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‘Warren Buffett’ Index Predicts Stocks Crash — How Will Bitcoin React?

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The “Buffett Indicator” is hinting that the United States’ stock market is currently at dot-com bubble levels, Yahoo Finance reported on Aug. 20. The indicator divides the Wilshire 5000 Index by the GDP of the U.S.

Meanwhile, on Aug. 14, Warren Buffett-led Berkshire Hathaway invested in Barrick Gold, the second-biggest precious metal miner in the world. Some analysts said it could benefit Bitcoin (BTC) in the long term as it coincides with this stock market bubble alarm.

The historical average of the indicator is 1, and before the dot-com bubble, it hovered at 1.71. Currently, the Buffett Indicator is reportedly at 1.7, signaling that the stock market is highly overvalued.

If the U.S. stock market slumps as investors fear the overvaluation of equities, Bitcoin could see a major reaction.

Does this provide any glimpse into Bitcoin’s long-term trend?

According to Tom Essaye, the founder of Sevens Report Research, stocks are considered as “fundamentally overvalued” when the Buffett Indicator hits 1.3. 

The current level of 1.7 indicates that there is a potential for a steep downtrend in the stock market if the trend reverses. He explained:

“What does that mean for us? It means stay long stocks in longer-dated accounts, and make sure you own assets (such as a house, etc.). But it also means this asset inflation cycle better not stop, because as the 1.7 times total market cap to GDP ratio tells us if asset inflation stops, it’s a long, long way down to fundamental support.”

Throughout the past four months, Bitcoin has shown some correlation with the S&P 500 and gold. Since late July, due to the decline in the U.S. dollar, BTC has more closely followed the price of the precious metal.

An argument could be made that a potential pullback in the U.S. stock market could strengthen Bitcoin’s momentum. Some institutions have started to consider Bitcoin as a legitimate store of value, causing institutional inflows into BTC to spike.

The correlation between Bitcoin and gold

The correlation between Bitcoin and gold. Source: Skew.com

The correlation between Bitcoin and the S&P 500 broke slightly in the past week, as stocks continued to surge. The price of BTC rejected at $12,400, recording an 8.6% drop to as low as $11,370. 

The deteriorating correlation between Bitcoin and the U.S. stock market, and the simultaneous slump of BTC and gold, buoy the bull case for BTC when stocks decline.

What do technical analysts think in the near term?

In the short term, technical analysts are cautiously anticipating a consolidation phase for Bitcoin. 

A potential short-term scenario for Bitcoin

A potential short-term scenario for Bitcoin. Source: Michael van de Poppe

Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said dropping below $11,500 again could lead to a bearish divergence. He said:

“Well, on the daily timeframe we’ve arrived at the crucial level to hold for further upwards momentum. White small square Bearish divergence only gets confirmed if we lose this $11,500 zone. White small square Holding here = bounces on altcoins. White small square In general still altseason and alts continue.”

Robert Kiyosaki, the best-selling author of “Rich Dad Poor Dad,” also said that a banking crisis is coming. Emphasizing that Buffett has trimmed his positions in major U.S. banks, he hinted gold, silver, and Bitcoin could see significant gains as safe-haven assets.

The confluence of a tightening correlation between Bitcoin and gold and the rally of the stock market could raise the likelihood of a BTC uptrend when stocks begin to fade.

Source: https://cointelegraph.com/news/warren-buffett-index-predicts-stocks-crash-how-will-bitcoin-react

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Cardano long-term Price Analysis: 29 November

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Disclaimer: The findings of the following article are the sole opinion of the writer and should not be taken as investment advice

Cardano recorded a stark surge in its price, despite its drop of 30% following Bitcoin’s correction on the charts. Altcoins are the ones that suffer the most due to Bitcoin’s volatility and the same has been true in ADA’s case.

However, what’s different is that Cardano’s bounce since the drop – the 30% drop – was almost fully retraced over the next 2 days. This underlined the strong buyback for ADA, one that was backed by a good volume surge on the charts.

At the time of writing, ADA’s outlook seemed 50-50. The cryptocurrency’s price was just above the 61.8%-Fibonacci level and could go either way.

Cardano 4-hour chart

Source: ADAUSD on TradingView

The 4-hour chart had Fib extensions, the moving averages, and indicators to it. While there was no pattern to it, ADA’s chart seemed eager to surge higher. A bounce from the 61.8% level could take ADA higher. However, failure to respect this level could push ADA down to the 50% level, which was at $0.1442.

