Today In The Market
Bitcoin (BTCUSD-Bitfinex) made a mid-U.S. session low of 6700.00 Tuesday, slips almost -3.25%, around the Nov low of 6619.40. Overall, BTCUSD tumbled over -11% in Dec (MTD) following a slump of over -17% in Nov. Bitcoin plunged over -28% in Nov and Dec (MTD) on a fresh crypto scam and ease of Trump trade war tensions after Phase One deal between U.S.-China. Bitcoin is also treated as digital gold- a safe haven financial asset (like real gold).
The attraction of Bitcoin as a safe haven asset is increasingly under threat amid never-ending crypto scams. But the appeal of Bitcoin/Crypto Blockchain/Ledger Distribution technology is still there and various big economies/countries like China are now trying to adapt it with some regulations.
As a recapitulation, in Oct, BTCUSD jumped over +10% on Chinese President Xi’s reported optimism about Blockchain technology and fading optimism of FB’s Libra. There was also another report that China approved a cryptography law ensuring proper regulation for such Blockchain/crypto technology. The market is optimistic that as China will gradually adapt the Cryto tech, its cold war rival U.S. will not be left behind and will also soon be obliged to adopt the same just to confront China.
BTCUSD as-well-as other Cryptos such as BCH, ETH, XRP, LTC crumbled in Dec of a report of a massive Chinese crypto scam-PlusToken pyramid (Ponzi) scheme of $2B - promising a return of 600% with new customer addition incentive.
The report suggested that many of the players/participants of this illegal Ponzi scheme are selling cryptos including Bitcoin from various anonymous accounts for the last few weeks, causing almost 50% plunge of BTCUSD since late June high of around 13764.00. As a pointer, Chinse authorities have arrested some of the fraudsters of this PlusToken Crypto scheme late June, but some of the main fraudsters are still free, dumping their ill-gotten cryptos in a huge quantity, causing the present plunge. And the market is concerned that such selling (dumping) will continue in the near future. Chinese authorities are unable to track the crypto transactions (selling) as fraudsters are using different Blockchain ledgers.
The report also said that PlusToken fraudsters have already sold 25K Bitcoins and may have another 20K spread in their disposal over 8.7K anonymous BTC wallets. The report also suggested that such PlusToken BTCs are being sold by some BTC wallet or even as OTC transactions (private) through some trading desks for a handsome fee to help in money laundering.
As a reminder, on 17th Dec’2017 (2-years ago), BTCUSD made the lifetime high of around 20000 and from there it plunged to 3200 levels in 2018 due to mainly the advent of BTC derivatives, opening the floodgate of short selling (like any other financial assets listed in exchange) along with regulatory crackdown and a deluge of crypto scams. In June 2019, BTCUSD recovered to around 13764.00 from Dec’18 closing of around 3830; i.e. a move of almost +260% and then plunged almost -52% to the Nov low of 6619.00. Still, BTCUSD is now up by almost +73% for the year (YTD).
For Bitcoin or any other cryptos, extreme volatility is a huge opportunity for trading and investing in 2020. Although technology (Blockchain/Ledger distribution) is now the main attractiveness of Cryptos/Bitcoin, loose monetary policy (QE, rate cuts, NRIP/ZRIP) of Fed, ECB and BOJ as-well-as various other G10 economies, maybe an added attraction in the days ahead. The volatility in BTCUSD is now much more orderly than in 2017-18 and thus it may be a great trading opportunity going forward.
Technically, whatever may be the narrative, BTCUSD has to sustain above 6500 for a rebound to 7300/7800*-8100/8500 and further to 8955/9550-9925/10500* in the near term (under bullish case scenario).
On the flip side, sustaining below 6450 BTCUSD may fall to 6200/5500*-5300/4900* and 4200/4000*-3100/2800* in the near term (under bear case scenario).