Bitcoin’s upward momentum has lost steam. The flagship cryptocurrency has struggled to power through its all-time highs of $20,000, with bulls caught in intense consolidation in recent days. A sell-off to the $1800 support is no longer inevitable as miners have turned bearish opting to offload holdings.
A break below $19,000 appears to have kick-started the current sell-off wave that continues to gather steam. With the $18,000 level emerging as a key support level, a break below could leave the crypto susceptible to plunging towards $17,600. Increased outflows from miners look set to continue conversely fuelling the downside action.
It is still unclear whether Bitcoin is taking a rest after registering blockbuster moves over the past two months. The rally came on Wall Street, realizing that adding Bitcoin to an investment portfolio can be healthy to counter elevated volatility levels in the market.
Bitcoin’s impressive run in 2020 has already forced Wall Street to take a keen interest on the cryptocurrency. Institutional interest has increased significantly. Likewise, many mainstream companies are coming up with ways of making it possible for people to use their bitcoin holdings.
PayPal has already unveiled a service that allows people to use bitcoin to pay for goods and services. Square, on its part, has invested $50 million in anticipation of the cryptocurrency value increasing. Increased mainstream adoption is one of the catalysts behind the meteoric rise of close to $20,000.
The rise of Bitcoin has also come with its fair share of disruptions. In addition to taking on the dollar, the crypto has again hurt the gold market. Strategists at JPMorgan believe Bitcoin will continue to take on gold as institutional adoption grows.
In recent months, capital inflows into gold exchange-traded funds have declined significantly. It is believed that most of the funds have ended in Bitcoin funds, which has helped support the recent rally upwards.
Grayscale Bitcoin Trust, commonly used by institutional investors, has attracted over $2 billion in capital inflows. In contrast, investors have withdrawn close to $7 billion from gold-backed exchange-traded funds over the past two months.
With the talk that institutional investors’ adoption of bitcoin has only begun, the expectation is high that bitcoin will continue powering high. Wall Street barons who had previously bashed the altcoin are increasingly rescinding their opinions.
Some of them have turned to the coin to hedge against inflation triggered by the coronavirus induced stimulus spending. Increased bitcoin use in the mainstream sector is why most Wall Street barons are increasingly coming to terms with Bitcoin’s long term prospects.
However, skepticism still remains about Bitcoin use as well as long term prospects. Israeli entrepreneur who co-founded traffic navigation app Waze remains bearish on cryptocurrencies. He claims that the likes of Bitcoin are increasingly being used to fuel crime, especially money laundering.
According to Levine, the likes of Bitcoin solve problems that people already have answers to. He believes that Bitcoin is only being used to facilitate human trafficking and fuelling the dark economy.
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