Bitcoin Caught A Cold, Is The Bull Market Over?
Coronavirus And The Bitcoin Safe-Haven
The Coronavirus is spreading around the world. The World Health Organization just upped their rating of the illness to a major global threat. The impact of the virus is more economic than anything else, catching the cold is little more than a bad case of the flu. Regardless, the spreading threat has the global equities market in free-fall and gold moving higher. Thinking about gold and the safe-haven trade you’d think Bitcoin would be moving higher too, but it’s not, proving its value as a safe-haven is dubious.
What’s Bitcoin doing now? Moving lower and setting a new low at the late-January support target. The move is gaining momentum so it is possible we’ll see lower prices in the near future. There is some support at the $8,500 level and it may hold, we can expect this level to be tested thoroughly in the least. If $8,500 fails a move down to $8,000 is the likely scenario, a move below $8,500 is a different story. At that -point the long-term outlook will come into question.
The Long-Term Outlook
The long-term outlook for Bitcoin and cryptocurrency in general is bullish. In the general sense, the advancement of the ETH 2.0 project that is scheduled (again) for later this year will spark broader interest in the industry. In the specific sense, the Bitcoin halving is still on the horizon. The halving is just over two months away and should propel BTC above the $12,000 and $14,000 levels at least.
Looking to the BTC hash-rate, the hashing power attributed to BTC is still rising and only recently hit a fresh all-time high. At the current levels the hashing power is nearly double the 2018 peak showing a high-degree of confidence in the technology. Looking to BTC’s dominance, BTC’s dominance is down from the 2019 high but still above 60%. This also shows a high degree of market confidence, the number 2 coin Ethereum is only about 20% of the total cryptocurrency market.
The Trade Today?
The best trade to make today is no trade at all. With BTC testing one support target the prudent thing to do is wait to see how that support target plays out. If BTC is able to stabilize and bounce from $8,500 buying, bullish and long positions are recommended. If BTC fails to find support and falls to new lows it may be time to go short. The risk for bears is that BTC is on a bullish path, there are catalysts ahead, and the coronavirus will go away, sooner or later.
