One way or the other, all parts of the world have been affected by the pervasive turbulence, and as a result, most stocks have slumped down to the levels unseen before. The major 2020 stock market crash which took place back in February and was most severe on March 12, (the so-called Black Thursday), lasts up to this day, leading economies into millions of losses, and continues to hit investors’ pockets. And, although the markets are revamping, the real recovery is still a long way to come.
In June, the stock market started exhibiting positive signs, flagging the long-waited-for resurgence. And, although June 8 recorded the beginning of the rally during which Nasdaq 100 struck an all-time high, just four days later marked a massive sell-off, during which many stocks touched the bottom unseen from March.
Such unpredictable behavior caused experts to draw a parallel between stock and cryptocurrency markets. Vitalik Buterin, the founder of Ethereum, commented in his tweet:
Stocks vs Crypto: Which is better during a crisis?
While it may seem that the stock market is a “safer” and more reliable way during times of crisis, it’s not always true. Some major banking institutions experienced losses of over 50%, while with smaller companies in the oil industry, the fall in stock price may have spread up to 70%. While that may bring a promise of good returns once the economy is revived, it may still be a long way for stocks to reach levels seen back in January.
Instead, when it comes to cryptocurrency, the market is rather not equated (contrary to expectations, Bitcoin dropped to a major year-to-date low on March 13 – and that happened in the time when it was expected to act as ‘safe haven’), it is more dependent on internal system factors – and one of them may be the third Bitcoin halving event which occurred on May 11, 2020. That showed a similar level of fluctuation towards what the stock market now experiences.
If asking where it is better to invest during a crisis, there is no definite answer. Stock and cryptocurrency markets are both equally opportunistic, and their performances are mostly reactive to some external events (and the upcoming presidential elections in the US may be one of them – at least in the case of the stock market). The cryptocurrency market is mostly subject to its own rules or mechanisms and can fluctuate largely depending on fork events, rise in mining activity, and of course, announcements on its legal status.
However, there is always a question of gains and losses. While the price of Bitcoin can unexpectedly go down 61% in just one day, as was the case in March (and revamp to the same level in about a month’ time, as it happened in April), price fluctuations of stock markets are more even – it takes longer to drop and more longspun to recover.
This way, it depends on individual preferences of investors of whether they are willing to accept a higher degree of risk of uncertainty and often unpredictability, or would rather stick to verified traditional financial instruments.
Crypto Market Analysis: 26th October 2020
In a week where equity markets have stagnated, bitcoin bucked the trend as it pushed through the $12,000 resistance level, as well as touching and seeing some resistance at $13,000. Altcoins were buoyed by bitcoin’s rise, with ethereum, XRP, litecoin and chainlink all showing upward trajectories too.
Simon Peters, analyst, eToro: Bitcoin blasts through $12,000 barrier
Bitcoin price action has dominated attention in the last week, rapidly reaching year to date highs. It approached and then subsequently smashed through the much-feted $12,000 mark with such strong momentum, there is every chance the cryptoasset could just push right on through to $14,000.
If we were to see some pullback towards $12,000, I would urge investors not to be too worried. We may end up in a period of consolidation just above that level. I’ve highlighted many times in these pages that there is still time in 2020 for a bitcoin bull run, and my view remains the same (Will 2020’s Q4 be an autumn of alts, or will they fall? 13th July).
So, what instigated last week’s bullish run? A number of positive developments in the crypto space, most notably PayPal announcing it would enable its users to pay for goods and services in cryptoassets. This would introduce a massive user base to crypto, with PayPal boasting 346m active accounts, all of whom will be able to hold and shop using bitcoin, Bitcoin Cash, Ethereum and Litecoin once the service has been rolled out.
This positive development was compounded by a discussion earlier in the week on the IMF’s Cross Border Payments Panel, in which Federal Reserve chairman Jerome Powell reiterated that a US CBDC continues to be on the radar, whilst also opening the door for private firms to get involved in the endeavour.
These developments are further backed on by positive statistical data. Glassnode’s investor sentiment index is gaining, open interest on bitcoin futures is increasing and short positions are unwinding. The combination of strong fundamentals and positive news for the cryptoasset are providing the rocket-fuel needed for bitcoin’s blast-off.
David Derhy, analyst, eToro: Look to $20,000 instead of back at $12,000
As Simon highlighted, the current run could simply push through all the way to $14,000. If that is the case, then the next level from a technical and fundamental perspective would be $20,000. With the US election coming up next month, further economic stimulus from the government is going to happen even if the size of that stimulus is still up for discussion. I am of the view that we won’t see a drop back down below $12,000 for a while yet.
