Recently, Bitcoin seems to be in a dilemma. Although the price of Bitcoin seems to be extremely volatile, the cryptocurrency has been in a period of consolidation in the past two weeks, after briefly hitting a high of $7,470. Hovering between the high zone of $6,000 and the low zone of $7,000. Next, where will Bitcoin go?
For a long time, people have been skeptical about the basic value of cryptocurrencies. They listed Bitcoin’s “slow” transaction speed, Ethereum hacks, and other “shortcomings” in the industry, claiming that this asset class has no future. However, in today’s turbulent world, the macroeconomic landscape is developing, especially cryptocurrencies, especially Bitcoin.
According to a report published by Bloomberg, Bitcoin is building up power for a large-scale bull market. The report emphasized that 2020 will be the year when Bitcoin becomes digital gold. “This year is a key test of Bitcoin’s transition to a quasi-currency like gold, and we expect it to pass this test.”
The number of people interested in blockchain and cryptocurrency is increasing
According to a survey conducted by Paxful, a global P2P bitcoin trading market, Americans who have knowledge of cryptocurrencies have shown increasing interest in blockchain technology and cryptocurrencies. This group of people is increasingly viewing digital assets as a substitute for the “defective” traditional financial system.
According to a research report released on April 23, cryptocurrency is maturing as an asset. Nearly 50% of respondents believe that emergencies within the traditional financial system will serve as an opportunity to help people shift their attention to Bitcoin as an alternative.
According to the survey, the most common uses of Bitcoin include real-life payments (69.2%) and combating inflation and corruption (50.4%).
Artur Schaback, chief operating officer and co-founder of Paxful, said in an interview: “It is worth noting that many people believe that mainstream adoption will be achieved in the next 6 to 10 years. On the contrary, some respondents believe that the same The cryptocurrency bubble will burst within a short time. I have hope for the first situation, so I think that as an industry, we should strive to create more products and apply more products to real-life use cases. Help accelerate mainstream adoption.”
In the context of the global new crown pandemic, Paxful believes that both cryptocurrency and traditional financial systems are being tested, which explains to a certain extent why the price of BTC is rising as BTC becomes a safe-haven asset.
Schaback emphasized that compared with before, people’s awareness of Bitcoin is undoubtedly higher now. “I remember when we first started, no one knew about Bitcoin and even thought of the word’Bitcoin’. However, from the survey results this year and last year, more people have heard of Bitcoin. More people associate it with different concepts such as currency and technology. We still have a long way to go, but I am eager to see more products that will help to mainstream.”
Regarding the barriers to adoption, the survey also emphasized that 53.8% of respondents believe that lack of relevant knowledge hinders the popularization of cryptocurrencies.
According to the report, respondents believe that the main factors that help increase the adoption rate are mobile mining, the recovery of altcoins, institutional investment and corporate use of blockchain technology.
Paxful’s COO commented on the future challenges: “The biggest challenge is still the knowledge about cryptocurrency itself. We know that more people have heard of it, but I think it’s the wrong reason, such as gambling and Level scam. Because of these, the mainstream audience still has a sense of fear. As an industry, this is our biggest challenge.”
Bitcoin futures continue to recover
After experiencing the decline in trading volume in the previous few weeks, Bitcoin futures trading volume has begun to rebound. According to CME’s latest data, its products hit a new high last month in terms of active accounts, with a compound annual growth rate of 161%.
According to reports, the U.S. regulator, the Securities and Exchange Commission (SEC) confirmed that the Medallion Fund (Medal Fund) under Renaissance Technologies can now enter the booming Bitcoin futures market. This fund is known for its outstanding investment return performance so far this year.
According to the information, Renaissance Technology will provide CME Group’s cash-settled bitcoin futures contract, CME is one of the two earliest bitcoin futures providers.
The $10 billion hedge fund under the Renaissance has recently made a name in the media. Although the new crown virus has plunged global markets into continuous turmoil, the fund has achieved 24% growth so far this year. According to CNBC, the management scale of the Medal Fund is around US$10 billion, equivalent to approximately RMB 70 billion. Estimated with a management scale of tens of billions of dollars, this year’s revenue is about 3.9 billion US dollars, equivalent to nearly 30 billion yuan; after deducting management fees and performance sharing, the fund has a net profit of about 2.4 billion US dollars, equivalent to nearly 17 billion yuan.
According to the Wall Street Journal, as of April 14, the medallion fund has a cumulative yield of 39% this year. Even in the March market “Great Falls” that Buffett hadn’t seen in his lifetime, the Medal Fund still earned 9.9%. In the same month, the S&P 500 fell 12.51%, and the Dow fell 13.74%, both hitting the biggest monthly decline since October 2008.
There is no doubt that this medallion fund, which has never lost money since its inception and can also obtain back-to-day returns during the economic crisis, represents the recognition of traditional capital in the cryptocurrency market, and it is bound to bring huge benefits to the CME Bitcoin futures market. fluidity.
Unlimited easing policy may stimulate Bitcoin counterattack
Despite the strong rebound in asset prices, including cryptocurrencies, the outlook for the global economy remains worrying. In the past five weeks, 26 million workers have applied for unemployment in the United States alone. At the company level, research companies expect the company to lose trillions of dollars in revenue.
Therefore, it is not surprising that central banks and governments around the world have made efforts to save people, companies, and entire companies.
In order to alleviate the threat of economic recession faced by the United States due to the impact of the epidemic, the Fed has unprecedented “big move”. On the evening of March 15, the Fed cut interest rates to zero and launched a large-scale quantitative easing program of US$700 billion. On March 17, the Federal Reserve launched the Commercial Paper Financing Facility (CPFF) and the Primary Dealer Credit Mechanism (PDCF) to provide liquidity for commercial paper issuers. On March 23, the Federal Reserve issued an unlimited quantitative easing (QE) policy and began to “buy” almost all credit products on the market except for stocks to provide sufficient liquidity support for the market.
