Bitcoin (BTC) starts a new week still at $ 13,000 and smoothly in the global economy, what’s next?
Cointelegraph takes a look at the potential issues at stake for Bitcoin in the coming days.
Banks Will Follow PayPal’s BTC Adoption
Last week’s announcement that the payments giant PayPal would support Bitcoin and three altcoins from 2021 continue to have an impact on price action.
When the news arrived last week, Bitcoin rose sharply past $ 12,500 to hit highs of $ 13,200., subsequently reaching $ 13,370 over the weekend.
Reactions among Bitcoin veterans were mixed, with some warning consumers not to let PayPal keep their cryptocurrencies for them, as restrictions are already known to apply.
However, The consensus remains that Bitcoin has overcome a major hurdle to adoption. Even David Marcus, co-creator of Facebook’s Libra digital currency project that PayPal previously abandoned, was optimistic.
“It’s exciting to see major financial services players jump on the crypto bandwagon“, tweeted October 25.
“Many banks are now pursuing support for #BTC and stablecoins after this week’s announcement by @PayPal. We are changing our minds. “
His words echo the forecasts of Virgin Galactic Chairman Chamath Palihapitiya, who on Thursday he also said that Bitcoin was no longer “optional” for large institutions.
As Cointelegraph reported, Multiple corporations have added Bitcoin to their reserves in recent weeks and months in a concerted effort to reduce fiat currency inflation exposure.
Bitcoin registers the 6th best weekly close in history
At $ 13,070, Bitcoin on Sunday sealed its second-highest weekly close since January 2018 and the sixth largest in its history.
On a technical level, this is not an insignificant feat., BTC / USD has broken past the long-term weekly resistance of $ 11,900 and has held those higher levels as well.
The $ 12,000 recovery and hold has been conspicuously absent from even Bitcoin’s most successful periods since the end of its bull market in late 2017, when it hit $ 20,000.
Both in 2019 and early 2020, brief streaks above $ 12,000 ended in rejection and a pullback to lower levels in weekly installments.
This week’s close provides another turning point for Bitcoin, and analysts expect its importance to be genuine.
Others were more conservative before the event; Cointelegraph Markets analyst Michaël van de Poppe predicts a short-term setback.
Van de Poppe said that the area just below $ 11,500 is essential to maintain the current trajectory.
“I think this is a likely scenario; I don’t expect a clear break above $ 14,000 just yet“, wrote on Sunday.
“A retest of the previous resistance zone to gain momentum towards the next rally towards $ 17,000 from next year.”
Central banks are expected to expand stimulus around the world
In the macro markets, meanwhile, the mood is decidedly less buoyant as the week begins.
A combination of stricter coronavirus restrictions, moves to inflate fiat currencies by multiple central banks and the uncertainty of the US elections is weighing on sentiment.
One week before Election Day, A new discussion in Washington on the Coronavirus stimulus has increased market nervousness.
In Europe, all eyes are on the European Central Bank for an expansion of its own monetary stimulus program, which is already worth EUR 1.5 trillion. The central banks of Japan and Canada are also due to announce updates on their response to the virus this week.
“In terms of getting back to the pre-crisis growth trend, it could take more than a year.”Chris Chapman, a portfolio manager for Manulife Investment, which has more than $ 660 billion in assets under management, told Bloomberg on Sunday.
“The moment of recovery will be delayed, but a vaccine is still expected sometime next year.”
The US Dollar Index (DXY), with which Bitcoin has shown considerable inverse correlation, has started to trend upward in recent days, while stocks are starting the week on a downward slope.
Fundamentals hit record highs
On another suggestion that Bitcoin may take a breather in the next few weeks, network fundamentals are showing signs of cooling after recent growth.
According to data from resources like BTC.com and Blockchain, difficulty and hash rate are or will be decreasing in the short term.
The difficulty, an essential measure of miners’ activity, is set for a decrease of 1.6% in the next automatic reset in six days. Currently, it is at all-time highs.
The estimated weekly average of the hash rate, in the meantime, has been declining from its own highs from October 18.
From Monday, average is 133 exahashes per second (EH / s), with the record at 146 EH / s.
However, For Bitcoin bulls, the old adage that price follows hash rate is still in play. In an interview with Cointelegraph on Saturday, RT host Max Keizer showed no signs of concern.
For him, price action has to go even higher to match recently recorded hash rate levels.
“The lag in prices versus the hash rate is partly due to shitty coins muddying the waters“, He said.
“As the dominance of BTC rises, this distracting noise will disappear and we will see the price adjust to the hash rate.”
PlanB: January 2021 to see a “vertical” Bitcoin bull market
However, for quantum analyst PlanB, the next few months should mean a greater impact on the system for participants in the Bitcoin market before the slowdown and consolidation phase begins.
Creator of the Bitcoin family of stock to flow pricing models, PlanB has been fully satisfied with the performance of Bitcoin prices since the last halving in May. The price has been adjusted exactly to the demands of stock to flow, and the last jump was no exception.
Looking ahead, he argues that last week’s huge supply buy will accelerate to a peak before disappearing.
“The supply shortage after the halving eats up the pool of bitcoins available for sale and leads to increasing supply and demand pressure … until it breaks, a couple of months later “, wrote during a conversation on Twitter over the weekend.
“Actually I estimate that the ‘vertical phase’ of the bull market will start in January / February.”
A new tweet before the weekly closing reinforced this idea. This time around, the focus was Bitcoin’s Relative Strength Index (RSI).
“If they weren’t here during the 2013 or 2017 bull markets – the current #bitcoin price surge is just a small taste of things to come (weekly RSI in a 70-90 range),” PlanB forecast.
“We haven’t even started!”