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Are strong technicals enough to bring Bitcoin price to $100K in 2021?

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After scaling up to a relative high of around $53,000 just over two weeks ago, it seemed as though Bitcoin (BTC) was well on its way to reclaiming its former all-time highs. However, the series of events that unfolded over the past week has seen the world’s largest cryptocurrency by total market capitalization lose nearly 13% of its value, with a single BTC currently trading near $45,800.

That said, the aforementioned volatility seems to have left Standard Chartered’s cryptocurrency research unit completely unfazed, with the analysts referring to Bitcoin’s most recent plunge as being a “false dip” while reiterating that a year-end target of $100,000 per BTC is still quite achievable for the flagship cryptocurrency.

The banking behemoth believes that Bitcoin will have hit $100,000 by “late 2021 or early 2022,” a move that will be accompanied by a huge spike in the value of Ether (ETH) as well. In fact, the research team pointed out that Ether is “structurally” valued at a year-end price point between $26,000 and $35,000, however, in order for that to happen, BTC must scale up to $175,000. 

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Contributing factors

To get a better idea of whether a year-end projection of $100,000 per BTC is still feasible, Cointelegraph reached out to Ben Caselin, head of research and strategy at cryptocurrency exchange AAX. In his view, last Tuesday’s sell-off was a classic “sell the news” move, adding that he believes that an elaborate “bear trap” may have been at play. Caselin told Cointelegraph:

“I do expect $100K is still in play for Bitcoin this year — if anything, $100K would be underwhelming. In fact, if we follow PlanB’s stock-to-flow, we are still moving in the lower band, tracing ‘worst-case-scenario prices,’ which stood at $47K last month, $43K in September, and no less than $135K at the end of the year.”

He added that when it comes to Bitcoin, there is more value in looking at on-chain data rather than price technicals alone, as it allows users to gain a more high-resolution view of what’s actually happening across the network in real-time. 

Similarly, Tommy Schreiner, senior research analyst at crypto data provider TheTIE, told Cointelegraph that there is still a healthy chance that Bitcoin can reach $100,000 by the close of 2021:

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“$100K seems as ridiculous perhaps as $50K did last year, but there are factors in play that don’t completely out-rule that scenario. The recent pullback was mostly a de-levering of the market, as a large percentage of leveraged open interest got wiped out and effectively reset all the bullish traders who were going YOLO.”

Schreiner further emphasized that despite all the economic turmoil across the globe, the United States Federal Reserve has shown no signs of stopping the money printer, something he believes to be a good sign for relatively riskier assets such as cryptocurrencies. 

Furthermore, he highlighted that layer-one solutions such as Solana, Terra, Avalanche, Polygon and Fantom have continued to bring in new money into the global digital asset ecosystem in recent months, something that may also help spur BTC’s value. 

“NFTs [nonfungible tokens] are burning a huge amount of Ethereum every day, despite pricing out a lot of retail users. So if $100K seems ridiculous, perhaps look at how far crypto has come in just a year,” Schreiner said.

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Nick Spanos, co-founder of Zap Protocol, believes that El Salvador’s recent acceptance of Bitcoin as legal tender has the digital currency well on its way to hitting the $100,000 mark by the end of the year. “Ether is also looking to hit $10,000 by then,” he said.

Some doubts for $100,000

Lennix Lai, financial markets director at cryptocurrency exchange OKEx, believes that while Bitcoin’s future seems poised for good things, that doesn’t necessarily mean the premier digital currency will close out the year at $100,000. He told Cointelegraph:

“I think we would see a short-term correction considering the loom on upcoming tapering from the U.S. Bitcoin is still very sensitive to the global money supply. Yet at the same time, the cryptocurrency is becoming a legitimate alternative asset class and everyone is looking for certain portions of asset allocation.” 

Lai did concede that if in the near-to-mid future even if 1% of the world’s total wealth were to flow into Bitcoin, then a price target of $100,000 per BTC could quite easily be attained.

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Similarly, for Igneus Terrenus, head of communications at cryptocurrency exchange Bybit, the most compelling case for Bitcoin’s price reaching $100,000 this year remains the approval of a Bitcoin exchange-traded fund (ETF) in the United States, which, in his opinion, will help open up the BTC market to new participants, such as retirement funds and wealth management products. 

“SEC punted the [BTC ETF] decision from Sept. 8 down to its new date of Nov. 14 — still within the calendar year of 2021. Anecdotal evidence shows that almost all wealth managers are asked by their clients about Bitcoin exposure. An ETF may just be the right vehicle for this to happen,” he told Cointelegraph. 

