Bitcoin has been all over the map since mid to late October.
The price of one bitcoin rose from $7,300 to $10,350 in the three days to Oct. 26, only to fall back to a six-month low of $6,515 earlier today.
Following the round trip, skeptics are decrying bitcoin's extreme volatility and downplaying its appeal as a store of value. A few are calling the U.S. dollar a better store of value.
The greenback seldom witnesses bitcoin-like volatility and could be a better store of value in the short term. The long-run story, however, is different.
Since 1800, the dollar's purchasing power has lost an average 1.39 percent per year, based on the consumer price index published by the U.S. Bureau of Labor Statistics.
Meanwhile, bitcoin's inflation rate is set to drop to 1.8 percent following the May 2020 reward halving, from the current 3.8 percent. Put simply, the cryptocurrency's inflation rate will be lower than the 2 percent inflation target adopted by the Federal Reserve and other major central banks.
The cryptocurrency, therefore, could turn out to be a better store of value over the long run.
Trader and analyst Luke Martin says investors should consider a longer time horizon when assessing an asset's ability to store value. |
 
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Corrective Bounce
BTC: Price: $7,200 | Market cap: $130 Billion | 24-Hr Volume: $48 Billion
Trend: Consolidation likely Bitcoin is looking oversold, as indicated by the below-30 reading on the relative strength index, having dropped 50 percent from the 2019 high of $13,880 reached in June.
An oversold reading does not necessarily imply a bullish reversal, but it does suggest that prices have gone to the extreme in the short term – an overstretched move to the downside, typically followed by a temporary pause or minor bounce.
This is exactly what's playing out in the market. Bitcoin is currently trading at $7,200, having bounced off a six-month low near $6,500 during the Asian trading hours. Now, market signals indicate that the cryptocurrency will likely consolidate in the range of $6,500-$7,500 for some time.
This is because investor confidence tanks during a bear market and V-shaped recoveries are rare. If the bounce to $7,200 seen in the last few hours is reversed with high volumes, a deeper price drop to $6,000 is possible, although that looks unlikely at press time.
Long-term trend: Neutral
Typically BTC picks up a strong bid six months ahead of the reward halving, but that hasn't happened yet, somewhat neutralizing the bullish outlook.
That said, the recent slide is viewed as a buying opportunity by analysts including Joseph Young and Josh Rager.
A bullish reversal would be confirmed if and when BTC breaks higher from the five-month long falling channel. Read Analysis
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Synthetix To Follow Bitcoin SNX: Price: $1.39 | MCAP: $202.01 million | 24-Hr Volume: $730,269
Short-term trend: Overbought SNX is one of today's best performing crypto assets in the top 100, according to Messari and CoinMarketCap data.
Its rise can likely be attributed to the crypto markets' wild fluctuations as of late with SNX's prices able to track currencies, cryptocurrencies and anything else. It does this with the same kind of system that some stablecoins use to maintain their value.
Market conditions for SNX, however, are currently overbought, as demonstrated by the daily relative strength index, a lagging indicator illustrating trader sentiment and momentum.
Expect prices to retest the 21-period exponential moving average (EMA) at $1.05 should conditions break down. Long-term trend: Overbought
Volume has picked up significantly in recent days, beginning Nov. 17, which saw the largest injection into its market in over 24 days. However, as always, caution is warranted as a period of profit-taking is likely to set in on the back of BTC's latest selloff.
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| | | Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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Store of Value? Really?