Rationale

Since the odds seemed equally skewed, considering ADA’s correlation with BTC might help break it. At press time, the 60-day correlation between ADA and BTC had surged from 0.276 to 0.50.

Such a stark surge in correlation meant that ADA will promptly follow where Bitcoin goes. Since Bitcoin did show a bearish outlook, we can expect ADA to head south as well.

Additionally, there was the confluence of moving averages 50, 100, and 200. There hadn’t been a reversion to the mean between the price and these MAs. Hence, this supported the bearish scenario.

The OBV indicator showed a good surge in volume for the second wave, however, it still seemed to be lower than the previous surge. The RSI was testing the overbought zone yet again. A failure at this level would be higher, hence, a short position will make sense.

Levels to look out for

Entry: $0.162438
Stop-loss: $0.173178
Take-profit: $0.144140
Risk-to-Reward: 1.7

Source: https://eng.ambcrypto.com/cardano-long-term-price-analysis-29-november

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Ripple Plans To Cash Out 33% Of Its MoneyGram Stake With A Significant Profit

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  • The San Francisco-based payment protocol has filed a document on Friday with the US Securities and Exchange Commission (SEC). It reads that Ripple Labs has entered into an agreement with MoneyGram, which entitles Ripple to sell up to 4,000,000 shares of common stock.
  • Ripple’s option to sell these shares will expire “upon the earliest of March 31st, 2021, the time at which the maximum amount shall have been sold, or the occurrence of certain other customary events affecting the issuer.” 
  • CryptoPotato reported last year that Ripple and MoneyGram announced a strategic partnership. The initial term of the agreement was for two years. Ripple had agreed to provide a capital commitment amounting to $50 million in exchange for equity through the two-year period.
  • As per the SEC filing, Ripple owns 6.22 million shares of the giant money transfer company (or 8.6% of shares outstanding). However, the blockchain company has a warrant to buy up to another 5.95 million shares, amounting to a total equity position of 12.2 million shares or 17% of MoneyGram’s shares outstanding).
  • With the initial investment in 2019, Ripple purchased the MoneyGram shares at 4.10 per stock, which was a significant premium to the market price. 
  • Nevertheless, MoneyGram’s stocks (MGI) have surged in 2020, closing Friday’s session at $7.42. As such, Ripple can cash out with an 80% profit, despite the initial premium.
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Source: https://cryptopotato.com/ripple-plans-to-cash-out-33-of-its-moneygram-stake-with-a-significant-profit/

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South Korea To Postpone Previously Planned Crypto Income Tax

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Lawmakers in Korea are planning to postpone a recently considered tax on crypto assets profits. Reports say the tax rule delay will be about three months – instead of October 2021, January 2022.

The New Crypto Income Tax Rule To Wait Until January 2022

According to a recent media report, the South Korean congress plans to put off the recently considered cryptocurrency income tax rule. A planning and finance committee of the National Assembly has issued a report, which proposes the necessity of implementing the crypto income tax rule from at least 2022.

A few months ago, in July, a report stated that South Korea’s Minister of Finance and Economy believes that the country should come up with a tax on cryptocurrency trading and investing. Back then, he added that South Korea has been in discussion with other countries about introducing a new digital law.

In July 2020, the country’s Ministry of Economy and Finance amended its tax code, where it included the plan for charging residents a 20% tax on gains from cryptocurrency trading, which are worth more than 2.5 million Korean won (about $2,000).

Lawmakers in the National Assembly are to approve the Government’s plan, which was to carry into effect the cryptocurrency income tax rule from October 2021.

Reason For The Delay – Time Is Tight

As per the media report, the reason for the postponement of the crypto tax law is based on some concerns, raised by local crypto exchanges. They have claimed the lack of time to build their proper tax reporting system and infrastructure, needful for the process to begin.

The so-called “Specific Financial Information Act” would be enforced from March next year, so crypto exchanges have to complete the necessary reporting system by September 2021 for verifying their real names of deposit withdrawal accounts.

As CryptoPotato reported, South Korea announced the planning of the crypto income tax in June this year. The Asian country went through some different views on how and whether it should tax profits from cryptocurrency. Firstly, at the beginning of 2020, the Ministry of Economy and Finance did not consider that digital asset trading gains as taxable income. A month later, another local report said the Ministry believes that the nation could start label cryptocurrency trading profits as “other income.”

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Source: https://cryptopotato.com/south-korea-to-postpone-previously-planned-crypto-income-tax/

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