Bitcoin starts a new week falling just short of the magical $50,000—will it make the grade or will a new correction set in?
After a volatile weekend which produced new all-time highs of $49,714 on major exchange Bitstamp, Bitcoin seemed to run out of steam, falling back below $47,000 before pushing up towards $48,000 again.
Modern Consensus takes a look at what could lie in store for Bitcoin in the coming days. We also publish a weekly markets roundup every Friday, the latest edition of which you may find here.
So near yet so far for Bitcoin, Ether
With the U.S. on holiday, markets are still trending up and the dollar down, providing the perfect background for strength in BTC/USD. At the same time, the sudden breakout seen over the weekend may turn out to be more like a “fakeout,” analysts warn, as $50,000 support continues to evade the market.
Analyzing the current setup, popular analyst Michaël van de Poppe highlighted the need to keep $47,000 intact in order to avoid a more significant drop.
Flip the area between $48,500 and $49,000 to firmer support, however, and the upside towards $50,000 and higher could continue.
“Given that such downwards momentum is going to cause pain across the market, I’m assuming the Bitcoin dominance chart will go up, given the fact that altcoins will drop more heavily than Bitcoin, causing the Bitcoin pairs on altcoins to drop heavily,” he forecast about a downside scenario winning out.
Likewise, recent peaks for Ether faced the same setup and could follow Bitcoin’s lead, he said. The largest altcoin was close to $2,000 on Monday, with sellers nonetheless keeping the psychologically significant level out of reach, much like $50,000 for BTC/USD.
“Quite a bit of bearish divergence with (the relative strength index) on multiple time frames at the moment for $BTC. Largely overbought as well. Going to need a major push soon to overcome them,” fellow trader Scott Melker added.
Meanwhile, thanks to a week of corporate shifts in favor of Bitcoin, themselves coming after MicroStrategy’s dedicated summit, appetite was present for fresh announcements from the business sector.
“The key for Bitcoin’s path higher is to win over more corporate endorsements,” Edward Moya, senior market analyst at Oanda, told Bloomberg.
“Bitcoin is no stranger to massive weekend moves and the next several days could easily see some wild swings.”
Following on from rumors which appeared late in the week, Morgan Stanley is widely tipped to announce some form of Bitcoin exposure via $150 billion investment offshoot Counterpoint Global.
Taleb abandons BTC
Against overwhelmingly positive sentiment, Bitcoin bears are thus in increasingly short supply this week—but there are exceptions.
Nassim Nicholas Taleb, author of the popular book “The Black Swan,” announced that he was selling his BTC position due to what he claimed is excessive volatility. Proponents who privilege Bitcoin over alternatives he described as “monocellular” in a Twitter storm on Sunday.
“Bitcoin misfits share the monocellular brain & logical wiring defects: ‘BTC is a good idea therefore IT WILL BE *THE* reserve currency’ (i.e. no other ideas & no other reserve). Reserve ≄Volatile,” he wrote.
“+ It is not supposed to be volatile AT HIGHER PRICES. + Never found uses.”
On a more personal note, Taleb then attacked Kraken growth lead Dan Held for a comparison of Bitcoin and gold, with Held subsequently adding “monocellular” to his Twitter name.
As Modern Consensus has reported, supporters argue that Bitcoin is the logical choice—arguably the only logical choice—for a new reserve currency due to the unique characteristics it possesses. These, they consider, allows Bitcoin to perform even gold’s duties better than gold itself.
“Bitcoin has been perfectly honed for its environment through its exceptional genetic code and the manifestation of that code in the form of superior traits,” Held wrote in a dedicated blog post late last year.
“Bitcoin is the apex predator of money, and its existence is the precursor to the extinction of gold.”
Commenting on Taleb’s decision to exit BTC, statistician Willy Woo was dismissive of his motives.
“He dropped BTC due to pretty generic noob worries, same FUD bankers throw at BTC,” he responded on Twitter.
“I recommend subscribing to (Held’s newsletter) to get a top 1% understanding of what you hold.”