Bitcoin Triggers a Major Trend Reversal, New Highs Coming
Though not by much, Bitcoin ended August on a positive note, and today it is looking poised to break above $12,000 yet again. At the time of writing, BTC/USD has been trading above $11,900 in the green with a ‘real’ trading volume around $2.23 billion.
According to technical indicators, a breakout is likely to happen as over the weekend; the digital asset bounced off the lower Trading Envelope band, a measure that tends to smooth moving averages to map out lower and higher limits.
The latest move suggests a retest of $12,000.
— CryptoYoda (@CryptoYoda1338) September 1, 2020
The GTI Global Strength Indicator also shows that bitcoin has entered a new buying trend. The largest cryptocurrency isn’t in overbought territory and is foretelling more gains ahead.
Bitcoin breaks this possible ascending triangle and we could see new yearly highs.
Looking for a long so I can make more moniesss 😊 pic.twitter.com/inLheenmzZ
— The Cryptomist (@TheCryptomist) September 1, 2020
Additionally, as we reported, institutional investors are getting up in Bitcoin with those trading CME bitcoin futures, also reducing their short exposure drastically.
Moreover, some believe, Fidelity Investments launching its first Bitcoin fund and JPMorgan Chase making an investment in ConsenSys and selling them its blockchain unit Quorum will help push bitcoin higher. Marc Grens, president and co-founder of DigitalMint said,
“As more household names like JPMorgan enter into the crypto space and regulators relax constraints on custodian companies, we’ll see more institutional capital pour into the industry, driving up the BTC.”
This is the Time!
As we reported, last month the S&P 500 rallied 7% to mark the best August since 1986. Just like the equities market, the Dow rose for a fifth month straight, up 7.6%. The tech-heavy Nasdaq meanwhile jumped 9.6% in its best monthly performance since 2000.
Among the tech stocks, Tesla performed the best with 74% returns in August and up 495.6% YTD. Zoom jumped 28%, Nvidia 26%, and Apple 21.4%.
Meanwhile, the greenback continues to fall ever since March, from 103 to a new low at 91.78 today, last seen in April 2018.
This marks the perfect macro opportunity for the digital asset to rally, and if not now, then when.
TBH if BTC doesn't go to $50k or something in this macro environment we might as well sell everything and call it a failed experiment. BTC is literally made for moments like this. (And I do think it will go to $50k and beyond.) https://t.co/ILwgvC9mIe
— Qiao Wang (@QWQiao) August 31, 2020
However, companies are turning to BTC as a reserve asset in the current environment of fiat currency devaluation, and it is “going to become the more desirable form of collateral,” because central banks can’t create more of it as such, protecting its value, wrote Raoul Pal in his latest GMI Monthly.
“My guess is that bitcoin will trade at rates higher than bonds not because of credit risk or inflation — bitcoin suffers from neither — but because the value of that collateral is worth more due to its “pristineness.” Owners of bitcoin collateral get rewarded for owning the best collateral. In the current system, owners of quality collateral get penalised with lower rates.”
And this, according to him, is a killer application. With a higher value, there’s no incentive to spend it but only to hoard it as a reserve asset that appreciates over time.