What a week it’s been! The stock market is closing in on the worst week in a decade. The American government is on the verge of a ‘shut down’ that could extend over the Christmas holidays, Brexit is still happening, Italy can’t manage their debt, and France has been under siege by ‘Yellow Jacket’ protesters for weeks who have a lot more to do with Bitcoin than you think. Why? Because the root cause is not tax hikes, but unchecked money printing that erodes citizens’ savings and purchasing power.
Clearly, the world is in a tizzy.
Fortunately, things are looking up for in the world of crypto. Bakkt is on the verge of launching, Bitcoin and Ethereum reclaimed a swath of recently lost territory, and a handful of notable analysts are suddenly feeling quite bullish about crypto’s prospects for 2019.
4 HR Chart
As mentioned above, after a decent 30% move this week, Bitcoin price $3903.81 -0.82% extended above the 200-MA and the 23.6% Fib retracement level to reach $4,172 twice. The current rally appears to have reached a point of exhaustion and bitcoin is pulling back from its high at $4,172.
The pattern of lower lows had been broken but the sharp upward move is still entirely indicative of a trend change as the current range is still far removed from where bitcoin was trading a month ago.
The weekly chart shows that the bearish downtrend is still in full effect. Early birds might keep watch for a daily higher low and higher high to follow through on the 4hr chart. Keeping a close eye on volume would be wise.There is a bullish cross on the MACD, and the RSI has turned upward after being flatlined in oversold territory for some time, both oscillators are worth keeping an eye on as well.
Possible correction targets are near the 200-MA ($3,900), which is also aligned with the 23.6% Fib Retracement level and also at $3,700 – $3,600.
BTC price has slightly dropped below the 20MA and it appears that the coming days will bring a bit of consolidation. But the possibility of waning trading volume over the weekend and next week’s holiday could mean any drastic media announcements of market moves could easily cause Bitcoin to double bottom in the $3,100 – $3,200 zone.
Generally, bears remain confident and the high number of shorts supports this. As BTC pulls back and consolidates over the next 24-48 hrs, traders could keep an eye on BTC shorts to see if they slap back on at the more recent top $4,172.
Global Economy’s influence on BTC’s Price
During periods of strong bullish or bearish outbursts, we see the price of Bitcoin (BTC) act independently of EUR/USD at certain times. However, when there is uncertainty on both sides and the price is trading sideways, we see BTC/USD react directly to the price action on EUR/USD. This is true now more than ever because the whole global economy is in a state of utter confusion and chaos.
If the next financial crisis were to happen anytime soon. Though at one side the liquidity crisis can force people to cash out their investments which can be expected to happen in case of Bitcoin as well, experts and crypto enthusiasts are positive and hopeful of Bitcoin to be the saviour during this crash.
During the crashes, silver and gold become the preferred hedge against the crisis. But this time people have another option i.e. digital assets. Bitcoin is increasingly seen as the lucrative alternate option, especially to the millennials. Moreover, as people lose faith in one currency, they tend to leave the sinking ship and jump onto the other one that just might be the case for Bitcoin as well.
Institutions are already fast diving
In the past few months, institutions have come out in the open and made their crypto-related plans known. From Morgan Stanley, Merrill Lynch, Goldman Sachs to JP Morgan, Fidelity Investments, Blackrock and so many more, institutions are making headway into the crypto market.
Unpopular opinion: Institutions will come under pressure in next 5 years if they have 0% exposure to Bitcoin & digital assets. As fiduciaries, they need to invest capital in the best risk-adjusted opportunities.
Digital assets historically provide best returns per unit of risk.
— Pomp 🌪 (@APompliano) September 16, 2018
Bitcoin andcryptocurrencieshave surely got a chance against the financial crisis. Now, only the time will tell how hard we will be hit and what role Bitcoin will play in this.
Do you think Bitcoin and other cryptos will be seen as an alternative option during the coming financial crisis or will it crash along with other markets?