Bitcoin’s technicals look strong 

In spite of recent volatility, Bitcoin’s fundamentals seem to be quite strong at the moment. In this regard, Charles Edwards, creator of one of the world’s most well-known Bitcoin metrics, Hash Ribbons, recently claimed that as long as the flagship cryptocurrency is able to hover above its all-important $42,000 resistance zone, it will continue to remain in the green.

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Late last year, Edwards predicted that by the end of 2021, Bitcoin could be looking at a price target of between $100,000 and $200,000. He said he would be “shocked” if Bitcoin didn’t hit $50,000 in 2021, a projection that came true after the currency reached its all-time high of $63,000 earlier this year.

In Edward’s view, one of the most important differences between this current rally and previous ones is the comparatively low level of retail interest that has been witnessed across the board. In fact, to reach a new all-time high this year, he believes Bitcoin will have to spend a considerable amount of time above the $50,000 range. “I think that would reengage more retail interest,” he said.

Even though $100,000 may not be in the cards for Edwards, he believes the market is slowly but surely closing in on the price point. However, in order for that to happen anytime in the coming three to four months, he believes that either renewed retail interest needs to be generated or a significant number of purchases from leading S&P 500 companies like Tesla need to take place.

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Looking ahead

When compared with previous events, the monetary effects of the 2020 halving have been quite tame up until now, with Bitcoin having only experienced a 4x increase in its value. In comparison, we can see that in the years following the 2012 and 2016 halvings, BTC’s value rose by 55x and 15x, respectively, thereby suggesting that a move to $100,000 could still be possible.

It will be interesting to see how the coming few days play out for the cryptocurrency market at large, especially as regulators all over the world continue to tighten their grips on this still-nascent industry.

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Bitcoin

Wen moon? Data shows pro traders becoming more bullish on Bitcoin price

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MicroStrategy’s purchase of 7,002 BTC might have helped boost Bitcoin price today, but derivatives data also shows that pro traders are becoming more bullish.

The $4,700 Bitcoin (BTC) price spike on Nov. 29 was likely a great relief for holders, but it seems premature to call the bottom according to derivative metrics. 

This should not come as a surprise because Bitcoin price is still 15% below the $69,000 all-time high set on Nov. 10. Just 15 days later, the cryptocurrency was testing the $53,500 support after an abrupt 22% correction.

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Today’s trend reversal was possibly encouraged by MicroStrategy’s announcement that it had acquired 7,002 Bitcoin on Monday at an average price of $59,187 per coin. The listed company raised money by selling 571,001 shares between Oct. 1 and Nov. 29, raising a total of $414.4 million in cash.

More bullish news came after German stock market operator Deutsche Boerse announced the listing of the Invesco Physical Bitcoin exchange-traded note or ETN. The new product will trade under the ticker BTIC on Deutsche Boerse’s Xetra digital stock exchange.

Data shows pro traders are still neutral-to-bullish

To understand how bullish or bearish professional traders are positioned, one should analyze the futures basis rate. That indicator is also known as the futures premium, and it measures the difference between futures contracts and the current spot market at regular exchanges.

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Bitcoin’s quarterly futures are the preferred instruments of whales and arbitrage desks. Even though derivatives might seem complicated for retail traders due to their settlement date and price difference from spot markets, the most notorious benefit is the lack of a fluctuating funding rate.

Bitcoin 3-month futures basis rate. Source: Laevitas.ch
The three-month futures typically trade with a 5%–15% annualized premium, which is deemed an opportunity cost for arbitrage trading. By postponing settlement, sellers demand a higher price and this causes the price difference.

Notice the 9% bottom on Nov. 27, as Bitcoin tested the $56,500 support. Then, after Monday’s rally above $58,000, the indicator shifted back to a healthy 12%. Even with this movement, there is no sign of excitement, but none of the past few weeks could be described as a bearish period.

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Lending markets provide additional insight

Margin trading allows investors to borrow cryptocurrency to leverage their trading position, therefore increasing the returns. For example, one can buy Bitcoin by borrowing Tether (USDT), thus increasing the exposure. On the other hand, borrowing Bitcoin can only be used to short it or bet on the price decrease.

Unlike futures contracts, the balance between margin longs and shorts isn’t necessarily matched.

