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Markets Report: Bitcoin Weekly Close Provides Fuel For Race to $14,000

Strong but stable weekly performance leaves bulls in command as Bitcoin’s copycat moves with gold dissipate

Bitcoin is stable and just overcame $12,000 resistance as a new week begins—what could take it higher or put the bears back in control?

Modern Consensus takes a look at the forces at work in Bitcoin markets this week, and what might be in store over the coming days for traders and investors.

Stocks take over gold’s bullish rise

Fresh strength in Stocks forms the background to an interesting change in interplay between macro assets and Bitcoin.

China leads the bullish mood, with the Shanghai Composite Index nearing two-year highs and Beijing signalling that it will continue to adopt an economic policy favorable to market growth.

In the US, the S&P 500 is also nearing its highest levels on record, just 14 points off its position in February, weeks before March wiped huge amounts of value from the books.

As Modern Consensus reported, the growth in stocks since March has caused considerable controversy. Interventions from central banks, notably the Federal Reserve, have combined with huge unemployment to deliver a curious paradox which has left commentators concerned that, for equities at least, market value no longer even matters.

Nonetheless, analysts on Friday predicted that the S&P 500 would surpass its record by the end of the year, hitting 3,600 points by 2021. 

“As the last few months have demonstrated, equity prices depend on not just the expected future stream of earnings but the rate at which those earnings are discounted to present value,” Goldman Sachs, which delivered the forecast, said in a note quoted by Zerohedge

“A plunging risk-free rate partially explains why equities have performed so well despite downward revisions to expected earnings.”

Regardless of its foundations, the stocks rally is already taking kudos away from safe havens, and specifically gold. 

Having hit $2,075 per ounce earlier in August, the precious metal has since lost support at $2,000, lingering at $1,956 on Monday.

The loss was not repeated by Bitcoin, which has shown considerable correlation to the precious metal in recent weeks. According to the latest data, that correlation has since firmly declined to under 50%.

Nonetheless, 1 BTC in gold terms is higher than ever, at 6 ounces per coin, quant analyst and Stock-to-Flow price forecasting model creator PlanB noted on Monday.

“The only chart that matters,” RT host Max Keiser commented on PlanB’s accompanying chart.

markets report bitcoin price
Bitcoin is now worth six ounces of gold. (Photo: PlanB/ Twitter)

Gold hitting $2,000 meanwhile meant that a single paper dollar equalled less than a single gold cent for the first time.

Fundamentals hit new peaks

Where price leaves off, fundamentals have stepped in for Bitcoin this week. 

After mixed performance, Bitcoin’s network hash rate has squarely beaten its all-time highs, and difficulty is set to follow at the next automated readjustment in a week’s time.

Hash rate has set repeated all-time highs this year, with the seven-day average now at 129 exahashes per second (EH/s).

An estimate of the computing power dedicated to the Bitcoin blockchain, hash rate allows a general insight into how confident miners are at current price levels.

Despite revenue halving in May along with the block reward, data shows that miners’ fortunes have since picked up and restablized. This, along with difficulty, form an essential self-regulating equilibrium which allows Bitcoin to function as immutable hard money.

markets report bitcoin price
Bitcoin’s hash rate is higher than ever, estimates show. Source: Blockchain.com

“As a result of exponential advancements in hardware and an increased demand to mine, the number of computations dedicated to mining Bitcoin has grown by nearly 11 orders of magnitude, a 1 million times faster rate than Bitcoin’s increase in price,” a report by asset manager Unchained Capital summarized last week.

“Despite these exponential advancements, Bitcoin’s fundamentals remain intact. Specifically, Bitcoin has been able to issue new coins and produce blocks at a constant rate of production, ensuring a predictable monetary policy.”

The premise of Bitcoin’s long-term predictable immutability has caught the attention of a wider audience this month, with MicroStrategy buying 21,454 BTC in late July combined with record investment in Grayscale’s cryptocurrency funds.

Copycat moves from other big business, which commentators have stated is inevitable, would serve to boost price performance further.

Bitcoin may not need the positive publicity. For popular trader Josh Rager, another bullish weekly close opens the door to higher levels still.

“Heading toward another higher-high on the weekly close,” he tweeted on Sunday. 

“Next levels to watch on weekly IMO, are $13,600 to $14,100.”

Like Rager, PlanB is also eyeing $14,000, but on monthly time frames — such a close would constitute Bitcoin’s highest-ever monthly performance. According to Stock-to-Flow, Bitcoin is perfectly positioned to do so, he said on Monday.

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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.