Bitcoin
PayPal Didn’t Shoot Bitcoin Above $13,000, Analyst Explains Why
On Wednesday, Bitcoin logged a supersonic bull run, hitting $13,000 for the first time in 15 months. The rally started after PayPal announced its foray into the cryptocurrency sector, leading analysts to believe that the $138 billion global payments firm drove the latest Bitcoin adoption.
But at least one of them disagreed. In a tweet published earlier Thursday, the pseudonymous analyst claimed that Bitcoin went upwards because of an abundant supply of Tether’s stablecoin, USDT.
“I don’t believe that the recent BTC rise occurred due to the PayPal news,” he said. “It more looks like a “Xi-pump” in October 2019.”
Bitcoin surged by $3,000 in October 2019 after Mr. Jinping’s blockchain endorsement. Source: BTCUSD on TradingView.com
With “Xi Pump,” the analyst was referring to a Bitcoin price rally in October 2019. Back then, China’s premier Xi Jinping endorsed the cryptocurrency’s underlying blockchain technology in a public event. That shortly followed a 40 percent price surge, a move that later reversed its direction entirely amid renewed sell-offs.
Tether Not PayPal
The pseudonymous analyst noted that the PayPal pump is no different than the Xi one. They both coincided with an increasing supply of USDT. It means that the capital that was already inside the cryptocurrency market got channeled towards Bitcoin. No significant money entered the space from the outside.
Pitting Tether’s market capitalization against the Bitcoin price trends showed a stark correlation between the two. The analyst noted that an increase in USDT supply always led to the BTC/USD rates higher. But when the stablecoin’s curve flattened or dropped, BTC/USD plunged in tandem.
Bitcoin-Tether correlation, as presented by Crypto Hamster. Source: USDT on TradingView.com
“New tether printed –> bitcoin goes up; tether capitalization drops –> bitcoin drops too; tether seems to be leading,” the analyst wrote.
Wait-and-Watch Mood
The cautious tone propelled by the pseudonymous analyst appeared well-spread across the cryptocurrency market. A prominent daytrader favored the PayPal-led Bitcoin price rally but expressed constraints over the crypto’s ability to hold $13,000 as its new support.
“Until BTC closes and holds above $13K, I’m not betting on ATH test,” he said. “Paying close attention, IF (ONLY IF) I trigger short set-ups in the coming days around or above that level, I will be inclined to hold as a short swing. I could see the corn go as low as 8k area worst case.”
Another daytrader reminded the community about the missing candles on the CME Bitcoin Futures chart near $11K. The community believes that Bitcoin fills those so-called gaps 98-99% of the time. That means the crypto could correct lower towards the $11,000-region.
“They will eventually be filled, which is why I think entering long term buys above 13K is a terrible idea,” the trade wrote.
Bitcoin was trading at $12,790 at the time of this writing, down 3.5 percent from its year-to-date high.
Bitcoin has had an explosive breakout year as a maturing financial asset,. The cryptocurrency is finally being considered by institutional investors for the first time, during a year that will go down in history for unprecedented money printing.
The asset’s hardcoded digital scarcity is a primary driver of its boom and bust cycles, and in the year following each block reward halving, magic happens. With the new year right around the corner, here’s a look back at past crypto market cycles for a glimpse at what to expect from Bitcoin in 2021.
Looking Back At Historical Bitcoin Market Cycles
All markets are cyclical and go through distinct phases of bear and bull trends. These cycles can take place over the course of decades, or a handful of years. In crypto, cycles often move faster than traditional assets due to the always-on, 24/7 market.
But because Bitcoin is just over a decade old, there are only a couple of boom and bust cycles at which to glean any useable data. In technical terms, when Bitcoin breaks its former all-time high, the new bull market is on.
Fundamentally, this occurs every four years following the asset’s block reward halving. This built-in mechanism slashes the supply of BTC in half at a time when demand is beginning to resume.
RELATED READING | NY TIMES BESTSELLING AUTHOR: BITCOIN S2F IS FLAWED, NOT MATHEMATICALLY SOUND
The combined effect of suddenly diminished supply and growing demand throws buying and selling equilibrium so out of balance that price appreciates exponentially.
2020 has acted as the ideal example of the impact each halving can have on the market. Bitcoin went from “a fad” to full-blown FOMO in less than nine months, all because supply and demand is so favorable to positive ROI.
And while 2020 was definitely a breakout year for a bullish Bitcoin, it is next year that will make a new wave of Bitcoin billionaires.
