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Markets Report: Bitcoin Holds $9,500 as Analysts Weigh Odds of Correction

Bitcoin goes from strength to strength as old resistance slowly flips to support, but how long will it last?

Bitcoin is aiming to end its trading week much more bullish than where it began — suddenly, $10,000 could be just around the corner.

Data from Bitcoin price trackers on July 24 showed strength in BTC/USD continuing, hitting highs not seen in more than a month.

Modern Consensus presents a recap of the week’s events, part of a regular series every Friday. We also publish a separate market forecast series on Mondays, the latest installment of which can be found here.

Bitcoin tests bears’ convictions

The largest cryptocurrency has had a successful week — something that analysts were not anticipating.

On Monday, attention from analysts focused on gold and silver, as a flight to safe haven narrative emerged due to fresh concerns over macro market reactions to coronavirus and geopolitical tensions. 

In particular, it was the United States versus China that set the stage for uncertainty, in addition to the continued spread of COVID-19 infections.

As time went on, however, the picture became conspicuously more bullish. News that Washington had agreed a $2 trillion stimulus package appeared to have an immediate knock-on effect for Bitcoin, which had already climbed above $9,400.

After a modest correction to $9,350, BTC/USD abruptly reclaimed $9,500, going on to hit a peak of $9,655 on Thursday — its best performance since June 23.

Weekly gains for investors thus stood at 4.8% at press time, with Bitcoin nonetheless overshadowed by more conspicuous growth in Ethereum, returns for which stood at 17.1%.

Nonetheless, performance impressed even previously more bearish traders, with filbfilb summarizing on Friday that he had been overly cautious with his short-term bets.

“Stopped out overnight. Happy enough with the profit but should have stuck with instinct,” he told Telegram trading channel subscribers.

Gold record underscores safe haven appetite

Bitcoin was a latecomer to the profitable week for many investors. Previously, sentiment among social media users pointed to an uptrend in line with gold, but the precious metal showed a clear head start over BTC.

After a slight correction of its own, XAU/USD went on to secure highs of almost $1,900 on the day — beating even its 2011 record.

“Since gold stocks rose with the market, traders sell them when the market falls,” SchiffGold founder Peter Schiff wrote on Thursday. 

“But the fundamentals for gold stocks are much different than for the overall stock market. While the stock market is over-priced, gold stocks are still cheap and stagflation is bullish for #gold.”

Schiff, ever buoyant on safe havens triumphing over fiat money, is nonetheless a vocal Bitcoin skeptic. Despite owning a modest amount, the gold bug took satisfaction from gold’s performance despite Bitcoin’s strength.

“So much for all the hype about institutional demand driving #Bitcoin to the moon,” he commented on news that Prime Factor Capital, the United Kingdom’s first licensed crypto hedge fund, had ceased operating

“That story is a lie told by pumpers looking to dump their Bitcoin on inexperienced retail buyers.”

Institutional interest has nonetheless formed a topic of debate this week. In the US, regulators finally allowed banks to offer crypto custody services, while one analyst described Bitcoin as “an insurance policy on global central banking.”

“If US banks put just 1% of their assets into #Bitcoin as an investment, hedge or insurance… … the Bitcoin price more than doubles,” Charles Edwards of crypto asset manager Capriole commented this week.

BTC/USD: Spotlight on support confirmation

Where Bitcoin is now heading is a question that traders are choosing to consider on a longer-term basis. 

Josh Rager, on the back of the run to $9,500, argued that the impact of May’s block subsidy halving was only just beginning to show itself.

By contrast, the previous 2016 halving ultimately delivered price gains of 3,000%, and investors are still early in Bitcoin’s current cycle.

“2020 halving: just getting started,” he told Twitter followers, uploading a comparative chart.

Fellow trader Michaël van de Poppe eyed an opportunity for BTC/USD to consolidate its latest gains with a modest correction and a period of ranging.

“Level hit. Time to test some lower levels for confirmation of support & some sideways movements. Would suit altcoins,” he tweeted.

According to an accompanying chart, mid-August constitutes a reasonable estimate for Bitcoin to test $10,000 once again.
Van de Poppe also noted that Bitcoin’s later gains came independent of macro market movements, the latter falling, not rising, as the week came to an end. This provides a refreshing contrast to the historic correlation that Bitcoin has increasingly exhibited with stocks since March’s crash.

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Anthony Bevan is a journalist focusing on disruptive finance and cryptocurrency, along with the changing face of the market as Bitcoin gains mainstream adoption. Journalists covering cryptocurrency for Modern Consensus May hold positions in some of the currencies they write about.