Everscale Partner
This past night the Bitcoin price climbed above $50 000. This happened for the first time in the past six days. There is a recovery from a 25% correction of last week, the largest since the markets crashed in March 2020. The price of the cryptocurrency rose above the 100- and 200-hour moving averages again, giving a short-term bullish signal.
The rally above $50 000 came shortly after the application for listing of the Bitcoin ETF by the Chicago Board Options Exchange (CBOE). Shortly before this, MicroStrategy announced an investment of another $15 million in BTC, and the media reported that Goldman Sachs was ready to resume trading in bitcoin futures. The movement was supported by increased trading volumes. The 9.7% gain was the largest for Bitcoin in three weeks.
We are seeing an increase in cryptocurrency offerings from major investment banks, including research on Bitcoin, custody, trading and primary brokerage, and we expect these offerings to grow as Bitcoin is adopted by global investment banks.
Meanwhile, we see many signs of cooling in Bitcoin: the price is falling, premiums are falling, and there is less volatility. Of course, this does not say for sure about what will happen in the future.
The $44 500 level was a solid support, but March has historically been a bad month for the first cryptocurrency. The onset of the tax season in the United States may become the reason why some investors will prefer to liquidate part of their positions in order to settle with the government for earlier profits. It is not excluded that the correction in the second half of February may serve as a sign of an “early start” of the March decline. In this case, it is likely that the worst part of it has already been left behind.
Despite the 20% loss, the uptrend still remains in a downward slope since the $10 000 breakout in October. The actions of miners remain a major unknown factor. They are exclusively on the side of sellers and represent real short-term risk.
Although the correction brought on typical bull market swings, buyers entered earlier than in previous growth cycles and long-term holders showed less willingness to sell. Analysts are guided by the ratio of unrealised profits and losses. In the past, in strong bull markets, during corrections, the ratio has usually “dropped” to 0.5, but this has not happened in the latter case.
Traditional markets also grew on Monday amid stabilisation in US government bonds and optimism about the coronavirus vaccine. The S&P 500, NASDAQ and Dow Jones ended the day in positive territory.
