Portfolios Reviews & Comments - April 2024

The rollback may not be over yet. The biggest risk for Bitcoin in the short term is associated with the decline in the US and global stock markets. Once upon a time, the correlation of traditional and cryptocurrency markets caused rejection and rejection among Bitcoin supporters. However, the situation has completely changed in just a few years. Now what is happening in the stock market is directly linked to the prospects for BTC and the entire crypto market.

Another impetus for the growth of the benchmark cryptocurrency was the announcement of MicroStrategy about its intention to raise $ 600 million through the placement of bonds for the purchase of another portion of bitcoins. The company goes all-in, since the current price levels are considered by many to be an already overheated market, but everyone understands that market participants are following such news in the most careful way and, no doubt, this will strengthen the willingness of the majority to remain in the asset for some time. The Glassnode report does indicate that Bitcoin is now completing only the initial stage of accumulation and is entering a phase of active growth, similar to what we saw in the last six months of 2017.

If everyone expects Bitcoin to test $ 50k and continue to grow up to $ 60k, then the attitude towards altcoins is warming very gradually and has turned into a state of obvious interest only now, while the attitude towards most coins until very recently was at least cautious. Over the past weekend, investors decided to celebrate Valentine's Day by buying all alternative cryptocurrencies in a row, as a result of which, most of the coins showed tens of percent growth. Altcoins are now also undergoing a local correction, but chances are high that this will not be the last impulse of price growth from retail buyers.

Personal statements by Elon Musk regarding the prospects of Bitcoin are also associated with the stability of the cryptocurrency, suggesting that Musk himself may have invested in Bitcoin. Nevertheless, all the speculative and natural dynamics are not enough to push the coin to retest the historical high above $ 40K, while the rather strong influence of individual speculations indicates extreme volatility and shallow depth of the market as a whole.

The support of cryptocurrencies from large institutional investors is, of course, good. It can provide further growth for bitcoin. However, the fact that the crypto market now largely depends on the sentiments of this rather small group, and that, in turn, on the sentiments of government officials, is bad, and can lead to a collapse of the quotes. A clear example is the January drop in the BTC/USD pair by 30%. However, government actions can not only put pressure on the crypto market, but also push it up. Thus, US President Joe Biden has confirmed his readiness for a new stimulus package for almost $2 trillion. And this is good, since with an almost 100% probability, some of these funds will flow to the digital asset market.

Against the background, there is also news that has good potential to push cryptocurrencies into growth. Since the beginning of 2021, only one crypto fund Grayscale has bought 40K BTC, despite the fact that the miners were able to mine 26K. This news can be viewed from several points of view. On the one hand, it is clear that supporting the first cryptocurrency may not cost as much money if we consider these investments in the context of the traditional market. On the other hand, we see that the shortage of coins on the market does not lead to a sharp jump in prices, and the demand from big capital is currently covered by the sales of earlier investors. Often a positive news background leads to growth with a slight delay, perhaps this is the case. However, Bitcoin is holding above $ 30K, bouncing quickly after corrections, and the current price levels were in principle very difficult to imagine a few months ago. With a lucky coincidence, Bitcoin has a chance to try again to overcome $ 40K.

The greed and fear index for Bitcoin and the largest cryptocurrencies demonstrates practically unchanged dynamics over the course of a day, remaining in the “extreme greed” mode at “77”. We are now seeing the most moderate form of this regime. The RSI on the daily chart also remains away from overbought levels. It looks like big capital is now on hold before making further investment decisions on Bitcoin. At the same time, statistics from Grayscale, which have bought 40K BTC since the beginning of 2021, may push us to think about the likely continuation of the price growth. During this period, 26K BTC was mined, and this directly indicates a shortage of the asset in the market.

Aside from the crypto fans who are betting on Bitcoin's dominance in the global financial system, for most investors who entered late last year, recent all-time highs were an extremely attractive profit-taking target. As a result, we can now see the consequences of such decisions on fixing profits on the crypto market. There is no trend reversal because there is no panic selling.

Bitcoin owes its historic highs to institutional investors. It is from them that they are now expected to take steps that could create an impulse for the entire market. American regulators are expected to be at least neutral in relation to cryptocurrencies. MicroStrategy considers Bitcoin price levels around $ 32K to be acceptable to buy. However, buying $ 10 million worth of bitcoin is not enough to create momentum right now. It is likely that we will see similar solutions for relatively small amounts, the purpose of which will be to create a more positive news background around cryptocurrencies.

