Elon Musk, Bitcoin and the Reddit-Raiders
A casual vote of confidence from the world’s richest man raises eyebrows, but doesn’t lead to a BTC price spike – could that change soon?
Bitcoin (BTC) begins a new week with $30,000 intact and a message of support from the world’s richest man – what can we expect next?
While trading resumes around the world, the largest cryptocurrency still lacks any decisive momentum to the upside or downside.
Cointelegraph takes a look at five factors that could play a role in shaping bitcoin’s price trajectory in the coming days.
Shares on guard against “Reddit-Raiders“
Stock markets began Monday with volatile behavior after posting their worst performance since October last week.
In a story that is likely to continue, markets are still feeling the effects of a revolt by retail investors who turned sour after regulators and trading platforms intervened to stop them from participating.
Although it involved U.S. companies, the impact was felt across the global economy, with Asia also coming under pressure before rebounding on Monday.
Nonetheless, a repeat of last week’s chaos could weaken an already shaky equity environment, analysts warn.
“We think the vulnerabilities are there, and while we don’t know exactly what catalysts might emerge or their precise timing (including some of the recent retail-focused pushes against heavily shorted stocks), we suspect they would derail the current rally and provide entry points that could be 10% lower,” Tobias Levkovich, chief U.S. equity strategist at Citigroup, wrote in a note to clients quoted by CNBC on Sunday.
The timing of the retail move could hardly have been more appropriate, with many stock indexes posting all-time highs despite increasing restrictions on daily life and economic activity in the U.S. and the Western world due to the coronavirus.
Another thorn in the side of U.S. policymakers is the ongoing disagreement over the size of a new stimulus package. New President Joe Biden’s $1.9 trillion plans have been called into question, with Republicans offering a $600 billion package instead – nearly 70% less.
Ammous warns against “shitcoin” silver
As global awareness of the disparity between the impact of these restrictions on the rich and the poor has awakened, investor appetite seems hardly dampened, despite warnings from the authorities.
This time, however, it seems that stocks are no longer on their radar, but the precious metal silver. In Monday trading, silver hit its highest level since 2012 at nearly $29 per ounce.
Gains have been brisk, with a 15% gain in the last four days alone – since the flurry of retail stocks took a turn for the worse.
Unsurprisingly, the phenomenon has been accompanied by a series of calls for these investors to abandon relatively lackluster silver and invest in Bitcoin instead.
“REMINDER… SILVER IS A SHITCOIN,” Saifedean Ammous, author of the popular book “The Bitcoin Standard,” summarized to Twitter followers over the weekend.
“The inventory to flow-through ratio is about 3. Whatever happens in the paper market doesn’t matter because it’s very easy to mine and recycle tons and tons of silver and put it on the market, which crashes the price. Pumping silver is a losing game.”
Ammous was referring to the widely used stock-to-flow method, which analyzes the scarcity of an asset based on the amount added to its existing supply in a given period. The same model provides the verdict that Bitcoin is the “hardest” of all monies to ever exist, thanks to its fixed declining issuance.
Nonetheless, some saw the potential if the same group of retail investors bought up silver en masse. For veteran trader Peter Brandt, a possible target is $102, or 250% from current levels.
Musk: I am “late” with Bitcoin
Just when Bitcoin supporters were feeling left out, the world’s richest man stepped in with rare words of encouragement.
In an interview with Clubhouse that aired late Sunday, Elon Musk openly acknowledged that he was a “supporter” of Bitcoin.
“I have to watch what I say here; some of these things can really move the market,” he began.
Musk revealed that even his friends had tried to get him on board over the years, even giving him a piece of a Bitcoin pie to eat in 2013. Nonetheless, after holding off on getting more closely involved, he now admits he’s “late to the party.”
“So I was a little slow on the uptake there, my apologies,” he continued.
“I had to think about it a little bit, but I think at this point Bitcoin is a good thing, and so I’m a proponent of Bitcoin, as I said – late to the party, but I’m a proponent of Bitcoin.”
As Cointelegraph reported, last week, the Tesla and SpaceX CEO added Bitcoin as the only content on his Twitter bio. Amid suspicions that it was a hoax, Musk nonetheless sent BTC/USD soaring for a brief period, the pair adding $5,000 in a matter of minutes as users caught on.
However, the recent interview has seemingly had little impact, with Bitcoin remaining at the lower end of its broad trading corridor, which stretches between $30,000 and $40,000.
Massive Abhebungen verlassen die Börsen
While it remains unknown whether Musk has purchased BTC or whether he plans to do so in a personal or corporate capacity, outflows from exchanges continue to signal major players are buying for the long term.
As noted by Danny Scott, CEO of UK-based exchange CoinCorner, and others, a single recent move from the large exchange was worth $500 million to Coinbase alone.
“Are we about to start February with another institution purchase,” he asked Monday.
The data additionally shows large amounts of BTC leaving exchanges for private wallets, a classic indicator of the desire to hod rather than trade or sell.
According to on-chain analytics resource CryptoQuant, total BTC holdings on exchanges are now back to their lowest levels in at least a year after a brief period of increase.
Altcoins stand in the shadow of XRP, DOGE
Bitcoin may struggle for prevalence not with non-crypto investment options, but with altcoins in the coming days.
As rumors spread that Reddit investors plan to target XRP this week, the fourth largest cryptocurrency began to outperform the major market cap tokens on Monday. The 24-hour gains have reached nearly 40%, marking a comeback for the embattled coin, which had previously fallen from highs above $0.60 to as low as $0.16.
“Today is the day, we should see a massive pump on $XRP. My guess: we will see 95% of people losing money on it, “Cointelegraph Markets analyst Michaël van de Poppe forecast on Twitter.
Last week saw a concerted effort to pump up the price of meme-based altcoin Dogecoin (DOGE), a trend that continued as DOGE / USD increased 37% on Monday.
The pair is now almost at $0.04, a transformation from just days ago and a simple new all-time high.
In his interview, Musk, who is responsible for previous smaller DOGE pumps, chose his words carefully about altcoins in general.
“I don’t have a strong opinion about other cryptocurrencies, I mean, I occasionally joke about Dogecoin, but that was really just meant as a joke,” he said.
“Dogecoin is made as a joke to make fun of cryptocurrencies, obviously, but fate loves irony.”
Eyes on $34,000 support flip
Finally, Bitcoin’s technical analysis reveals clear levels that must either be recaptured or avoided to determine the market’s direction.
As Bitcoin has fluctuated for several weeks since reaching an all-time high of $42,000 last month, commentators are still waiting to see if lower levels need to be retested before the overall bull market can continue.
For fellow Cointelegraph Markets analyst filbfilb and others, $34,000 now forms an essential barrier to flip to support to secure further upside.
“Overall supply weighing down market until this subsides sellers in control as seen by lower highs and lower lows. LTFs are showing an attempt to break through this, but first 34k needs to be recaptured,” he concluded on Saturday.
Above $36,700 there is “aggressive selling,” he added, while demand exceeds supply at $30,000 and below.
Data from Binance’s order book at the time of writing shows increasing selling pressure from $34,000 to record highs.
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