Bitcoin has transformed once again this week—not so much in price as in character—with $50,000 still easily within range.
Modern Consensus takes a look at the events of the past week and considers what might lie in store for traders in the coming days. We also publish a weekly forecast every Monday, the latest edition of which you can find here.
A bull market “like no other”
The week began with sideways price action for Bitcoin, this quickly changing as news hit that Tesla had recently purchased $1.5 billion of BTC.
While still modest compared to the likes of MicroStrategy’s holdings, Tesla set the market on fire with the move, and crucially caused the wider financial establishment to reevaluate their opinions of Bitcoin as an alternative to holding cash.
If there had been any misgivings about Bitcoin maintaining price levels near $40,000, these thus instantly evaporated as BTC/USD hit new all-time highs and continued ever closer to $50,000 thereafter.
Days later, BNY Mellon, the oldest bank in the United States, sparked a similar phenomenon, Bitcoin beating record highs and reaching its current peak of $48,480 after the lender said that it would offer custody and associated services for asset managers.
While Bitcoin has so far failed to either hit $50,000 or flip it to support, sentiment still firmly favors the bulls.
“Retail has arrived. The last 4 weeks. Welcome to the middle phase of the bull market,” statistician Willy Woo commented on Friday.
“This one is like no other.”
Worst case scenario $37,000?
With higher levels lingering, Bitcoin was primed for a fresh move on Friday, having offered 24 hours of sideways movement.
“…We can derive a new level of interest which is around $50,000 and we’re getting there,” popular trader Michaël van de Poppe said in a new YouTube update.
“If $50,000 breaks, we’re looking at $63,000, but that’s just not the case right now.”
Van de Poppe added that $43,000 was the zone to hold currently, and failure to do so would open up a freefall to $37,000 and a knock-on effect throughout altcoins as well.
“#Bitcoin Prudent as $Tesla Smoothes Path to Digital Reserve Asset: Tesla’s $1.5 billion imprimatur has significant potential to mark a fund-flow inflection point favoring Bitcoin, we believe,” Mike McGlone, senior commodity strategist at Bloomberg Intelligence added.
“Old-guard #gold allocators know the risks of not diversifying with the benchmark crypto.”
Miami tops week of adoption landmarks
Nonetheless, positive price cues from the wider economy kept coming on Friday, with Tesla’s buy-in being followed by a notice of acceptance from Mastercard and then the city of Miami.
As confirmed in an address, Miami mayor Francis Suarez plans to turn the city into a jurisdiction which openly allows various transactions to be performed in BTC.
“I want to thank the city of Miami commissioners for supporting my resolution which directs the city manager after analysis to procure a vendor to be able to offer our employees to get a percentage of their salary in Bitcoin, allows our residents to pay for fees in Bitcoin, and also would allow the city manager to cooperate with the Miami County to allow for taxes to be paid in Bitcoin,” he said.
Miami would thus become the first U.S. jurisdiction to embrace Bitcoin in such a way.
The move drew immediate praise from proponents, who had previously lobbied Suarez after he made increasingly pro-Bitcoin statements in recent weeks and months.
Also on Thursday, PayPal, which opened up cryptocurrency purchasing to the U.S. last year, announced that it was expanding the option to the U.K. as its first overseas market.
According to social media sources, this should be operational in the first half of 2021.
With such a wave of adoption incoming, little room was left this week for being wholly bearish on Bitcoin’s long-term potential.
“Can we step back and appreciate the fact that $BTC is worth almost 50k? 11 months ago today it dropped below 4k. What a ride,” trader Scott Melker summarized.
Woo also noted that since the institutional narrative firmly entered with MicroStrategy’s first buy-in, Bitcoin’s correlation to gold had fully reversed. Since July, a steady downtrend for the precious metal could not contrast more with the largest cryptocurrency’s fortunes.
“We have a 180 degree reversal in correlation to Gold,” he commented alongside a comparative chart.