The Bitcoin price is feeble, retracting from current highs and is now flirting with $11,500 at the time of press.
After a sharp rally in the last couple of weeks, the correction is normal. While the uptrend is firm–and traders urged to scoop the retracement, there are fundamental factors supportive of a possible BTC rally.
Winklevoss twins: the USD is not reliable
First–in the long list, is the state of the USD, the greenback. Ranked on the same level as gold and oil—the black gold, the USD is the world’s most dominant reserve currency. It dominates international trade and is kept by foreign governments as part of their reserve.
However, the Winklevoss twins argue that the currency’s reliance as a store of value is waning. In an article on Aug 28, the two serial investors laid bare the state of the Federal Reserve, complaining of their USD mismanagement.
Fears of hyperinflation
Their money printing and accommodative monetary policies–even when the U.S. stock market was in one of their longest bull run in years, lay bare their lose of touch.
Now with an economy propped by helicopter money and CARES Act, the twins expect hyperinflation. This will wipe purchasing power of the greenback, building a perfect case for another Bitcoin bull run to $500k.
Already, the Federal Reserve is preparing for a higher inflation, willing to let the economy run “hot” above the two percent inflation target.
Bitcoin is as an alternative to gold—boasting of several traits making it a perfect, reliable store of value whose supply is fixed and pre-determined by a secure, underlying code.
Fidelity Investments to launch a Bitcoin-only fund
While critics are turning their muzzle to the Federal Reserve, Fidelity Investments—one of the world’s largest money managers, are on Bitcoin case.
Recently submitting their application to the U.S. SEC, they plan to launch a Bitcoin-only fund. Approval means institutions—who are currently tied and only channeling funds through approved CFTC’s gateways like the Bitcoin Futures offered by the CME, can invest through a time-tested agent.
Fidelity scrutinizes the S2F Model
At the back of these news are revelations of their scrutiny of the Stock-to-Flow (S2F) model by PlanB. The price prediction model is controversial. Regardless, Fidelity Investment are convinced the model is credible and can be useful in predicting scarce assets. Their position is maintained by Grayscale who maintain the tool is quite reliable but still remain cautious.
Bitcoin price analysis
The Bitcoin price, after sliding to around $11,300, is bouncing back. Even so, the coin is trailing the USD—and is down three percent in the last week. However, it is gaining against ETH within the same period.
Technically, bears are in control in the short-terming as candlestick arrangements suggest. From the daily chart, even after today’s snap back to trend, Bitcoin prices are oscillating inside Aug 25 bear candlestick with low trading volumes. Additionally, the Bitcoin price is yet to conclusively close above the 20-day moving average (MA), the main resistance line—previous support.
From an Effort-versus-Results perspective, this is bearish. The Bitcoin price will only flash bullish if there is a sharp close above Aug 25 highs with high participation exceeding Aug 17’s—data from Coinbase. If not, a close below Aug 25 lows confirms the double bar bearish reversal pattern of Aug 17 and 18. In that case, the first bear target will be $10,500—February 2020 highs.
Disclaimer: The information provided is not trading advice but an informative analysis of the price movement. Cryptopolitan.com holds no liability towards any investments based on the information provided on this page.