The bitcoin market is uncharacteristically calm, even as analysts say a fresh wave of coronavirus could lead to more government stimulus - that could bolster BTC's inflation hedge narrative and send prices to $50,000 or even higher, predicts Bitwise.
Bitcoin miner Ebang makes plans to launch an exchange, just as the party begins to end for Compound token holders.
MARKET MOVES
Bitcoin has traded in an ever-tightening range for two months, and digital-market analysts say a new wave of coronavirus cases and emergency measures could provoke the largest cryptocurrency by market cap out of the doldrums.
The backdrop is an anemic economy, with the International Monetary Fund projecting last week that global output will shrink 4.9% this year: worse than its April forecast for 3% contraction. Confirmed deaths from the coronavirus passed half a million on Sunday, and authorities from China to the U.S. states of Florida and Texas enacted new restrictions to curb rising caseloads. The World Health Organization has also warned that the worst is yet to come.
Volatility is rising in the U.S. stock market, with the Standard & Poor's 500 Index still just 10% off the record high reached in February. Yet bitcoin has been stuck between $8,500 and $10,200 since late April, a remarkably placid stretch given the ongoing tribulations.
For bitcoin traders, it might not be the best time to sneak away for vacation.
"With more uncertainty in the stock market again and a monthly close coming up, we may face increased volatility going into July," analysts with the cryptocurrency-analysis firm Arcane Research wrote Friday in a report.
Bitcoin's stretch of calm is evident in price charts focused on a statistical pattern known as Bollinger Bands, which narrow when volatility shrinks. The bandwidth as of Monday had narrowed to 0.09, close to its lowest level in 2020.
Stock traders are struggling to reconcile U.S. Treasury Secretary Steven Mnuchin's predictions of a "spectacular rebound" later this year with Federal Reserve officials' warnings that the timing and strength of the recovery are uncertain.
Chart showing bitcoin's declining volatility, compared with the Standard & Poor's 500 Index of U.S. stocks (CoinDesk Research)
Big cryptocurrency investors including Pantera Capital and Bitwise Asset Management say bitcoin prices could benefit from the next wave of government and central-bank stimulus packages, which might be needed to prevent deeper economic fallout.
Due to its capped supply of 21 million, bitcoin is often touted as a hedge against inflation, similar to gold.
"The Fed is buying everything that isn’t nailed down," the cryptocurrency investment firm Arca wrote Monday in a weekly newsletter. "Naturally, even the most bullish investors remain somewhat cautious with regard to when all of this unwinds."
Based on one popular investment model, known as the "stock-to-flow ratio," bitcoin could rise to $115,000 by August 2021, according to Pantera. On Monday, the cryptocurrency changed hands at $9,151.
The "tsunami of money will have a large impact," Pantera wrote last week in a monthly newsletter. "If there are trillions more paper dollars, the law of supply and demand implies much more paper money to buy the same amount of cryptocurrency."
Matthew Hougan, global head of research at Bitwise, wrote in a monthly investor letter on June 15 that bitcoin could reach $50,000 if its market capitalization reached just 10% of gold's roughly $9 trillion.
"It's a matter of when, not if," Hougan told First Mover in a follow-up email.
Analysts with the digital-asset research firm Delphi Digital wrote Friday that "we're rapidly approaching a key inflection point as policymakers debate if and when to deploy their next wave of relief measures."
"One could argue the broader macro backdrop has never been more favorable for bitcoin," according to Delphi.
Anything to break up the monotony.
– Bradley Keoun, Editor of First Mover
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Trend: Bitcoin’s price bounce from the weekend low of $8,830 could well be short-lived, price-volume analysis indicates.
The leading cryptocurrency by market value is currently trading near $9,150, representing a 3% decline on a month-to-date basis. Prices clocked a high of $9,233 early Tuesday.
The recovery from sub-$9,000 saved the day for the bulls. After all, acceptance under that level would have marked a downside break of the multi-week long trading range of $9,000 to $10,000 and could have fuelled steeper price declines.
However, the relief could be temporary as the uptick from $8,830 to $9,233 is accompanied by a drop in trading volumes, as seen on the hourly chart. A low-volume bounce is often short-lived.
Also, the price rise seen over the past two days has taken the shape of a bear flag, a bearish continuation pattern. A break below the lower end of the flag, currently at $9,100, if confirmed, would create room for a sell-off to $8,150 (target as per the measured move method).
The bearish pattern would be invalidated if prices rise above the hourly chart resistance at $9,344. That would shift the focus to the highs of $9,800 seen last week.
Ethereum is Broken and I love it (Hacker Noon) "I sincerely believe that a global computer network that is evolved from the ideas in Ethereum is going to play a major role in the future of technology," writes security professional and Hacker Noon contributor Max Veytsman.
How to place a value on bitcoin? Its data are unfamiliar territory for many investors. Nearly half of investors in a recent survey said a lack of fundamentals keeps them from participating.
In a 30-minute webinar July 7, CoinDesk Research will explore one of the first and oldest unique data points to be developed by crypto asset analysts: Bitcoin Days Destroyed.
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.
Bitwise Calls $50K Bitcoin Price When Market Calm Finally Breaks