Many people believe that the successive actions of the Fed just highlight the seriousness of the US situation.
The Bank of Japan (BOJ) also confirmed this trend. According to Nikkei Asian Review, citing people familiar with the matter, the Bank of Japan is seeking unlimited purchases of Japanese government bonds in an attempt to stimulate the economy. It also hopes to expand its quantitative easing program to double the purchase of corporate bonds and commercial paper.
Although the United States has launched a limited bond purchase program, Max Bronstein, a member of the institutional investment team of the cryptocurrency exchange Coinbase, asserted that “the current system has completely collapsed.”
More and more people believe that decentralized and relatively scarce crypto assets will benefit from this trend toward unknown currency and fiscal fields compared to the fiat currencies of central banks.
Former Goldman Sachs executive and hedge fund manager Raoul Pal explained in the April edition of the “Global Macro Investors” newsletter that he thinks we are likely to see “our monetary system fail” or “the current financial structure collapses.” “.
Bitcoin will greatly benefit from the transition from a legal system to a digital ecosystem. Regarding Bitcoin, Pal wrote: “This is a complete, trusted, verified, secure, financial and accounting digital value system. The future of our entire trading system, the currency itself and its operating platform does not stop there. “
He added that Bitcoin is likely to reach $100,000 in the next two years, and even throw a cap of $1 million when the macro outlook changes dramatically.
After the “unlimited quantitative easing” policy, will Bitcoin still become a “safe-haven asset” under the financial crisis? In this regard, Mike Novogratz, CEO of Galaxy Digital, also predicted that Bitcoin may follow gold with a significant price breakthrough, mainly because these two assets are essentially scarce.
Xu Yingkai, the founding partner of BlockVC, said on Weibo that Bitcoin’s 3,800 USD is likely to be the bottom of the market’s decline. After Bitcoin’s halving (1-2 months later), the market began to fully recover. After the halving was completed, due to the cliff-edge The decline in revenue will concentrate a wave of miners, but the daily new market selling pressure has also doubled year-on-year, and the “death spiral” is expected to gradually weaken.
However, some people in the industry pointed out that “safe-haven assets” is an older concept, but considering that Bitcoin has a vast market and its liquidity is much stronger than other traditional varieties, the future demand will definitely continue to rise. Therefore, after the crash, Bitcoin will surely recover faster than traditional American assets. From this point of view, Bitcoin can still have a better prospect, but from the current market perspective, there is no risk aversion.
In fact, after a short-term plunge in Bitcoin, this price is very attractive in the medium and long term, and may be the starting point for the next bull market.
Bitcoin is gathering power for the future bull market
A report published by Bloomberg stated that Bitcoin is accumulating power for the bull market. Even the headline of the report expressed a clear bullish view-”Bitcoin Maturity Great Leap Forward”. Bloomberg believes that this year Bitcoin will complete the key test of the transition to a quasi-currency like gold.
The report mentioned a series of reasons why the Bitcoin market is maturing. The report also affirmed that “if history can be used as a guide, Bitcoin is gaining relative fuel as the stock market resets.”
In addition, Bloomberg said that Bitcoin and gold, two safe-haven assets in people’s eyes, are expected to benefit the most from the recent market turmoil induced by the new crown pandemic.
But according to a well-known cryptocurrency analyst, if Bitcoin reaches a certain price point, it may trigger a market spree, in other words, the currency price skyrocketed.
Last Saturday, 200,000 Twitter followers and a trader named CryptoYoda released his latest technical analysis series, in which he explained that the Bitcoin market structure tends to fall due to the formation of a wedge-shaped rise and the Shoulder patterns—two bearish signals defined by textbooks—but Bitcoin’s breakthrough of $7475 will overturn this situation, “forcing shorts to clear their positions while encouraging longs to buy these positions”:
“Breakthrough at such a high level will lead to large-scale short covering, and the volume of buy orders will drive a strong rebound, especially if buyers have already entered through the previous low resistance level.”
What he wants to explain is that if Bitcoin successfully breaks through, it can prove that the current sideways trade is not a hint of the top, but a process of consolidation and continued upward movement, which may reach $8,000 or even higher.
Avi Felman-a trader and analyst at the crypto asset fund BlockTower-observed two technical signals last Friday that clearly indicated that Bitcoin prices will soon undergo a correction:
Demark sequence (Tom Demark Sequential) is a time-based indicator, in the 3-day candlestick chart appears a continuous count sequence of selling. The same situation occurred in the previous two times when the currency price bottomed in mid-March and December 2019, but it reached the top of $10,500 earlier this year.
Ethereum currently seems unable to break through the 50-day and 200-day moving averages of the 3-day candlestick chart.
In addition, DonAlt stated that although the recent daily line did not show a “strong downward trend”, it was “extremely close to the unfolding of Bitcoin at the top of $10,000.” He pointed out that the price trend of Bitcoin was different from that in February Similarity in current structure.
A Bloomberg report “Bitcoin Maturity Jump” reported that Bitcoin is preparing for a large-scale bull market. In the report, the author elaborated on the correlation between Bitcoin and the S&P 500 index, gold, zero and negative interest rates. According to the report, the stock market turbulence accelerated the transition of Bitcoin to “digital gold”.
In 2020, it will be judged whether Bitcoin can transform from a risky speculative asset into a “digital gold”. From the perspective of volatility, Bitcoin’s volatility seems to have declined, while the stock market’s volatility has begun to rise. Such a market reaction will also allow more people to transfer funds to encrypted assets.
Post time: Sep-27-2020