Bitcoin Languishes While US Equities Are Poised To Rebound

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Bitcoin Languishes While US Equities Are Poised To Rebound

The price of Bitcoin has been languishing at long-term lows for many months. The coin has tried to rally several times in that period and recently broken out of a down-trending channel. The move had traders hopes high and yet still no rally has formed, no market follow-through is seen, and there is little hope the token will ever retest its all-time high. Or is there?

Bitcoin’s major hurdle is not acceptance or adoption, or even transaction speed. Bitcoin’s hurdle right now is regulation and specifically U.S. regulation. The SEC and CFTC has been wishy washy on the subject and yet to take a concrete stand. Traders in the US, and around the world, are waiting for regulators to establish a framework for adoption so the market can have what it really wants; a Bitcoin ETF.

The SEC is expected to approve a Bitcoin and/or cryptocurrency ETF the question is when. They’ve have several chances already and have only to say the word for ETF management firms to start the process. When that happens you can expect to see BTC begin moving higher again, until then expect volatility and the possibility of new lows.

The BAT Isn’t Waiting For The SEC

The BAT isn’t waiting for the SEC. The native token of the Brave browser system, powered by the ERC-20 protocol, has risen more than 70% off of its long-term low and heading higher. The move is driven by accelerating adoption of the Brave browser system by users, publishers and advertisers. The tokens are used to power an anonymous, opt-in only, ad streaming service that pays Internet users to watch ads. Be sure to keep an eye on this one, it could easily see exponential gains over the next twelve months.

US Equities Are Poised To Rebound

The US equities market is poised to rebound. The broad market S&P 500 fell hard over the past two weeks as rising interest rates for long-maturity US bonds began to rise. The yield topped 3.25%, a multi-year high, and signal an expectation of rising FOMC interest rates. The caveat that traders need to beware of is this; rising rates at this point in the economic recovery are a good thing. Rising rates indicate a normalization of economic activity and the expectation of expansion.

With earnings season at hand and the results so far better than expected the sell-off is more likely an entry point for the bulls than the start of a deep correction. The S&P 500 is finding support at a long-ter uptrend line and poised to move higher. The indicators are rolling into a strong trend-following signal that could easily lead the market to new all-time highs.

Buying Into Bitcoins

With the 21st century demand for quick and big profits, one of the most controversial new investment vehicles has been Bitcoins, the virtual currency. It’s gained controversy partly because of its volatility, partly through the instability of Bitcoin exchanges and partly because their in-traceability meant they were a favored payment method for criminals.

Things are changing and after a particularly volatile spell in which one of the main exchanges, MtGox, filed for bankruptcy, the currency seems to have settled into a more stable pattern allowing investors to be able to take a measured view of whether to risk their money in a currency that technically doesn’t exist.

Although Bitcoins are becoming increasingly popular, the market is still quite small, meaning that good and bad news can have a disproportionate effect on the price. The long term outlook for Bitcoins is potentially good, meaning that the upside on price is stronger than the potential for a decline over the long term. Most brokers recommend that you consider Bitcoin a medium to long term investment because of its volatility. Think of it in terms of real estate. No one buys and sells houses many times a day and there can be significant drops in property prices but the long term trend for property prices is usually up. The same can be said for Bitcoins. Whilst there is a significant daily trade in the currency, many Bitcoins are held as investments as analysts believe that it’s likely the price of Bitcoins will rise long term because they are becoming more widely accepted.

As with all financial instruments, prices are influenced by supply and demand. Bitcoins are no different but what has caused big fluctuations in price has been the unusual nature of the news that influenced the supply and demand:

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• The bankruptcy of MtGox, one of the biggest Bitcoin exchanges

• The closing down of Silk Road which allegedly accepted Bitcoins for drug trading

• The disclosure by the US government that, despite the negative uses of Bitcoins, they believed that the currency had a future

• The media has also stirred up interest by reporting on milestones in the currency’s rise and fall, trumpeting the rise to over $1000 and its subsequent plummet on bad publicity.

Generally the advice on investing in Bitcoins is to sit and watch the market for a couple of weeks to get an idea of how the currency trades, its volatility and trends. It’s difficult to find rumor that hasn’t instantly affected the value, so many suggest investing a small amount and simply watching for opportunities, a little like setting take profit levels with shares and Forex, you can do the same on Bitcoins; it’s just a bit longer process and a little less automated.

