A relief bounce in the Bitcoin market Thursday did little in offsetting its prevailing correction bias as its price slipped inside a critical support area.
The BTC/USD exchange rate touched an intraday low of $45,000 during the early Asian trading session Friday, down by up to 22.90 percent from its record high established earlier this week. Traders held on to $45,000 and the levels around it as support, given the range’s historically-verified capability of capping downside corrections.
BITCOIN SUPPORT CONFLUENCE
“[I’m] keeping an eye on the $44ks — tested once, but a break below there likely sends price back down to $40k,” alarmed Josh Rager, the co-founder of BlockRoots.com. “And if price makes way to $40k — you know it’s going to wick in the mid to upper $30ks. [It] could bounce here — but going to take it level by level/day by day.”
It represents the 50-period simple moving average (50-SMA) on Bitcoin’s daily chart. The wave has underpinned the cryptocurrency’s uptrend throughout 2020. Many instances showed the price breaking below the 50-SMA but only to reclaim the wave later to confirm the market’s bullish bias.
Analyst Willy Woo’s floor model—which has zero evidence of turning false—also alerts about hard price support near $39,000. Mr. Rager agreed that Bitcoin could fall to $40,000 in the coming sessions while forming a wick towards $38,000-39,000. The cryptocurrency may resume its uptrend at a later stage.
PSYCHOLOGICAL PRICE FLOORS
This week, mobile payment app Square announced that it had also upped its Bitcoin reserves by investing another $170 million into the cryptocurrency. The Jack Dorsey-headed firm had added $50 million worth of bitcoins to its balance sheet late last year.
Nasdaq-listed business intelligence firm MicroStrategy also took a similar but heightened call to increase its bitcoin exposure. It put $1.06 billion to purchase another stash of the digital assets, pushing its total reserves from around 71,000 BTC to above $90,500 BTC.
Square has 5% of their balance sheet in bitcoin.
Tesla has 8% of their balance sheet in bitcoin.
Microstrategy has 95%+ of their balance sheet in bitcoin.
Who is next?
— Pomp 🌪 (@APompliano) February 24, 2021
That also increased Bitcoin’s ability to reclaim levels above $50,000 in the coming sessions, given the corporates’ high-profile exposure in the cryptocurrency above the said levels.
Elon Musk warns of ‘strong inflationary pressure’ as Tesla mulls Bitcoin payments
The world faces “strong inflationary pressure” in the short term, and it may persist, warns the world’s richest man.
In a debate about inflation, some of the best-known names in Bitcoin (BTC) voiced unanimous doubts about the state of global monetary policy.
Future of inflation great unknown, says Musk
As even the United States Federal Reserve admits that inflation may be here to stay, the topic has become especially pertinent for Bitcoiners, given the cryptocurrency’s intrinsically deflationary characteristics.
For Elon Musk, who remains cool when it comes to Bitcoin as a “magic pill” for fiat currency’s ills, inflation is no less of an issue. With over $250 billion in net assets as of this week, potential exposure to devaluating currencies is more of a potential problem than ever.
“I don’t know about long-term, but short-term we are seeing strong inflationary pressure,” he said in a Twitter debate with Ark Invest CEO Cathie Wood and MicroStrategy CEO Michael Saylor.
All were commenting on a previous tweet from Twitter CEO Jack Dorsey, who described inflation as “happening” and apt to “change everything.”
Wood, also a firm BTC supporter, noted that monetary velocity, on the contrary, had been slowing since the 2008 global financial crisis, disguising some of the devaluation impact.
Regardless, when all types of products are taken into account, the true cost of dollar printing far outstrips government claims about how inconsequential inflation really is.
“Inflation is a vector, and it is clearly evident in an array of products, services, & assets not currently measured by CPI or PCE,” Saylor wrote.
“Bitcoin is the most practical solution for a consumer, investor, or corporation seeking inflation protection over the long term.”
Bitcoin may yet return to Tesla
Musk’s Tesla passed $1,000 per share for the first time this week, helping spur a dramatic increase in his net worth.
In a filing with the U.S. Securities and Exchange Commission, meanwhile, the company left the door open to accepting Bitcoin for its products in the future.
“During the nine months ended September 30, 2021, we purchased an aggregate of $1.50 billion in bitcoin. In addition, during the three months ended March 31, 2021, we accepted bitcoin as a payment for sales of certain of our products in specified regions, subject to applicable laws, and suspended this practice in May 2021,” the 10-Q document reads.
