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Bitcoin Fails to Push Past $38K on Stronger Dollar, Higher Yields

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Bitcoin slipped heading into the European session Thursday as traders booked profits from its recent price rally.

The benchmark cryptocurrency briefly crossed over $38,000, a wave high it breached last Friday after gaining open endorsement from Tesla founder Elon Musk. The move upside also appeared as a broader recovery trend that saw the Bitcoin price surging from $32,200 on January 31 to as high as $38,769 as of Thursday.

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Bitcoin trades lower after briefly closing above $38,000. Source: BTCUSD on TradingView.com
Bitcoin trades lower after briefly closing above $38,000. Source: BTCUSD on TradingView.com

It provided traders ample opportunities to secure their short-term gains, therefore pushing the prices lower.

Dollar Firm

Bitcoin’s intraday losses coincided with similar gains across the gold and silver markets, led by a firmer US dollar and better-than-expected Treasury yields.

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The US dollar index continued to its recovery path on Thursday as traders assessed the prospects of a strengthening US economic recovery. It weighed negatively on gold, whose prices fell three days in a row. But for Bitcoin, which was rallying almost in line with the dollar, the move appeared more like a bias-neutralizing downside correction.

Pablo Piovano, an analyst at FXStreet, confirmed that the dollar might continue heading upward as “the vaccine rollout continues to favor better growth prospects vs. overseas economies.” In turn, that could push the Treasury yields higher, as well, giving investors to hold government bonds than pick riskier assets.

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US dollar recovers to its one-month high on Thursday. Source: DXY on TradingView.com
US dollar recovers to its one-month high on Thursday. Source: DXY on TradingView.com

Meanwhile, Bitcoin bulls anticipate that the US’s next stimulus package would provide tailwinds to the cryptocurrency’s ongoing rally. The BTC/USD exchange rate almost surged by 1,000 percent against the backdrop of more than $3 trillion stimulus aid and the Federal Reserve’s ultra-dovish policies.

Most of these fundamentals are still in place, with the US central bank confirming keeping interest rates lower until 2023 while ignoring to taper its $120 billion monthly bond-buying programs. Atop that, US President Joe Biden plans to roll out the third stimulus package worth $1.9 trillion.

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Bitcoin Technical Analysis

The technical signals show that Bitcoin is flirting with the idea of moving lower towards its 20-period moving average (in green), as shown in the chart below. The wave holds the history of serving as minor support to Bitcoin’s short-term uptrends.

Bitcoin, cryptocurrency, BTCUSD, BTCUSDT
Bitcoin eyes a pullback towards the green wave for support. Source: BTCUSD on TradingView.com
Bitcoin eyes a pullback towards the green wave for support. Source: BTCUSD on TradingView.com

Nevertheless, an extended pullback moves risks putting Bitcoin en route to its 50-period MA (blue), another reprieve for the bulls, and the confluence of the previous wave low in the $33,000-34,000 area.

Meanwhile, a high-volume close above $38,000 could send the BTC/USD rate pursuing $40,000, subject to the breakout target set by the previous Falling Wedge pattern (blacked area).

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In Argentina, several businesses accept payments in BTC, DOGE, other cryptos

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Imagine going on vacation and being able to pay both your Uber driver and Airbnb host with crypto. This sounds like a fantasy for many but is reportedly now a reality for users in Argentina.

Regional news publications announced that the crypto company Bitrefill was offering 138 prepaid cards in order to pay to different businesses. Some taking part in the initiative include Frávega, Lacoste, Dexter, Isadora, Cheeky, Airbnb, Uber, Movistar, Claro, and Personal.

Users can pay in six different cryptocurrencies, which are Bitcoin [BTC], Ether [ETH], Dogecoin [DOGE], Litecoin [LTC], Tether [USDT], and Dash [DASH]. However, in order to use the card, assets are first converted to dollars or euros, and then converted again to Argentine Pesos [ARS] to complete the transaction.

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Analyzing Argentina

What does Bitrefill’s initiative reveal about the state of crypto adoption in Argentina? Data may hold the answer. The Blockchain LatAm Report 2021 by Sherlock Communications stated,

“…66% of respondents were most concerned with protecting their savings. This reflects recent inflation rates in the country: 36.1% in 2020 and 53.8% in 2019, the highest in 28 years.”

