Bitcoin should benefit from the U.S. dollar’s weakness, according to Stephen Roach, former chairman of Morgan Stanley’s Asia division.
The Yale faculty noted that the greenback could fall by as much as 35 percent against the basket of foreign currencies.
He cited reduced domestic savings rates, as well as the U.S. economy’s current account deficit, as the principal factors behind the dollar’s potential decline. Cryptocurrencies like Bitcoin should benefit from the U.S. dollar’s decline, says Stephen Roach, a Yale faculty and the former chairman of Morgan Stanley’s Asia division.
In his latest opinion editorial published Monday, the prominent economist wrote the greenback could crash by as much as 35 percent against foreign currencies of America’s trading partners. The negative outlook arose from the prospects of a bullish Chinese Yuan and Euro. U.S. Dollar Index chart from TradingView.com showing the greenback’s performance since March 2020. Source: TradingView.com
“The broad renminbi index constructed by the [Bank for International Settlements] is up 53% from its December 2004 lows in real effective terms,” wrote Mr. Roach, adding that China’s advanced economic and structural reforms would lead to further currency appreciation.
As for the Euro, the economist said the eurozone currency has risen above expectations in the last decade. Euro now trades 15 percent below its April 2018 highs, which mostly leaves it in a secure buying area. Excerpts from Mr. Roach’s article:
“With China and the euro zone accounting for 40% of U.S. trade, I would be the first to concede that the math of a dollar crash won’t add up unless those two currencies rise significantly.”
In a separate interview with CNBC’s Trading Nation on Monday, Mr. Roach discussed a string of economic policy shifts within the U.S. that could lead to a weaker dollar. The catalysts included a shallow domestic saving rate, a massive U.S. fiscal deficit, and de-globalization. U.S. Fiscal Deficit chart showing a $1.905 trillion deficit until May 2020. Source: U.S. Treasury
Mr. Roach called them a “lethal combination,” which may leave the U.S. economy under the stress of inflation. Investors would, therefore, move their dollar and dollar-backed investments into other havens, including Bitcoin.
“Although cryptocurrencies and gold should benefit from dollar weakness, these markets are too small to absorb major adjustments in world foreign-exchange markets where daily turnover runs around $6.6 trillion,” Mr. Roach added.
Bitcoin Against Dollar in 2020
Bitcoin saw one of its worst monthly declines in March 2020 amid a global market rout that crashed everything from bonds to stocks. Meanwhile, the U.S. dollar emerged among the only assets that benefitted from the financial crisis. The U.S. dollar index rose 8.76 percent during Bitcoin’s decline.
Later in March, federal governments around the world responded with unprecedented stimulus programs. The prospects of unlimited cash liquidity helped stocks, gold, bonds, and bitcoin recover in tandem. Bitcoin, in particular, surpassed its traditional peers by rising by close to 150 percent by June 2020.
The same period saw the U.S. dollar index dipping by 7.06 percent from its year-to-date high of 102.99. Bitcoin price chart from TradingView.com comparing its post-March trend with the U.S. Dollar Index. Source: TradingView.com
The trend roughly reflects traders’ assessment of the U.S. dollar’s strength against Bitcoin. An uptick in the greenback sees the cryptocurrency shedding its gains. Meanwhile, the dollar’s downside move leads to price growth in Bitcoin.
With Mr. Roach advocating the negative correlation between the two assets in his outlook, it puts Bitcoin in the psyche of more investors as an insurance asset. A 35 percent decline in the U.S. dollar could certainly lead investors to the safety of decentralized and scarcer assets. Source: https://bitcoinist.com/bitcoin-will-benefit-asserts-top-economist-after-predicting-35-crash-in-dollar/?utm_source=rss&utm_medium=rss&utm_campaign=bitcoin-will-benefit-asserts-top-economist-after-predicting-35-crash-in-dollar
Tezos price looking at 20% bounce after holding $2.0 level
XTZ/USD price has declined 5% today but could rebound by more than 20% if bulls maintain upward pressure towards a key level
The price of Tezos’ token XTZ is changing hands around $2.13, up from 24 – hour lows of $2.04 registered yesterday. The token’s price however remains nearly 5% down during this period.
The downtrend witnessed over the past week had seen Tezos bulls finding it hard to crack resistance at a key level, which meant a potential retest of recent lows.
XTZ/USD on the 1 – hour price chart suggests an ascending parallel channel is forming. However, the upside is capped around the current price level, with the SMA50 and SMA100 providing key hurdles. The bounce on the hourly chart is likely to happen given the upturned RSI.
A break above the moving averages could see buyers push for prices around $2.2, which suggests a 20% uptick from current levels.
XTZ/USD 1-hour chart. Source: TradingView
The outlook on the 4 – hour chart is also positive as seen in the three green candles with lower highs and higher lows. It appears that the bulls are trying to defend gains after slipping below the SMA50, SMA100 and SMA200.
The moving averages are clustered around $2.18 and $2.22, which means a break above these levels could give bulls the motivation to attack resistance around $2.40. The MACD is suggesting a bullish divergence, while the RSI remains upturned after climbing out of the oversold territory.
Although bulls are targeting a break above $2.2, the outlook will turn bearish if downward pressure cracks the lower limit of the formed ascending parallel channel.
In this case, bulls will have to defend the support zone around $2.10 below while bears could easily plunge XTZ/USD to $2.04. An extended downside means that the next target for bears is $1.9.
Altcoins seeing red
As the Bitcoin price looks to hold gains above $12,000, most altcoins are registering losses or insignificant upsides which suggests that the money is flowing into the top cryptocurrency.
