Does It Really Matter What Central Banks Think About Bitcoin?

Tuesday, September 14, 2021

When last we checked, Bitcoin was butting up against former support-turned-resistance in the $48,000/$49,000 neighborhood.

Today, the King of Crypto is hanging on around $45,000, well into what Sam Blumenfeld described last Friday as an “overdue pullback.”

Meanwhile, cryptocurrencies in general continue to generate considerable debate. You might even call it “pushback,” judging by headlines like “Bitcoin Could Collapse and Isn’t a ‘Good Safeguard of Value,’ Warn Global Central Bankers.”

Source: MarketWatch

At the same time, more forward-looking players are doubling down on their Bitcoin bets.

For example, MicroStrategy (Nasdaq: MSTR) CEO Michael Saylor tweeted more major news about his company’s balance sheet Monday morning.

Whether those central bankers HOPE FOR rather than WARN of an ultimate crypto collapse is a matter of the highest intrigue … the stuff of global power/not power dynamics.

Whether Saylor is a crypto genius or a moron depends how big his bet pays off.

The thing is, those of us who aren’t able to drop a quarter-million dollars at a time can still profit from price action.

Indeed, the price action right now is more compelling than any intellectual exercise about blockchain technology, distributed ledgers or even decentralized finance (DeFi).

 Sept. 10, Weiss Crypto Alert:

The broader crypto market is struggling today.

•  Bitcoin (BTC, Tech/Adoption Grade “A-”) is down 2% so far today. It sits slightly above $45,000. But altcoins are faring worse.

•  Ethereum (ETH, Tech/Adoption Grade “A-”) is 6% lower, and it’s trading at about $3,225.

•  Bitcoin’s crypto market dominance dipped 50 basis points, and it now stands at 41.3%.

But we warned that we could face a larger correction after consistent positive price action.

The King of Crypto is holding its value better than most altcoins, but that’s expected during pullbacks. A larger correction would still be healthy, considering the market’s recent strong performance and the volatility of the space.

Bitcoin failed to find temporary support at its 21-day moving average during the mid-week sell-off, but the large drop was largely attributed to overleveraged traders getting liquidated.

•  Keep in mind that a leverage purge in the crypto market from time to time is not overly concerning. It shifts funds from speculators to strong-handed investors.

Here’s Bitcoin’s price in U.S. dollars via Coinbase Global (NASDAQ: COIN):

After briefly surpassing the important $4,000 price level, Ethereum dropped with the broader market.

Like Bitcoin, Ethereum didn’t find temporary support at its 21-day moving average due to the violent leverage-induced sell-off. It still trades below its 21-day moving average, and it will likely continue digesting its significant recent gains.

•  On-chain metrics show there’s less ETH being kept on exchanges, which is very bullish for Ethereum.

Traders are still dealing with exorbitant gas fees due to significant network activity from time to time, but Ethereum recently experienced its first day where more ETH was burned than minted. Over 266,000 ETH have been burned since the EIP-1559 update.

Here’s Ethereum’s price in U.S. dollars via Coinbase:

As usual, Sam pulled back from the top two individual cryptocurrencies to provide some broader perspective:

Corrections are inevitable for an asset class that can experience such large gains in short time frames. While we may see short-term fluctuations, the overall narrative for the crypto market is overwhelmingly bullish. Market sentiment is also improving.

Holdings are transferring from short-term speculators to long-term accumulators, and the next phase of the crypto market’s bull run could begin very soon.

•  Despite the volatile price movements over the past week, crypto’s outlook continues to brighten.

We’re seeing more governments address its future, which cements its status as an important advancement for the global financial system. El Salvador has officially adopted Bitcoin as legal tender, and other countries could soon follow.

More and more merchants are accepting cryptocurrencies as a valid form of payment, which opens the door for tremendous future growth. Adoption starts slowly, but more and more dominoes will fall in line as major players drive innovation.

Prices will reflect that sooner rather than later.

Best wishes,

David Dittman

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