Just like with any investment, the value can fall, and events like the collapse of MtGox and the closing down of Silk Road, negatively affected Bitcoins; not just because demand was reduced but also because Bitcoins were falsely linked with the companies by urban myth. The market seems to be becoming more regular, but not necessarily regulated, as more exchanges come online. Some of the exchanges will go the same way as MtGox but others will consolidate and become stronger and more reliable. No doubt official regulation will be applied to Bitcoins in due course at which time the volatility is likely to reduce.

Bitcoins represent an exciting and potentially lucrative medium to long term investment vehicle. Exciting because it hasn’t yet been accepted into the mainstream of currencies or investment vehicles. One thing investors like about Bitcoins is their conviction to prospects as was in gold

How Long Will the Market Downturn Last?

When will normality return? How long till global markets recover and bitcoin resumes the bull run it was teasing at before the coronavirus materialized? These are questions that all investors are pondering as the epidemic wreaks havok on gold, oil, stocks and – up until March 19 – on bitcoin itself. BTC is up 20% today, but there is still a long way to go before a full recovery is made. News.Bitcoin.com has asked several analysts when they believe this will occur.

Crypto Market Rallies Amid Corona Chaos

Crypto markets are back in the green on March 19, one week after bitcoin suffered its biggest one-day drop in seven years, tumbling over 50% to $3,700. “Bitcoin is uncorrelated [with traditional markets] over any time period other than 1-2 week “indiscriminate panic to cash” time,” noted Ryan Selkis.

On March 19 at 20:00 EST, BTC was up 14% for the day.

“Full recovery when?” many are asking. It’s hard to say for sure, but a guess can be hazarded. Since the Second World War, global bear markets have tended to last an average of 13 months, although a sustainable comeback in 2020 will depend very much on countering the coronavirus. Some economists suspect that a rebound will occur during the summer, when warming temperatures will potentially weaken the virus, while others think the misery will persist for the remainder of the year.

Saga founder Ido Sadeh Man takes a measured view of where the global markets will go from here. “If you believe that the world as we know it ceases to exist any time soon, we can definitely expect an unprecedented rally in prices of crypto assets that are uncorrelated and independent of any existing financial infrastructures,” he told news.Bitcoin.com. “However, I am quite certain that the world is not about to end, and we can therefore expect people to look for diversification within known financial paradigms. This much is certain: as the world is changing, people are seeking stability above all.” He added:

Governments, through their central banks, are deploying unprecedented means of trying to stabilize and provide security to their citizens. However, these means are extremely dangerous and it remains uncertain whether they will indeed provide security or endanger the system as a whole because they’re taking place in an already-weakened global financial environment.

Man emphasizes the potential for individuals faced with 0% interest on the dollar to seek yield in crypto assets, including stablecoins to lock into lending protocols, and low volatility cryptos such as SGA . The multiple fiat-backed token, which mirrors the IMF’s SDR basket of five currencies, was added to Zengo’s noncustodial wallet this week, giving holders of the stablecoin a storage solution that isn’t reliant on private keys.

What Fiat Printing Means for Bitcoin

“Over the past two days, bitcoin and certain other coins have already started diverging from traditional markets,” observes Kronos CEO Jack Tan. “DASH, STEEM, and DATA all up a ton even as Asian and western equities are under sell pressure.” On the matter of quantitative easing, Tan ventures “The price impact from fundamental factors such as QE and negative rates will be seen maybe 6-12 months down the line. Certainly the expected impact on crypto from inflation and negative rates will help in the short term to support prices, but whether these catch on and instill confidence in the market remains to be seen.”

STEEM is up 40% on the news of a hard fork to move the Steemit community away from Justin Sun’s kingdom to a new blockchain.

Jack Tan remains bullish however in the mid to long term, predicting: “I believe bitcoin and a few other currencies will emerge stronger than ever after this stress test. However, it will take at least six months to see the true impact the virus has on global GDP, currencies and crypto. While we wait patiently for more signs of bullish divergence in crypto, I have an optimistic target of 30k on BTC for the end of 2020.” Mati Greenspan, founder of Quantum Economics, also believes that bitcoin could be in “full recovery within the next few months” provided efforts to contain covid-19 are constructive.