OKEx USDT/BTC margin lending ratio. Source: OKEx

When the margin lending ratio is high, it indicates that the market is bullish—the opposite, a low lending ratio signals that the market is bearish.

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The chart above shows that traders have been borrowing more Bitcoin recently, because the ratio decreased from 21.9 on Nov. 26 to the current 11.3. However, the data leans bullish in absolute terms because the indicator favors stablecoin borrowing by a wide margin.

Derivatives data shows zero excitement from pro traders even as Bitcoin gained 9% from the $53,400 low on Nov. 28. Unlike retail traders, these experienced whales avoid FOMO, although the margin lending indicator shows signs of excessive optimism.

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Bitcoin, Ethereum and Two Smart Contract Competitors Are the Winners Among Institutional Investors, According to Crypto Asset Manager CoinShares

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Leading digital asset manager CoinShares says institutional investors have a strong appetite for Bitcoin (BTC) and three leading smart contract platforms.

According to the firm, the overall crypto market correction has left investors hungry for more.

“Digital asset investment products saw inflows of US$306m last week suggesting [a] continued appetite for digital assets.”

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As usual, BTC led all digital assets in terms of capital inflows, this time in the wake of a new exchange-traded product (ETP) set to launch on the Deutsche Borse exchange.

“Bitcoin saw the largest inflows in 5 weeks totaling US$247m following the launch of another investment product in Europe. This brings the 11 week run of inflows to US$2.7bn.”

BTC is trading at $58,475 at time of writing, up nearly 6% on the day.

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The leading smart contract platform Ethereum (ETH) concluded a strong month of inflows with a week totaling over $23 million.

“Ethereum saw inflows totaling US$23m last week, marking its 5th consecutive week of inflows.”

This week’s big winners in inflows relative to assets under management (AuM) also include the scalable smart contract platform Solana (SOL) and the interoperable blockchain Polkadot, which is designed to support multiple layer-1 smart contract protocols.

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“In terms of inflows relative to AuM, Polkadot and Solana continue to be the winners, with inflows representing 8.6% (US$11.5m) and 5.9% (US$14.6m) of AuM respectively last week.”

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Source: CoinShares

Ethereum is currently trading at $4,453.79, up 7.5% in the last 24 hours. SOL and DOT are trading at $211.48 and $36.82, respectively, at time of writing.

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Nayib Bukele sends cryptic response to Bank of England over Bitcoin law criticism

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  • Nayib Bukele questions England love for El Salvador over Bitcoin adoption.
  • England expreses concern over El Salvador Bitcoin law.
  • Outside England IMF also criticized El Salvador over Bitcoin law.

After he expressed concerns over Bitcoin adoption in the country, El Salvador President Nayib Bukele has sent a cryptic response to the Governor of the Bank of England, Andrew Bailey.

Over the weekend, Bailey said he is not a fan of bitcoin or its growing adoption in countries like El Salvador. He expressed concerns while speaking at Cambridge University, asking if Salvadorians are aware of Bitcoin’s volatility.

“It concerns me that a country would choose it as its national currency,” Bailey said in response to a question at an appearance at the Cambridge University student union on Thursday. “What would worry me most of all is, do the citizens of El Salvador understand the nature and volatility of the currency they have.”

Bank of England is not the only international body to express concerns over Bitcoin adoption by El Salvador. Since June, when the Central American country announced its Bitcoin intention, numerous global financial organizations have tried to warn the country not to do it.

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Outside the Bank of England, the IMF also criticized the move by the country.

Nayib Bukele’s cryptic, Ironic response

While addressing Bailey’s most recent comments, President Bukele responded in a tweet pointing at the “genuine” concerns that the BOE has for the people of El Salvador.

“Bank of England is “worried about El Salvador’s adoption of Bitcoin? Really?

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I guess the Bank of England’s interest in the well-being of our people is genuine. Right?

I mean, they have always cared about our people. Always.

Gotta love Bank of England,” he wrote.

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El Salvador adopted Bitcoin as its legal tender months back, and according to Nayib Bukele, there has been progress since the country made the move.

For instance, the nation has used the aforementioned volatility, especially when the price dips, to accumulate more portions of the asset and to use the profits when the price increases to make plans for buying pet hospitals or new schools.

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El Salvador adopted Bitcoin as its legal tender months back, and according to Nayib Bukele, there has been progress since the country made the move.

For instance, the nation has used the aforementioned volatility, especially when the price dips, to accumulate more portions of the asset and to use the profits when the price increases to make plans for buying pet hospitals or new schools.

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