Ethereum’s price as a percentage of Bitcoin is down to about 3%, with the Ether bulls likely to cede the initiative to the bears if the price tanks below $350.
Zcash (ZEC) and NEM (XEM) are among the biggest losers with their respective prices tanking by more than 10% in the past 24 hours. ChainLink (LINK), Filecoin (FIL), and Crypto.com Coin (CRO) are down 4%-7% on the day.
While top altcoins continue to struggle, nearly $2 billion has been wiped off the total altcoin market cap in just 24 hours. Meanwhile, Bitcoin’s dominance index has jumped to 60.6%, according to data from CoinMarketCap.
Bitcoin SV, Stellar Lumens, Dogecoin Price Analysis: 21 October
As Bitcoin closed above $12,000 once more, it was pertinent to ask if the altcoin market would follow. Would traders sell altcoins to follow Bitcoin’s gains? The rising Bitcoin Dominance suggested, yes. Bitcoin SV formed a bullish divergence and made gains in the past few hours, while Stellar Lumens witnessed strong buying volume. Dogecoin was making some gains in the short-term, but the longer-term bearish trend also loomed over the asset.
Bitcoin SV [BSV]
BSV slipped beneath the short-term range from $158 to $174. However, the asset’s sellers were unable to drive prices lower as the RSI signaled a bullish divergence which saw BSV reclaim the range’s low.
The RSI moved past 50 to indicate bullish momentum, and BSV could see steady gains in the coming days alongside a bullish Bitcoin.
On the other hand, if BSV stalled at $158 for a couple of days, it might indicate that the price was headed lower.
Stellar Lumens [XLM]
Both the CMF and the OBV highlighted the strong buying present behind XLM’s recent move from $0.072 to $0.086. The OBV has set higher lows (white), and the outlook for the asset would be bullish in the coming days provided OBV does not dip beneath the ascending trendline.
The CMF showed neutrality at press time as buyers and sellers were in equilibrium in the market.
The price would have to close above $0.084
DOGE was moving in an ascending channel as the level of $0.00257 was defended once more. The Directional Movement Index picked up steam as the ADX (yellow) moved above 20, indicating a strong trend was in progress. +DI (blue) highlighted the bullish nature of the trend.
Trading volumes have not been standstill in the past few days either, showing legitimate interest behind the asset in its most recent bounce.
The asset also posted a new low against BTC recently as Bitcoin surged past $12,200 while DOGE languished at support. DOGE/BTC was last trading at this value in 2017, December.
Bitcoin’s Record-Breaking Run Attracts More Wall Street Money
Bitcoin’s hot streak is proving an irresistible prospect for Wall Street investors while stocks and shares slip and slide.
- AAX continues its record-breaking run above $10,000.
- Institutional investors continue to flock to the cryptocurrency as a hedge against rocky stock markets.
- Euro stocks slide as further lockdowns seem increasingly likely.
Just yesterday the Decrypt Market Watch was talking about Bitcoin’s stellar performance, especially when compared to stocks and shares. Today its run of good fortune continues, shooting past the $12,000 mark for the third time in 2020.
While you may be thinking, “so what, it’s done this before!” This time things are different. Bitcoin has been above $10,000 for 83 consecutive days, beating out the previous record of 62 days set in the halcyon era of December 2017.
Another point of note is Bitcoin’s stability relative to the last time it passed the $12k mark. In August this year, the price pinged around the $12k before sliding down aggressively. In the last 30 days, volatility has stuck around 1.5% – putting it within touching distance of gold’s 1.2% monthly volatility. Bitcoin’s price fluctuations are evening out, for now at least.
“Previous instances when Bitcoin has been this high, it’s been followed by significant drops, which keeps investors from seeing the asset as a genuine hedge against market fluctuations elsewhere in their portfolio. But this time the signals appear to suggest things are more stable,” says a spokesperson from AAX, the world’s first digital asset exchange powered by the London Stock Exchange.
It’s no wonder investors are piling in. The number of Bitcoin addresses holding more than 0.1 coins, (currently about $1,188) has hit an all-time high, and the number of addresses holding more than 100 coins (currently $1,188 million) has reached a six-month high, according to Glassnode.
That’s been reflected at the institutional end, too. The total value of assets managed by crypto-focused investment company Grayscale reached $6.5 billion for the first time, according to the firm.
The biggest of the company’s trusts by far—Grayscale Bitcoin Trust (GBTC)—currently exceeds $5.4 billion. According to Bitcoin Treasuries, publicly traded companies, including Grayscale, now hold a total of 785,999 BTC—worth around $9.18 billion currently. And the number keeps on growing.
It’s little surprise when you see the jitters in the stock markets.
Stocks still looking for clarity over US stimulus
We’ve seen the impacts of what happens when a senior US official talks about Bitcoin, but political posturing is a daily occurrence in fiat markets.
While several indices in Asia had risen in partnership with US markets on stimulus hopes for the COVID stricken economy, European stocks slid in early trading.
The FTSE 100 dropped 1.3% as a rising pound ate into export-focused stocks, while Germany’s DAX and France’s CAC 40 also lost similar numbers as new lockdowns appear increasingly likely across the continent.
One note of consolation for investors is the US election is due to take place as planned on November 3. Whatever happens, it will likely give investors much-needed clarity over when and if there will be fresh fiscal stimulus. For crypto investors however, November 5 would mark the 100th day above $10,000.
You choose which is the better omen.
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