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Furthermore, as people in Argentina are legally restricted from buying more than a small and taxable amount of U.S. dollars every month, the attraction of crypto is easy to understand. Adding to this, there are around 20 legal crypto exchanges in the country, and one of them – Ripio – hit a million users in 2020.

However, it’s worth noting that there is a tax of 15% on income gained from selling digital currencies. At the last count, there were 12 Bitcoin ATMs/tellers in Argentina. Out of these, 11 were located in Buenos Aires.

Not just a shopping spree…

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Apart from crypto adoption, companies are also eyeing the country as a destination for Bitcoin mining. One major reason for this is the cheap cost of electricity in Argentina, with subsidies for the same.

In October, the Canada-based Bitfarms announced that it was constructing a 210 megawatt BTC mining farm in Argentina. More than 55,000 new mining rigs are expected to be on-site. According to the Cambridge Bitcoin Electricity Consumption Index, Argentina’s share of the average monthly hashrate in August 2021 was 0.05%.

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Hedge Fund Billionaire Paul Tudor Jones Says Gold Losing the Race Against Crypto As Inflation Hedge

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Hedge fund billionaire Paul Tudor Jones says that crypto is currently his preferred way of hedging against inflation.

In a new interview with CNBC, Jones says that crypto has acted as a great hedge as of late and is winning the race against gold.

“Crypto has been a great hedge… I said then, I said now, I’ve got crypto in single digits in my portfolio. I have a small trading position in our fund. I do think we’re moving into an increasingly digitized world. Clearly, there’s a place for crypto, and clearly, it’s winning the race against gold at the moment. So yes, I would think that would also be a very good inflation hedge. It would be my preferred one over gold at the moment.”

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The billionaire, who heads investment management firm Tudor Investment Corporation, says that while the new Bitcoin futures exchange-traded fund (ETF) is a regulated and legitimate product, he thinks a better investment is to own physical BTC.

“I think a better way to get in would be to actually own physical Bitcoin, to take the time to learn how to own it and carry it. I think the ETF will be fine. I think the fact that it’s SEC approved should give you great comfort.”

The investor says that embracing Bitcoin is part of the American character and that China’s refusal to do so may have economic consequences for the country in the future.

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“I think crypto is here to stay. Look, this is the United States of America right? The reason we’re the most dominant economic power [in] the world is because we unleash our individual entrepreneurialism and creativity. And you’re seeing China do the exact opposite. That place is on, economically, a slow boat to the South Pole. As long as the US can continue to unchain our entrepreneurs, we’re going to always be in the dominant position.”

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The Real Opportunity for Bitcoin and Crypto Will Come From This Group of Investors, Says Shark Tank Star Kevin O’Leary

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Shark Tank investor Kevin O’Leary says that a group of investors could transform Bitcoin (BTC) and the crypto markets when they decide to allocate capital to the space.

In a new interview with Bitcoin bull Anthony Pompliano on The Best Business Show, the celebrity investor says that there will be a massive opportunity for crypto once sovereign funds in the Middle East invest in digital assets.ADVERTISEMENT

“The real opportunity is not with the family offices or hedge funds that operate out of the Middle East. The real money is in the actual sovereign funds in both Saudi Arabia and the United Arab Emirates. It’s billions and billions and billions of dollars. 

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They have not allocated to crypto yet. When that happens, you’ll see it reflected in the price of Bitcoin. There’s no question about it. They have such long-term views in those funds, and the funds are so large.”

O’Leary says that given the size and number of the funds, even a 1% allocation would have an impact on the markets.

“They generally abide by discipline and principles of risk diversification, so they may have a mandate, for example, that no stock represent more than 5% of the fund or no sector more than 20%. Those are diversification mandates that are used all around the world, and they do that there, too.

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But when you’re dealing with a multi-billion dollar mandate, and some of these, they’re the largest pools of capital in the world. A 1% allocation is a tremendous amount of money.”

The investor says at the moment, Bitcoin is the only digital asset on the sovereign funds’ radar. He predicts that they could easily decide to allocate 1-3% just on BTC.

“I speak to those guys almost every day. They would immediately go to 1% to 3% on Bitcoin alone. Just Bitcoin, let alone Ethereum or any level-1 or level-2s on the chain. They haven’t even thought about that. They’re just thinking about Bitcoin and owning that as an asset. The amount of capital that will come into this market when the regulator approves Bitcoin as an asset or currency or a security, or whatever they’re going to regulate it as is going to be unbelievable.”

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