With the reduced volatility we are seeing, institutional investors are more and more interested in buying bitcoin. Combine this with the host of listed companies also looking to add bitcoin to their balance sheets, and the springboard for bitcoin prices continues to look very positive.
Simon Peters, analyst, eToro: Stimulus fears could stoke the fire for Bitcoin
With the ‘if’ of economic stimulus in the US out of the way, what matters now is the ‘how much’ and the ‘where’. How much money is the US government going to be pumping into the economy? What areas will they target and does that strengthen the use case for bitcoin? As David mentioned, the size is dependent on who wins the election, but any outcome will almost certainly lead to stimulus. If the Fed will be funding this by adding US treasuries to its balance sheets, then this would surely reinforce the argument for bitcoin as an alternative currency. Both sides have also agreed for another stimulus check of $1,200 to every citizen, but the rest will most likely go towards preserving jobs.
Bitcoin SV long-term Price Analysis: 26 October
Disclaimer: The findings of the following article are the sole opinion of the writer and should not be taken as investment advice
While Bitcoin rallied above $13,000 once again, at press time, a few other altcoins were also making a dash for their immediate resistance levels. 10th-ranked Bitcoin SV’s price rose by 12.46 percent over the past one week, with a relatively high spike of 4.36 percent over the past 24 hours. However, the rally might note a period of turbulence soon.
Bitcoin SV 12-hour chart
At the time of writing, the 12-hour chart for Bitcoin SV was keeping up with the ascending triangle pattern and it seemed like the eventual breakout above $200 might take a while. As identified by the chart, the price did register a re-test of the parallel trendline of the pattern, but it did not complete a complete breach. With the price hovering right under $180, at press time, there was a high chance that the price would attain a breakout from the ascending triangle over the next few days, but the turnaround can be more drawn out as well.
At the time of writing, Bitcoin SV was receiving the underlying support of the 50-Moving Average, but a retest at $165 remained a possibility.
According to Stochastic RSI, the breakout downwards might surface within the next few days as the bearish indicator closes in on a crossover with the bullish line in the overbought zone.
Bitcoin 1-day chart
The 1-day chart for Bitcoin SV highlighted a rising wedge pattern, one that falls in line with the eventual bearish movement. While the breakout from the pattern might not take place over the current week, a pullback under $170 should unfold soon.
The price range between $180 and $170 appeared crucial as the crypto-asset has hardly noted higher consolidation at this range.
Finally, the On-balance volume, at press time, was dropping below the neutral zone, hence, the retail side might be exiting the market as strong hands might need to dip in again to pump the price. Speaking about volume, trading volume was extremely minimal as well, keeping the price movement highly volatile and unsure.
Treasury official appointed to crypto-risk management platform
Prominent Risk Management platform TRM Labs has appointed former Treasury Official Ari Redbord to a critical role. Former Treasury official Redboard, well known for his work on the Treasury’s FinCEN taskforce, will now represent TRM as its head of government and legal affairs. This appointment is the latest move by the Federal government in their […]
Prominent Risk Management platform TRM Labs has appointed former Treasury Official Ari Redbord to a critical role. Former Treasury official Redboard, well known for his work on the Treasury’s FinCEN taskforce, will now represent TRM as its head of government and legal affairs. This appointment is the latest move by the Federal government in their bid to regulate Cryptocurrency platforms.
The Co-founder of TRM, Esteban Castaño, said that the firm’s data could be essential in the Treasury’s ongoing war with financial fraud. He went on to say that TRM could offer valuable insight into the risks that pervade cryptocurrency markets, protecting consumers and businesses.
Ari Redbord’s previous work at the Treasury included working as an advisor for the undersecretary for Terrorism and Financial Intelligence. While his work with FinCEN focussed primarily on cryptocurrency markets and similar concerns, making him more than qualified for the position at TRM.
Appeasing The Treasury?
When asked whether Redbord’s appointment to head of government and legal affairs indicated a shift in favor of government regulation, Castaño became defensive and acted quickly to quash any doubts over the position. He insisted that TRM’s focus would not be on “being the long-arm of the law” and emphasized that the move would mean less government regulation of cryptocurrency platforms. :
“…a company like TRM allows for less regulation, quite frankly, by allowing governments around the world to be more comfortable than they can identify suspicious activity and get those bad actors out of this.”
The Treasury and other regulators have made numerous moves in recent weeks that would enable greater control of cryptocurrency platforms by the Federal Government. This push is part of a well-documented effort to combat money-laundering and other financial crimes on cryptocurrency platforms. The crypto community will likely see Redbord’s appointment as the US is coming one step closer to achieving that goal.
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