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Bitcoin (BTC) starts a new week still at $ 13,000 and running smoothly in the global economy, what’s next?
Cointelegraph takes a look at the potential issues at stake for Bitcoin in the coming days.
Banks will follow PayPal’s BTC adoption
Last week’s announcement that the payment giant PayPal would support Bitcoin and three altcoins from 2021 will continue to impact price action.
When the news came last week, Bitcoin jumped over $ 12,500 sharply to hit highs of $ 13,200., subsequently reaching $ 13,370 over the weekend.
Reactions among Bitcoin veterans have been mixed, with some warnings to consumers not to let PayPal keep their cryptocurrencies for them, as restrictions are already known to apply.
However, The consensus remains that Bitcoin has overcome a major obstacle to adoption. David Marcus, co-creator of Facebook’s Libra digital currency project that PayPal had previously abandoned, was also optimistic.
“It is exciting to see the major players in financial services jump onto the cryptocurrency bandwagon“, tweeted October 25.
“Many banks are now looking to support #BTC and stablecoins following this week’s @PayPal announcement. We’re changing our minds. “
His words echo the predictions of Virgin Galactic President Chamath Palihapitiya, who He also said on Thursday that Bitcoin is no longer “optional” for large institutions.
As reported by Cointelegraph, Many companies have been adding Bitcoin to their reserves over the past few weeks and months in a concerted effort to reduce exposure to fiat currency inflation.
Bitcoin records the sixth best weekly close in history
At $ 13,070, Bitcoin on Sunday sealed its second highest weekly close since January 2018 and the sixth largest in its history.
On a technical level, this is not an insignificant undertaking., BTC / USD broke through the long-term weekly resistance of $ 11,900 and held those higher levels as well.
The recovery and retention of $ 12,000 has been conspicuously absent even from Bitcoin’s most successful periods since the end of its bull market in late 2017, when it hit $ 20,000.
Both in 2019 and early 2020, short streaks above $ 12,000 resulted in a rejection and withdrawal at lower levels in weekly installments.
BTC / USD weekly chart. Source: TradingView
This week’s close provides another turning point for Bitcoinand analysts expect its importance to be genuine.
Others were more conservative before the event; Cointelegraph Markets analyst Michaël van de Poppe expects a short-term setback.
Van de Poppe said so the area just below $ 11,500 is essential to maintain the current trajectory.
“I think this is a likely scenario; I still don’t expect a clear break above $ 14,000“, he wrote on Sunday.
“A retest of the previous resistance zone to gain momentum towards the next rally towards $ 17,000 from next year.”
Central banks should expand stimulus around the world
In the macro markets, meanwhile, the mood is much less lively at the beginning of the week.
A combination of stricter restrictions for the coronavirus, moves to inflate fiat currencies by multiple central banks and the uncertainty of the US elections weighs on sentiment.
One week before election day, A new discussion in Washington on the Coronavirus stimulus has increased market nervousness.
In Europe, all eyes are on the European Central Bank for an expansion of its monetary stimulus program, which is already worth 1,500 billion euros. Central banks in Japan and Canada are also expected to announce updates on their response to the virus this week.
“It could take more than a year to return to the pre-crisis growth trend.”Chris Chapman, portfolio manager for Manulife Investment, which has more than $ 660 billion in assets under management, told Bloomberg on Sunday.
“The time of recovery will be delayed, but a vaccine is still planned next year.”
The US dollar index (DXY), with which Bitcoin has shown a notable inverse correlation, has started an uptrend in recent days, while stocks start the week on a downward slope.
US dollar index since the fall of the Coronavirus. Source: TradingView
Fundamentals hit record highs
On another suggestion that Bitcoin could take a break in the coming weeks, network fundamentals are showing signs of cooling after recent growth.
According to data from resources such as BTC.com and Blockchain, difficulty and hash rate are or will decrease in the short term.
The difficulty, an essential measure of miners’ activity, is set for a 1.6% decrease on the next automatic reset in six days. Currently, it is at an all-time high.
The estimated weekly average of the hash rate, meantime, it is down from its highs from 18 October.
From Monday, the average is 133 exahashes per second (EH / s), with the record of 146 EH / s.
7-day average Bitcoin hash rate chart over a month. Source: Blockchain
However, For Bitcoin bulls, the old adage that price follows the hash rate is still in play. In an interview with Cointelegraph on Saturday, RT host Max Keizer showed no signs of concern.
For him, the price action must increase further to match the recently recorded hash rate levels.
“The lag in prices over the hash rate is partly due to shitty coins muddying the waters“He said.
“As BTC’s dominance increases, this distracting noise will disappear and we will see the price adjust to the hash rate.”
PlanB: January 2021 to see a “vertical” bull market for Bitcoin
However, for quantum analyst PlanB, the next few months should mean a greater impact on the system for Bitcoin market participants before the slowdown and consolidation phase begins.
Creator of the Bitcoin family of stock-to-flow pricing models, PlanB has been fully satisfied with Bitcoin price trends since the last halving in May. The pricing was adjusted exactly to flow stock demands, and the latest leap was no exception.
Looking ahead, it supports it last week’s huge supply buying will accelerate to a peak before disappearing.
“The shortage of supply after the halving consumes the pool of bitcoins available for sale and leads to increasing supply and demand pressure … until it breaks, a couple of months later “, he wrote during a conversation on Twitter over the weekend.
“In fact, I estimate that the ‘vertical phase’ of the bull market will start in January / February”.
BTC / USD price chart with visible RSI peaks. Source: TradingView
A new tweet before the weekly close he reinforced this idea. This time around, the focus was on Bitcoin’s Relative Strength Index (RSI).
“If they weren’t here during the bull markets of 2013 or 2017, the current price increase of #bitcoin is just a small taste of things to come (weekly RSI in the 70-90 range),” PlanB predicts.
“We haven’t even started!”
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