A growing number of traders question whether Bitcoin will return to $ 40,000. However, address activity and trading volumes indicate that the long-term trend still looks quite healthy. Watch to see if Bitcoin usage levels remain elevated. Analysts at the private banking division of British financial giant Barclays consider bitcoin an "almost unusable" asset due to surges in volatility.

Bitcoin failed to re-cross the $ 40,000 threshold, remaining within the corrective scenario. Nevertheless, the support level around $ 35,000 has not been broken, and the participants in the crypto market are not showing panic. Bitcoin could fall to lower levels if it does not gain a foothold above the $ 40,000 psychological mark, analysts at JPMorgan Bank say. An analysis of the demand for bitcoin futures and the Grayscale Bitcoin Trust (GBTC) stock may be a key to understanding the situation. GBTC's daily inflow is likely to remain at $ 100 million over the coming days and weeks for this breakout to happen.

Retail users were significantly more bearish - only 38% of them were on the side of buyers. According to the CEO of the analytical firm CryptoQuant, Ki Yong Joo, institutions will defend the $ 30,000 level, and in any case, one should not expect a deeper fall. According to the analytical platform CryptoQuant, deposits of stablecoins began to flow to exchanges again in the last 24 hours, confirming the increased pressure from buyers. Previously, analysts at the company drew attention to the slowdown in such deposits as a risk factor for the Bitcoin rally. Bitcoin will head to new highs if it can reach the $ 38,000 level.

Over the course of the day, Bitcoin demonstrates an increase of 1% and is trading at about $ 36,000. Altcoins have also moved to cautious gains. Now, cautious investors should carefully monitor the dynamics of the rebound in order to determine the future prospects of the market. If the recovery turns out to be sharp enough, like the week before, it will strengthen the upward momentum for the entire market. The index of greed and fear sank by another 6 points over the course of a day to the value of “84”, at the border of the exit from the “extreme greed” regime. The RSI has stopped declining and is now showing attempts to return to growth.

The change in sentiment among institutional investors had the greatest impact on the most overbought sectors of world markets, causing waves of correction. The crypto market, as the most volatile, showed the maximum movements, giving back about half of the gain since the beginning of the year. However, it is too early to speculate about a complete trend reversal. As in the beginning of the year, buyers can come to the aid of bitcoin and other most liquid instruments of the crypto market, because the fundamental grounds have not changed yet: the Americans are preparing to sign large-scale incentives, and the markets are flooded with liquidity, which is parked in assets showing at least some positive profitability. If the upward trend in long-term Treasury yields is not alarmingly steady this week, we may see an equally rapid reversal towards Bitcoin and other markets. Don't be surprised if cryptocurrencies repeat the dynamics of the previous week: a sharp correction at the start of the week, followed by a spurt to new peaks. $ 50k still looks like an attainable target for this week.

Bloomberg experts predict the continued growth of bitcoin. The first cryptocurrency may head towards the $ 50,000 mark after breaking past highs of about $ 20,000. Bitcoin has been hovering just below the $ 20,000 mark for a week now, with all attempts to drop below $ 18,500 being bought out by buyers. Although the market is not falling, trading volumes have fallen by half compared to the beginning of last week. Traders are predominantly in watch mode: nobody wants to be an early seller or a late buyer. Meanwhile, the Greed and Fear Index remains in extreme greed mode at 94, indicating high potential for a correction.

Bitcoin has tried several times unsuccessfully to take the long-awaited psychological level of $ 20K. All attempts so far ended with profit taking and dropping the coin down. The main question that now worries all participants in the crypto market, what is happening now is the manifestation of the strongest resistance or consolidation before a new jump in quotations? A large-scale correction can create momentum for continued gains by connecting buyers in a downturn. Therefore, a number of investors do not pay attention to such turbulence. The current rally is led by large institutions, foundations and even the world's largest payment system PayPal, which integrates the largest cryptocurrencies into its service.

Bitcoin continues to hold the $ 15,400 level, slightly changing in price per day. Thus, buyers and sellers have formed a balance of power among themselves in anticipation of what will be the next step of investors. The ability to hold above $ 15K is great news for crypto market participants, raising the chances that the consolidation process will end in growth driven by fundamental factors.

