Volatility is seemingly becoming the norm in traditional markets: on what some have dubbed “Black Monday,” global stock markets dropped by anywhere from 5% to 12%, then they bounced by 5% on Tuesday, to only crash by 4% during Wednesday’s session (so far).
Bitcoin, interestingly, has flatlined amid this macro backdrop, holding around $7,800 to $8,100 for the past three days, effectively shrugging off the near-record level volatility in equities, commodities, and bonds.
This relative stability as global markets has gone haywire has left many wondering what comes for Bitcoin and the rest of the cryptocurrency market yet. Interestingly, many remain bullish on this nascent market for a swath of reasons.
Here’s Why Bitcoin’s Technical Outlook Isn’t That Bad
Since topping at $10,500 in February, Bitcoin has been in for a rough time, falling as low as $7,600 on Monday as buyers have seemingly upped and left.
Despite this, analysts remain bullish on Bitcoin.
For instance, Joel Kruger, currency analyst at LMAX, recently told BlockTV that while the ongoing price action in this nascent market is currently “interesting,” the drop does not “compromise the outlook for the possibility that this market could be trading [at] $15,000 to $20,000 by the end of the year.” A rally to $15,000 would mark a nearly 100% rally from the current price.
"It is going to be an interesting time but by no means does it comprise the outlook for the possibility that this market could be trading $15,000-$20,000 by the end of this year." – @JoelKruger
— BLOCKTV (@BLOCKTVnews) March 9, 2020
Kruger further explained that as long as this area holds, or at least the $6,000s hold, it will show the strength of Bitcoin, even in the face of macro turmoil.
This analyst in December of 2018 said that he expected the cryptocurrency to end 2019 around $8,000. And that it did.
This optimism has been echoed by Byzantine General, a prominent trader. He noted that both the “BTC production cost and average miner cash flow” have arrived at the $7,700 level, suggesting that this is where the price should hold henceforth; indeed, as can be seen in his chart, the average miner cash flow marked Bitcoin’s bottom three times over the past few months, then once before in December 2018.
Both the $BTC production cost and average miner cash flow arrive at the 7700 level.
This definitely isn't an important level or anything pic.twitter.com/5SF0V0LczA
— Byzantine General (@ByzGeneral) March 8, 2020
There Are Non-Technical Reasons to Be Bullish on Crypto
Importantly, there are reasons other than pure technicals to be bullish on Bitcoin.
On Wednesday, as the coronavirus-caused disease COVID-19 has started to rapidly spread across Europe, from Spain and Italy to the U.K. and the Nordic countries, governments have been forced to intervene to save a potentially catastrophic economic and monetary situation.
According to a number of news stories from global media, the Bank of England (the central bank of the U.K.) has cut its policy interest rate by 0.5% to 0.25% as an emergency measure, Italy has just announced a €25 billion package to deal with the outbreak after quarantining the whole country, and the European Commission has pledged to help member states get ready for the economic effects of the virus through more flexibility in budget rules.
Also, just last week the Federal Reserve cut its already-low policy interest rate by 0.5%, activating an emergency cut for the first time since 2008’s Great recession.
Analysts have said that these measures, especially the emergency rate cuts by the Federal Reserve and Bank of England, amount to rocket fuel for BTC, so to say, as the cryptocurrency has algorithmically-enforced scarcity and no tie to a central government.
Also, the difficulty of the Bitcoin network, meaning how hard it is to put blocks into the chain, recently increased by 7%, indicating that miners remain optimistic about the future of BTC despite the recent market weakness.