Bitcoin (BTC) hit a new high this weekend in the last episode of its spectacular bull run in 2021 – what’s next for the hodlers?
As the largest cryptocurrency approaches $ 60,000, TBEN examines factors to consider when forecasting price action this week.
Investor wants to “reset” the stock market
Stocks showed no signs of an endless reversal on Monday as buyers continued to pour into the market.
Despite warnings that a bubble may already be on the verge of bursting, markets have relied on all-time highs in anticipation of a global economic recovery have fueled enthusiasm.
In the United States, hope surrounding President Joe Biden’s $ 1.9 trillion coronavirus stimulus package still lay the foundation for growth. Last week, Treasury Secretary Janet Yellen suggested that the cash mechanism, which would include a third round of stimulus checks valued at $ 1,400, be finalized by Congress in the coming weeks.
“Everyone is playing on the prospects for better economic growth, the prospects for more fiscal stimulus,” Adrian Zuercher, head of global asset allocation at UBS Wealth Management, told Bloomberg.
“It is normal for nominal yields to tend to increase, stocks are also trading at a high level, as well as commodities on the basis of a better economic outlook.”
While Bitcoin has exploded at the same pace as stocks since the March 2020 crash, not everyone was so bullish.
In new comments Monday, investor and hedge fund manager Michael J. Burry presented an onerous forecast for the global economy, saying a major correction in equity markets was due.
“People say I didn’t warn the last time. I did, but no one listened. So I’m warning this time. And yet, no one is listening. But I will have proof that I warned, ”he tweeted.
Speaking to TBEN, Cathie Wood, Founder, CIO and CEO of Ark Invest, added that a “valuation reset” would likely be the result of a continued sharp rise in rates.
In the absence of a precise timeline, there was a clear risk that this March would repeat itself last March, which ultimately allowed Bitcoin and Ether (ETH) to outperform.
Too bad the strength of the dollar
Any short-term pursuit of Bitcoin, meanwhile, could be tempered by the poor behavior of the US Dollar Currency Index (DXY), which has rebounded from lows in recent days.
Traditionally, a rally in DXY has put downward pressure on BTC / USD, and the index has spent most of February moving lower.
As TBEN reported, the long-term outlook still sees the dollar weakening overall over time, in large part due to the massive expansion of money supply by the Federal Reserve.
“There is a lot more downside for the dollar, and our long-term perspective is for dollar weakness, not dollar strength,” Steve Englander, head of research at Standard Chartered, told Reuters in early February. .
An accompanying poll found that only 13% of participants voted for an increase in the USD in three months, with the vast majority expecting value to lose or stagnate.
“Much of the dollar’s exceptionalism has to do with its scarcity,” Englander added.
“The prospect now is that there will be no shortage of dollars and in fact there will be plenty as far as the eye can see.”
Arrivals carry whale sale warning
For Bitcoin, signs of a possible pullback appeared on Monday in the form of a spike in currency inflows.
As reported by on-chain monitoring resource CryptoQuant, institution-focused Gemini has seen giant cumulative inflows of 28,004 BTC ($ 1.63 billion), suggesting that a large investor is considering selling or preparing funds in the event of falling prices.
“Watch out for the risk of whale dumping downside,” CryptoQuant added in comments to Telegram subscribers.
Last week, TBEN reported that stable coin balances on the exchanges had reached all-time highs, which accompanied BTC / USD reaching a new high – $ 58,312 on Bitstamp. It was then that the so-called Coinbase bounty – the price difference between Coinbase and Binance – was negative.
For Ki Young Ju, CEO of CryptoQuant, the nature of the gains was concerning despite the resulting euphoria.
“One thing that makes me uncomfortable about this $ BTC surge is a negative Coinbase premium,” he said. tweeted.
“The purchasing power does not seem to come from American institutional investors, but from stable whales and retail investors. Not a healthy bull without cash entries in USD. “
Altcoins could rise soon
Should Bitcoin come back, it is expected that altcoins could once again come into the limelight this week.
The weekend produced mixed results for the major cap tokens, with some gains while others stagnated. Bitcoin’s uncertain behavior on Monday came as the largest Ether altcoin had already lost 2% in 24 hours after hitting $ 2,000 for the first time.
Polkadot (DOT), Cardano (ADA) and Chainlink (LINK) were also negative on that day, while XRP decided to climb 14% to close to $ 0.60.
“Money is flowing in #Bitcoin right now,” popular trader Rekt Capital Told Twitter followers last week.
“But given that Altcoins are in the very early stages of their macro bull market, rest assured … Altcoins will be back.”
Bitcoin’s market cap edged up to 61.4% on Monday.
Peter Schiff and Bitcoin: “If he buys, I’m away”
It might be time for the Bitcoin bulls to get out while they can – because one of the cryptocurrency’s biggest critics could buy a large amount.
In a decidedly cryptic weekend tweet, gold bug Peter Schiff asked how much he should be looking to sell any BTC he could buy.
“If I were to actually buy #Bitcoin, how would I know when to sell? If your answer is never to sell, what’s the point of buying in the first place? ” he asked.
“I can’t trade it because the merchants don’t take it. I have to sell it first, either myself or using an intermediary like Bitpay. But I am not talking about small amounts. When should I sell to take profits or reduce my losses? “
Schiff once tried Bitcoin, complaining about losing his wallet password, but made a name for himself by shaming its economic base and promoting gold as the only option to avoid the inflation of the Fiat money.
Interest in hodling, real or not, therefore ended the trading community, which saw it as the classic sign of a bull market spiraling out of control.
“Slowly then all at once. If he buys, I’m away, ”cryptocurrency trader Scott Melker replied.
As TBEN reported last year, Bitcoin hitting $ 50,000 could indeed be the event that “triggers” Schiff’s investment.