Experts from Binance Research have identified five factors for Bitcoin's growth: declining investor interest in the DeFi market, the launch of the PayPal crypto service, investments in Bitcoin by such a giant as MicroStrategy, the US presidential election and the coronavirus pandemic. Such a rapid growth of the first cryptocurrency inspires concern for many experts. At any time, large investors can move to selling, which will lead to a collapse of Bitcoin. The higher the rise in the price of BTC, the more painful the fall will be, observers warn.

The RSI (Relative Strength Index) indicator chart resembles the movement of the indicator during the two previous rallies in Bitcoin in 2013 and 2017. A rise in prices with a simultaneous rise in the volume of active positions may mean that new money is coming into the market. Bitcoin will not stop at the achieved results and will continue to rally. The US elections are gradually drawing to a close and the details of the financial stimulus are becoming clearer. Any such package could lead to further weakening of the dollar and the growth of bitcoin. Binance Futures traders have used the highest relative leverage over the lifetime of the platform. This factor portends continued high volatility, regardless of the direction of the market movement. So far, Bitcoin continues to be quoted 30% below its historical highs against the dollar.

Bitcoin's reaching $ 20,000 this year is no longer a fantasy, but a perfectly acceptable scenario. An important event will be overcoming the $ 14,000 barrier. After that, bitcoin will aim to take new heights. Now there are all the prospects for the rapid growth of bitcoin. The growth of fundamental bitcoin on-chain metrics after the market crash in March this year allows counting on "the largest take-off in history."

If Bitcoin closes the week and month near $ 14K, it will clear the way for up to $ 20K. The two-trillion-dollar support package under discussion is able to revive demand not only in the stock market, but also in cryptocurrencies, which in 2020 proved to be a very profitable source of savings diversification.

Despite the transition to Bitcoin of a number of large companies, most of the transactions with the largest digital currency are still speculative. The number of active participants in the Bitcoin network has reached levels last seen in December 2017, when the cryptocurrency was trading at all-time highs of around $ 20,000.

LSE-listed fintech group Mode Global Holdings became the first UK public company to purchase BTC as part of its investment strategy. For these purposes, it has allocated up to 10% of its capital. The company said in a statement that its confidence in bitcoin increased amid the coronavirus crisis and the lowest interest rates in the Bank of England's 326-year history. Previously, two other large companies invested in bitcoin: MicroStrategy and Square. Bullish momentum is clearly picking up steam with support from large corporations. Option market participants are also betting on the growth of the rate. This can be seen by the significant lagging of the price of put options or bearish rates from the call options.

The current rollback of the bitcoin price occurs against the backdrop of news about the suspension of withdrawal of funds in one of the largest crypto-exchanges - OKEx in connection with the alleged detention of one of the private key holders. Although the management of the exchange claims that the claims of law enforcement agencies are not related to the activities of the exchange, a few hours before the announcement, significant volumes of BTC and other large cryptocurrencies were still withdrawn from the site. The news around OKEx appeared literally a few weeks after a similar situation with BitMEX, where the authorities were claiming the exchange itself.

Traditional investment destinations like the US dollar or bonds are rapidly losing their appeal, so cryptocurrencies, the most recognizable of which is Bitcoin, are entering the scene as part of a reserve strategy. In addition, the construction of investment infrastructure over the past few years is bearing fruit.

The current decline is a short-term correction, after which the upward movement of the cryptocurrency rate will continue. Bitcoin is likely to surpass the $ 11,700 mark in the near future. In this case, it can start moving towards $ 13,000. However, for this, the asset value must remain above $ 11,300. Otherwise, it may sharply fall to $ 10,500.

Bitcoin's market capitalization is well positioned for further growth. Investing one percent of the $ 50 trillion bond market in bitcoin could push the market capitalization of the first cryptocurrency to $ 500 billion. A scenario is also considered in which the capitalization of bitcoin rises to $ 1.3 trillion.

By the end of November 2020, Bitcoin will be worth over $ 12,000 with a 90% probability. Some analysts point to a higher level of "holering" compared to past bull cycles. I estimate the propensity of investors to keep bitcoins in their wallets as the price rises. In this case, these sentiments can be reinforced by the expectation of a rally associated with halving. Historically, Bitcoin has gone up for 12-15 months after each halving, rewriting all-time highs. While the current environment around Bitcoin is different, crypto market participants are still betting on the leap based on this event. The crypto market is also looking to the future with enthusiasm due to the confidence of miners who continue to keep hash rates at historic highs.