Summer brings positive inflows into the crypto market! What should we be aware of?
Is Bitcoin able to recover?
2019-11-11 • Updated
So far, 2018 was a difficult year for Bitcoin investors. As the price declined, some participants got out of the market. Yet, there are still many HODLers, i.e. investors who aim to hold Bitcoin no matter what.
BTC/USD tested levels around $5880 yesterday, the lowest level since the end of June. However, the cryptocurrency didn’t stay low for long.
Fundamentals: what news drives Bitcoin?
The main topic that interests traders is cryptocurrency exchange-traded funds (ETFs). If such funds were launched, many investors who didn’t want to be involved with cryptocurrency exchanges would gain opportunity to invest in Bitcoin. Currently, there are many proposals of Bitcoin ETFs. However, they have to be approved by the US Securities Exchange Commission (SEC), and it seems that the regulator isn’t ready yet and wants to have more time to study this financial innovation.
The Chicago Board Options Exchange (CBOE) wants to be the first to list a Bitcoin exchange-traded fund. Last week the SEC postponed a decision on a proposal that would allow the fund from VanEck Associates Corp. and SolidX Partners Inc. to list on Cboe. Earlier, at the end of July, the agency rejected a second attempt of Cameron and Tyler Winklevoss, founders of crypto exchange Gemini, to list their Bitcoin ETF. According to the SEC, Bitcoin market is not resistant to manipulation and involves such problems as fraud and investor protection.
Yet, it seems that the introduction of Bitcoin ETF is a question of time. Everyone wants to be the first here. Many market participants think that the CBOE VanEck/SolidX Bitcoin ETF is the most likely to be approved. The problem with the Winklevoss Gemini Bitcoin ETF is that it would use Bitcoin price data only from the Gemini Exchange. As trading volumes at this exchange are low, it’s clear why the regulator feared manipulation. The CBOE VanEck/SolidX Bitcoin ETF, on the other hand, uses the aggregated markets for pricing. Each share of this ETF would cost 25 BTC. The high entry price should eliminate unprofessional investors.
Hany Rashwan, chief executive officer of crypto startup Amun Technologies Ltd., thinks that the SEC will delay with Bitcoin ETF approval until February 2019. At the same time, we know that the markets like “buy the rumor, sell the fact” scenario, so traders may start buying the cryptocurrency far ahead of this event leading the price of BTC up.
In addition, there are other initiatives that would increase the demand for cryptocurrency. For example, the New York Stock Exchange’s owner is planning to introduce its own crypto futures contract later this year. Bitcoin previously rose to a record high in December 2017 after CME Group Inc. launched Bitcoin futures. As a result, it’s clear that further steps to make BTC mainstream will make its price go up.
Technical analysis for Bitcoin
According to Bloomberg, the GTI Global Strength Indicator, which correctly predicted Bitcoin’s decline at the end of July, is now pointing at its recovery. BTC/USD came to a support area, which limited the downside since the start of the year.
The short-term trend still seems negative. A break above resistance at $6450 is necessary for us to consider buying BTC. All in all, we see that there’s sense to keep track of Bitcoin news. Despite the all the troubles and declines, there’s surely light ahead.
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