Halving years are marked in blue. In the year following, the cryptocurrency goes full parabolic | Source: BLX on TradingView.com
Move Over 2020, Why 2021 Will Be The Cryptocurrency’s Best Year Yet
Glancing at the chart above and it’s shocking to see just how high Bitcoin has climbed in twelve years. During the twelve years of trading, the cryptocurrency has had three distinct halvings, cutting the reward miners receive from 50 to 25 BTC, then from 25 to 12.5 BTC, to the current 6.25 BTC.
Each time this happens, demand begins to so drastically outweigh the limited supply, the asset goes parabolic and rises exponentially.
RELATED READING | BITCOIN BULL RUN IS OFFICIAL ACCORDING TO MONTHLY RSI, MORE BULLISH THAN 2017
In the two post-halving years on record, the first resulted in well over 6,000% ROI and the second just under 2,000% ROI. What could 2021 bring crypto investors?
Another 2,000-6,000% return isn’t likely simply due to the law of diminishing returns, however, even a 400% increase from current levels would result in a price of $125,000 per BTC.
Featured image from Deposit Photos, Charts from TradingView.com
A downside correction in the Bitcoin market at the beginning of this week may prepare a fresh run-up towards $30,000, says Teddy Cleps.
The independent market analyst tweeted a technically bullish set up on Monday, projecting the Bitcoin price in a trend continuation pattern. In the chart, traders can observe the cryptocurrency consolidating inside a Triangle-like structure following its parabolic upside move above $28,000 on Sunday.
Bitcoin bull run setup, as presented by Teddy Cleps. Source: BTCUSD on TradingView.com
It appears like a potential Bullish Pennant, which could technically send the Bitcoin price higher by as much as the rally that preceded its formation — aka “flagpole.” It is around $3,652 long, as measured by Bitcoinist. Therefore, the bitcoin price has a great potential of hitting $30,000 should it break the Pennant to the upside from its apex.
“The rejection from $28,000 was just telling us where the next triangle started,” said Mr. Cleps. “Let it consolidate, let it reach an apex, let it break out, and then show us the way to $30,000.”
Fundamentals
The bullish analogy surfaced as Bitcoin achieves one record high after another. The cryptocurrency reached a new one of $28,387 on Sunday as traditional markets remained close for the Christmas holiday. Meanwhile, the aggregated open interest of Bitcoin Futures hit another record level of $8.9 billion, further reflecting the market’s enthusiasm.
Bitcoin Futures aggregated open interest across all exchanges. Source: Skew
Robbie Liu, a researcher at OKEx cryptocurrency exchange, noted that Bitcoin expects to sustain its profits on booming institutional adoption. Typically, the leading crypto corrects lower after a rally as traders’ focus shifts on its rivals, causing a so-called “altcoin rally,” which is no longer the case.
Mr. Liu referred to Donald Trump’s decision to sign a bill that would pave the way for a $900 billion stimulus package to reach millions of Americans. Coupled with the Federal Reserve’s dovish policies, it would increase further downside pressure on the US dollar. The greenback is already down by more than 12 percent YTD.
“The three major U.S. stock indexes rose for the second day in a row before the Christmas holiday,” said Mr. Liu. “Meanwhile, stock index futures saw gains today after President Trump signed a new $900 billion stimulus package, and we can expect some of that sentiment to boost Bitcoin.”
Warnings for Bitcoin Bulls
As the bullish euphoria sustains, some analysts have also suggested traders prepare for a short-term downside correction — that could invalidate the Bullish Pennant setup above.
Mark Principato, the executive director at Green Bridge Investing, stated that Bitcoin’s current upside moves “are a sign of speculative froth and the herd mentality.” The analyst stated that the cryptocurrency could still fall towards $23,000, where traders can consider opening a long position.
“Please understand, when the market looks its best, that is often the WORST time to enter,” he explained. “Avoid the hype and all of the “logic” and reasoning as to WHY this move is taking place. It will not enforce good habits in the long run.”
‘Bullish year ahead’ — Bitcoin primed for Q1 2021 gains, strength index suggests
The new ‘Bank of England’ is ‘no bank at all’
New York authorizes first Yen stablecoin operator in the US
-
Bitcoin4 Monaten agoBitcoin and cryptocurrency are no hedge for inflation
-
Regulation3 Monaten agoCongress weighs crypto payments and fintech lending in hearing today
-
Bitcoin3 Monaten agoMicroStrategy CEO seems to embrace Bitcoin maximalism
-
Cryptocurrency4 Monaten agoBank of England is Planing to Adopt Digital Currency
-
Altcoin3 Monaten agoDfinance: Layer 2 Blockchain Network
-
Monero9 Monaten agoSophisticated Mining Botnet Identified After 2 Years
-
Market4 Monaten ago
The request could not be satisfied
-
Blockchain3 Monaten agoThe US is number one…in blockchain patents
