time U.S. election results were contested was in 2000. Between the election and the end of the year, the S&P 500 fell 7.8%,” he told Messari, adding:

“A stock market sell-off could trickle into “speculative investments” like bitcoin. Too many over-leveraged longs could liquidate, potentially leading to a similar crash in March.”

#2 Biden’s Tax Plan

The stock market may keep influencing Bitcoin even after a clear Biden win.

Investors fear that the Democrat’s capital gains tax plan on wealthy corporates – from 23.8 percent to 39.6 percent – would prove volatile for the stock market. That could lead to a sell-off on Wall Street, risking a bearish spillover to the Bitcoin market as traders sell the cryptocurrency to offset their losses.

#3 A Republican Senate

So far, the Democratic-led US Congress failed to pass the second coronavirus fiscal bill in the upper house of the Senate with a Republican-majority.

The Joe Biden administration will have to win at least 51 seats in the Senate to prove its hegemony. If it happens, then the road to the next big stimulus will be without bumps. Otherwise, a “Red Sweep” scenario would push the bill back into the discussion mode, leading to further delays.

Such a scenario could prompt the Bitcoin price to head lower.





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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.