Bitcoin Is Weathering A Lot of FUD This Week; What’s the Market Saying?
This week, Bitcoin is fighting several ‘fear, uncertainty, and doubt’ all at the same time.
The week started on a red note, as the price of the digital asset declined by 28.5%, and the market got a buy the dip opportunity. On the downside, $30k is of importance, whose breach could trigger “could trigger a much sharper correction.”
However, it didn’t take long for BTC to recover, and we were back at $40,000 in the middle of the week.
Now, into the weekend, Bitcoin is holding around $37,000 BTC -2.92% Bitcoin / USD BTCUSD $ 57,448.38
-$1,677.49-2.92% Volume 64.49 b Change -$1,677.49 Open $57,448.38 Circulating 18.71 m Market Cap 1.07 t 1 d VanEck Files for the First Ethereum ETF in the US 1 d Risk-on Sentiment Sending Bitcoin, Ether, & Gold Higher as President Biden Declares 'We Can’t Let Up' 2 d BoE Governor Andrew Bailey Says Crypto Investors Trading In A Bubble , taking a breather and giving altcoins the chance to rally.
Nothing Stopping it from Going to zero
While the broad crypto market is enjoying an uptrend, Bitcoin is weathering a lot of skepticism and the same old FUD.
First, the UK financial watchdog issued its stapled investment warning that customers investing in cryptocurrencies should be ready to lose everything.
”Cryptocurrencies are not sustainable,” chimed in Peter Branner, the CIO at APG Asset Management. “Bitcoin is not backed by a central bank. It only has a value if people gives it value.”
Even UBS Global Wealth Management is taking inspiration from the Financial Conduct Authority (FCA) issuing a warning of losing all your money.
“There is little in our view to stop a cryptocurrency’s price from going to zero when a better designed version is launched or if regulatory changes stifle sentiment,” authors including Michael Bolliger, the chief investment officer for global emerging markets, said in a report Thursday in response to rising client interest.
UBS believes entry barriers to the cryptocurrency market are low and thus "there is nothing stopping future cryptocurrencies from overtaking Bitcoin".
They fail to understand network effects. Barriers of entry for a bitcoin competitor are almost insurmountable. pic.twitter.com/RixYYcT1iO
— Alex Krüger (@krugermacro) January 14, 2021
While in the short-term, institutional adoption, limited supply, and market momentum can prop up the prices, regulatory intervention is a risk in the long term, the strategists wrote, citing the UK banning crypto derivatives. UBS Wealth said,
“Investors in cryptocurrencies must therefore limit the size of their investments to an amount they can afford to lose.”
When this wasn't enough, the market itself found some FUD to keep things interesting. Mt. Gox saga renewed with CoinLab making a deal so that creditors can claim 90% of BTC owed to the exchange.
But while there is only 0.23 BTC available to every Bitcoin the creditors lay claim to, the users have been waiting for 7 years with nothing so far. Though it “should be bearish news short term,” the rehabilitation plan deadline has been postponed several times.
Amidst this, whether Tether is 100% backed remains a constant presence in the market, which only got heavy with Deltec Bank announcing that they hold a large position in Bitcoin for their clients, which Tether says has nothing to do with them.
We are aware of recent statements by Deltec Bank & Trust Limited about the purchase of digital tokens for and on behalf of their customers. @Tether_to does not outsource decisions about its reserves. Deltec does not purchase digital tokens for and on Tether's behalf.
— Stuart Hoegner (@bitcoinlawyer) January 15, 2021
“The amount of USDT printed by Tether is dwarfed by the amount of USD printed by the state,” argues Balaji S. Srinivasan, and that even if USDT fails, bitcoin has seen several 80% to 90% drawdowns, and there are other stablecoins available with long term people here to “advance freedom, privacy, and decentralization (and) that doesn’t change.”
Goldman Sachs is now also looking to invest in digital assets. The report came after Anchorage became the first crypto firm to win a charter from the Office of the Comptroller of the Currency, whose big official called for regulators to be ready for DeFi — self-driving banks.
Not to mention the big stimulus coming, USD weakness, Fed Chairman informing that they have no plans to increase rates or stop asset-buying anytime soon, the macro environment is also in favor of BTC.