Bitcoin (BTC) starts a new week above $ 10,000 and provokes investors with more gains: will it last or is a correction already guaranteed?
Cointelegraph takes a look at next week and what it might have in store for the price of Bitcoin: five factors that could take BTC / USD to the moon or back to four figures.
Gold vs. Bitcoin: “Strong gains are inevitable”
While equity futures were up a bit more on Monday, the focus for macro was more on geopolitical tensions. The United States and China continued to increase the hostile mood, while coronavirus problems also made headlines.
Both issues have had a notable impact on the demand for safe havens, and in particular gold. As Cointelegraph reported, last week saw a significant appreciation in both gold and silver, while gold hit daily highs over the weekend.
In line with previous sentiment indicators, there is a lot of faith that Bitcoin follows the lead of the precious metal.
Speaking to Bloomberg, an analyst predicted that the gold race was far from over.
“Strong gains are inevitable as we enter a period very similar to the post-GFC environment, where gold prices soared to record levels as a result of the large amount of Federal Reserve money being injected into the system financial “, Gavin Wendt, resource analyst for Australia MineLife Pty said.
At the same time, Citigroup placed the odds of XAU / USD exceeding $ 2,000 by the end of 2020 at 30%.
“The US dollar has just reached a record low. Now he needs more than $ 1,920 to buy an ounce of #gold, “summarized the gold bug Peter Schiff.
“But this record will not last long, as the dollar’s decline is just beginning. He is about to dive into new depths bringing the American standard of living with him. ”
Bitcoin versus gold 3-month chart. Source: biased
Exchange inflows increase dramatically
In the context of a flight to paradise, Bitcoin’s rise to $ 10,300 is not surprising. It was anticipated that the weeks of price compression would be resolved in a breakout, analysts simply divided in which direction the market would go.
However, the speed of the breakout over the weekend was troubling for some. Specifically, the behavior of the trader suggests that the mood is increasingly turning towards short-term profit taking.
“The BTC price went up too fast. It seems that other whales think the same, “summarized Ki Young Ju, founder of the crypto analysis quantum chain.
Ki uploaded a chart showing the exchange entries for the past three days, which revealed a noticeable increase in the number of coins moving to exchange wallets.
At the start of the increase, the long-term lack of sales by sellers gave the impression that this time, $ 10,000 would not disappear in a mass sale as with the previous two peaks.
CryptoQuant data now suggests that the temptation for many is too high.
3-day chart of Bitcoin exchange entries. Source: CryptoQuant
$ 300 futures gap opens
A familiar force returning to Bitcoin this week concerns the derivatives markets, a gap in the CME Group Bitcoin futures market.
Underlining the contrast with compression, the difference between the end of Friday’s trading session and the start of Monday is a matter of several hundred dollars, with approximately $ 9,650 and $ 9,900 as a broker.
As Cointelegraph frequently reports, BTC / USD has a habit of “filling” the gaps that remain in futures, often within days or even hours after they appear.
As such, the focus was on a potential drop to $ 9,600 from the print time levels of $ 10,250 to close the gap. Orders were piling up below the broker’s bottom on Monday, around the so-called checkpoint (POC) at $ 9,575, prompting Cointelegraph Markets analyst Michaël van de Poppe to draw different conclusions about Bitcoin and the rest of the market. .
“To be honest, I think Ethereum is starting a new cycle and Bitcoin is still stuck in its range,” he said in private comments.
“The only suspicion I have is that we will have a drop to $ 9,400 and continue the range for a month.”
Ether beat expectations with its own gains over the weekend, firmly breaking resistance at $ 285 and continuing at $ 330.
CME Bitcoin 1-Week Futures Chart. Source: TradingView
Eyes on stimulus from the Fed and the US
Going back to the macro, the US stimulus measures were due to be released Monday, injecting more dollars into the economy.
At the same time, markets were listening to new directives from the Federal Reserve, which analysts advise keeping interest rates at 0.25%.
Any effect that this decision has on the shares could contribute to Bitcoin’s trajectory, despite the fact that the weekend constitutes an exception to the correlation that the price of BTC has shown to the shares.
Bitcoin 3-month chart versus S&P 500. Source: skewed
“The reason COVID19 is fatal to the US economy is that we have borrowed so much money to artificially boost GDP and the stock market in the past,” Schiff continued, adding:
“So we are too broke to borrow more to fight Covid now and all we can do is print. The dollar will collapse and the economy will fall with it. “
Schiff, as always, was less optimistic about Bitcoin’s prospects, privileging gold as the main safe haven as the dollar falls.
Indicators of mining sentiment remain calm
Unlike spot traders, Bitcoin miners seemed calm during the recent volatility. According to CryptoQuant, mining group outflows did not increase as a result of price gains.
The previous events caused much more turmoil, in particular the halving of the May subsidy, which cut miners’ rewards by 50% overnight.
Bitcoin mining group issues 1-year chart. Source: CryptoQuant
At the same time, the fundamentals of the network remain intact, with the hash rate and difficulty at all-time highs.
An automatic difficulty adjustment on Tuesday will reduce the metric by around 2.7% based on current estimates, with a stable hash rate.
Difficulty is an imprecise but useful indicator of mining sentiment, while the hash rate forms a rough indication of how much power the computer secures the Bitcoin blockchain.