I can not express how bullish I am on bitcoin. We are at risk of losing the entire system right now. I know they will find a way to save it but all trust is lost.

Gold guys/girls – you’ll be fine too. It’s just that $BTC has bigger upside, by far but is riskier than gold

Given that bitcoin is fundamentally immune to the inflationary policies of the global financial system, it could be poised to capitalize on gross monetary mismanagement by actors such as the Fed, finally demonstrating its “sound money” credentials. Bitcoin advocates have long contended that the currency is a hedge against inflation and profligate financial institutions, rather than a safe haven from recession. Nobody can arbitrarily create more bitcoin and expand the supply.

As noted in the March 18 Marty’s Bent newsletter , bitcoin “is completely bereft of the debt handcuffs linked to the traditional financial system … Consistently producing blocks and enabling peer-to-peer transfers for those who have access to the software … This is the type of environment in which bitcoin was birthed. This is why bitcoin exists.” Castle Island Ventures’ Nic Carter also believes that “as long as people continue to crave a permissionless, globally-available, freely usable, always-on, never impaired alternative monetary system, bitcoin will continue to matter. Now more than ever.”

The volatility across assets is unreal right now – not even “safe havens” are immune

To get a sense of how drastic the vol in the treasury market has been this past week, 30-day annualized rolling vol for 20Y US treasury (TLT) index is higher today than bitcoin was a year ago�� https://t.co/kFFgGcJnDW pic.twitter.com/c99cy7QIPn

How Long Will the Downturn Affect Global Markets?

The current bear market took just 22 days to arrive, but it could take as long as 18 months before corona disruption fully abates, with the next three to four months set to be especially tough. The economic effects of coronavirus continue to reverberate, with global stocks plummeting despite major stimulus packages being announced. With many national governments taking the unprecedented step of writing blank checks to help businesses and workers navigate a coming recession, and the Fed slashing interest rates to near zero, it’s natural to wonder how much pain when the global markets will emerge from the wreckage.

Comments by UK Chancellor Rishi Sunak sum up the prevailing mood. At a news conference on March 17 he remarked, “Never in peacetime have we faced an economic fight like this.” Wildfires ignited by the covid-19 pandemic have scorched every part of the economy, hitting sectors such as aerospace, supply chain, housing and travel particularly hard. On the markets, even safe haven assets like gold and corporate bonds have taken a battering as traders wrestle with rising risk. Liquidity continues to dry up as companies draw down on credit lines.

On Tuesday, the U.S. Treasury announced a $1 trillion support package , with $250 billion provisioned for small businesses and $500 billion for individual aid via direct payments and tax cuts. The Fed also announced that it would bail out debt-burdened corporations by purchasing some of their loans. It’s 2009 all over again, the American Recovery and Reinvestment Act Part II.

The most pervasive thing about QE & bailouts (aka printing money) is that we won’t see their economic impact in years

As global debt intertwines, #Bitcoin becomes the hedge

It’ll also take years until its utility is widely accepted; but that’s something long term hodlers know: pic.twitter.com/w1mZJKHCFG

In the U.K., meanwhile, £350 billion has been earmarked for businesses, while in the EU, a €37 billion Corona Response Investment Initiative was proposed to complement member states’ own fiscal measures. The CRII fund will be made available to healthcare systems, SMEs, labor markets and other beleaguered parties.

Money printer goes
BRRRRRRRRRR#Bitcoin Goes
BRRRRrrr r r r r r

Fiat is infinite. #BTC only gets scarcer.

With a vaccine potentially 18 months away, flights grounded, borders closed and virus-suppressing, social distancing/home isolation measures in place, life has started to look very different for us all.

How long do you think the economic effects of coronavirus will last? Let us know in the comments section below.

Disclaimer: Price articles and market updates are intended for informational purposes only and should not be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”

Images courtesy of Shutterstock.

Did you know you can verify any unconfirmed Bitcoin transaction with our Bitcoin Block Explorer tool ? Simply complete a Bitcoin address search to view it on the blockchain. Plus, visit our Bitcoin Charts to see what’s happening in the industry.

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