“We may in the future restart the practice of transacting in cryptocurrencies (‘digital assets’) for our products and services.”
Bitcoin bull market ‘2nd leg has started,’ says BTC price model creator
Bitcoin (BTC) marking a new high of $67,000 last week has opened the possibility of hitting $100,000 by the end of this year.
PlanB, creator of the popular Bitcoin Stock-to-Flow (S2F) model, called Bitcoin’s price retracement from the $60,000-level the “2nd leg” of what appeared like a long-term bull market.
In doing so, the pseudonymous analyst cited S2F, which anticipates Bitcoin to continue its leg higher and reach $100,000 to $135,000 by the end of the year.
The price projection model insists that Bitcoin’s value will keep on growing until at least $288,000 per token due to the “halving,” an event that takes place every four years and reduces BTC’s issuance rate by half against its 21 million supply cap.
Notably, Bitcoin has undergone three halvings so far: in 2012, 2016 and 2020.
Each event decreased the cryptocurrency’s new supply rate by 50%, which was followed by notable increases in BTC price. For instance, the first two halvings prompted BTC price to rise by over 10,000% and 2,960%, respectively.
The third halving caused the price to jump from $8,787 to as high as $66,999, a 667.50% increase. So far, S2F has been largely accurate in predicting Bitcoin’s price trajectory, as shown in the chart below, leaving bulls with higher hopes that Bitcoin’s post-halving rally will have its price cross the $100,000 mark.
PlanB noted earlier this year that Bitcoin will reach $98,000 by November and $135,000 by December, adding that the only thing that would stop the cryptocurrency from hitting a six-digit value is “a black swan event” that the market has not seen in the last decade.
An 80% crash later
Despite the high price projections, Bitcoin can still see big corrections in the future. PlanB thinks the next crash could wipe at least 80% off Bitcoin’s market capitalization, based on the same S2F model.
“Everybody hopes for the supercycle or the ‘hyperbitcoinization’ to start right now and that we do not have a big crash after next all-time highs,” the analyst told the Unchained podcast, adding.
“As much as I would hope that were true, that we don’t see that crash anymore, I think we will. […] I think we’ll be managed by greed right now and fear later on and see another minus 80% after we top out at a couple hundred thousand dollars.”
But not everyone thinks the next correction will be as dramatic as the previous ones. Dan Morehead, CEO of Pantera Capital, said in mid-October that the next Bitcoin price drop will be less than 80%, citing a consistent drop in selling sentiment after each halving cycle.
Last week, Bitcoin established a new record high at around $67,000 following a 53% rally in October so far. But the new highs prompted profit-taking among traders, resulting in retests of the $60,000 support level.
BTC price dips below $62K on VanEck Bitcoin ETF launch day
Bitcoin (BTC) fell below $62,000 on Oct. 26 as the launch of the third United States regulated exchange-traded fund (ETF) failed to budge the sideways price action.
$61,600 support target for BTC
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting daily lows as U.S. markets opened on Oct. 26.
The latest ETF, the VanEck Bitcoin Strategy ETF (XBTF), was met with a decidedly different mood on the day as Bitcoin seemed unmoved by the prospect of fresh institutional involvement.
At the time of writing, $62,000 formed a shaky focus, which is still in line with the latest price forecasts from popular analysts.
“It would be natural price progression for BTC to dip into ~$61600 (orange level),” Rekt Capital commented alongside a fresh price chart.
“Holding there would be a sign of strength on the side of buyers.”
Expectations have remained high for all-time highs to see a retest on the back of recent movements, while research has argued that a dip as low as $50,000 would still preserve the overall bullish trajectory.
As Cointelegraph reported, even the October close is predicted to be around $63,000, giving Bitcoin room to track sideways longer before pressure increases.
PlanB, the analyst who called $63,000 the “worst-case scenario” for the monthly close, proclaimed the second leg of the 2021 bull officially in progress this week.
Altcoins due a “copy paste” of earlier bull run
Major altcoins were similarly tentative in their behavior on the day, with Ether (ETH) unmoved at $4,150.
The top ten cryptocurrencies by market cap were likewise flat over the past 24 hours — a rare episode of communal calm for an asset group that has been characterized by volatility this month.
“We know this structure from earlier on in which we’ve also had retests happening before we’ve started to continue moving,” Cointelegraph contributor Michaël van de Poppe said in his latest YouTube update.
He predicted a “copy paste” scenario of the gains from the start of 2021 at a later date, with the timeframe for this nonetheless unpredictable.
“Upside is generally higher than what you expect to be happening,” he added.