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Markets Report: Elon Musk’s Bitcoin endorsement fizzles as Reddit takes on XRP, Dogecoin

Slow progress for Bitcoin even after an endorsement from Elon Musk allows two altcoins in particular to steal the show

Bitcoin is tackling a pivotal level as a new week begins but is taking a back seat to Dogecoin and now XRP — what’s next?

As Reddit users shift their focus from stocks to silver and crypto, hope is rising about Bitcoin becoming the ultimate beneficiary.

Modern Consensus takes a look at the state of the market and what might be in store for Bitcoin in the coming days. We also publish a markets roundup every Friday, the latest edition of which can be found here

Even Elon fails to rally BTC

Elon Musk’s long awaited endorsement of Bitcoin sort of fizzled (Photo: Wikimedia Commons)

The weekend was eerily quiet once more for Bitcoin, with no unusual behavior challenging the established status quo. A trading corridor between $30,000 and $40,000 already in place for several weeks continued to dictate the atmosphere as rangebound moves prevailed. 

With attention still on stocks and hedge funds’ decimation by retail investors, few factors were pointing to Bitcoin stealing the limelight. 

Even positive words from Elon Musk, who in an interview on Sunday said that he “supports Bitcoin” but has no opinion on altcoins, failed to rally the bulls. 

Instead, analysts pointed to a need for Bitcoin to reclaim $34,000 as a support level in order for fresh upside to have a chance of ensuing. At press time on Monday, BTC/USD was attempting to do just that after making limp progress in recent days.

“The price of Bitcoin is showing overall weakness as it struggles to establish $34,000 as a support level,” exchange BTCC wrote in a note. 

“Some investors start to worry about Bitcoin’s price falling into a bull trap after ‘Elon Musk pump’. However, the price has found strong support at the $32,000 level while rallied rapidly after reaching the 240-day simple moving average. Therefore, it is expected that Bitcoin is still on the bullish trace.”

Bitcoin’s battle for $34,000 takes shape. Source: TradingView

With January’s monthly close coming in at an all-time high of $33,141, quant analyst PlanB had separate good news. In a tweet on Monday, he announced that Bitcoin had entered the start of its bid to vie with gold as a multi-trillion dollar asset, a process known as “phase 5” in his stock-to-flow cross-asset (S2FX) price forecasting model.

“…Phase 5 has started! We only know for sure when we have more data and run the cluster analysis, but for now I mark December as the month where we transitioned to phase 5,” he wrote. 

“Note S2F multiple drops to ~0.1 ($31K/$288K). 2021 will be spectacular.”

BTC/USD conforms to S2FX expectations. Source: PlanB/ Twitter

The waiting time for “spectacular” action may not be as long as some imagine. Data from exchange orderbooks shows large amounts of BTC exiting hot wallets for cold storage. 

In the case of Coinbase, a $500 million withdrawal headed to a wallet which has no outgoing transactions.

“Massive Coinbase outflows. 15k $BTC at 32.4k,” Ki Young Ju, CEO of on-chain analytics service CryptoQuant, noted on Monday. 

“Looking at the (transaction), it went to custody wallets that only have in-going transactions. It’s likely to be OTC (over-the-counter) deals from institutional investors. I believe this is the strongest bullish signal.”

Amid speculation that Musk may have praised Bitcoin because he has already purchased some or is on the cusp of doing so, for his part, the world’s richest man stayed off the topic of his own investment, noting only that his mentioning Bitcoin has the power to move the market.

“…I’m late to the party but I’m a supporter of Bitcoin and I think that Bitcoin is really on the verge of getting broad acceptance by the conventional finance people,” he added.

Elon Musk

Dogecoin leads the charge of the alts

As the Wall Street opening bell looms, however, commentators are still more excited about Reddit’s next move. 

As stocks cool, silver, Dogecoin and XRP are showing unprecedented gains and demand. Of these, silver and XRP had previously shown overall weakness, with the threat of legal action making the latter a hot potato among traders.

Thanks to Reddit, XRP/USD has gained 170% in a week, while silver is at its highest since 2012 and DOGE/USD has outpaced them all with 7-day returns of 350%.

XRP/USD challenges its December performance. Source: TradingView

“There’s no call you can make in Bitcoin; there’s no call you can make to the CEO of Ethereum—there’s no such thing,” Gemini exchange co-founder Tyler Winklevoss summarized to CNBC late last week.

Referring to allegations that reeling hedge funds pressured stock trading app Robinhood to choke off GameStop stock purchases, he added:

“…People are seeing the permissionless nature of these blockchains and the power of it.”

Tyler Winklevoss

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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.