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3 Biggest Bitcoin Takeaways from JPMorgan’s Q3 Earnings

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JPMorgan is not a Bitcoin indicator. But the American banking giant’s third-quarter earnings report is full of anecdotes that may influence the cryptocurrency’s future outlook – in one way or another.

Background

The JPMorgan earnings showed an increase in profits by about 4 percent from a year ago. The WSJ reported the outcome as “surprise,” stating that the bank’s return to pre-pandemic levels baffled earlier Wall Street estimations. JPMorgan somewhat represents the health of the US economy, which remains in recession thanks to coronavirus.

However, it was not the consumer business that upped JPMorgan’s profits. The bank made its money from its corporate and investment wing. The gains surged by about 25 percent as companies rushed to secure cash, refinance debt, and dump stocks to offset the recession.

The Three Bitcoin Takeaways

#1 Loan Defaults

JPMorgan marked down the amount of money it had reserved to cover bad loans–from $10.47 billion in the second quarter to $611 million in the third. It showed that the bank believes it can handle a wave of soured lendings should it come. Meanwhile, it is also a vital signal of a sharp economic recovery.

For Bitcoin, it is good news. JPMorgan is telling the whole world that the worst for the US economy is behind. That should mean a continued upside run across the riskier assets as investors hunt for better yields away from cash and bond markets. Bitcoin has fared better under such fundamentals so far in 2020.

#2 Stimulus Package

JPMorgan CEO Jamie Dimon noted that the US government is the most significant catalyst behind US economic recovery. In March, after the coronavirus-led lockdown, Congress passed a $2 trillion stimulus package that benefited the American households and pandemic-hit businesses and sectors.

While most of that money now stands spent, the policymakers are discussing the second round of stimulus. Mr. Dimon believes that a “good, well-designed stimulus package will simply increase the chance” of getting “better outcomes.” He added that “there is so much uncertainty” around the deal that they cannot predict a “definite” outcome.

Bitcoin’s bullish bias is also at an impasse with the delay in the second stimulus deal.

Bitcoin has failed to close above $12,000 on stimulus uncertainty. Source: BTCUSD on TradingView.com

As earlier reported, the cryptocurrency surged by more than 200 percent on fears of a rising fiscal deficit and devalued US dollar caused by the relief. That prompted companies like Square and MicroStrategy and billionaire hedge fund manager Paul Tudor Jones to offload a portion of their cash reserves to purchase Bitcoin.

JPMorgan’s relaxed stance showed that–deep inside–it expects a stimulus deal to protect it from loan defaults. It is the question of when.

#3 JPMorgan Warnings

Mr. Dimon did leave a word of caution behind. He claimed that JPMorgan has near $34 billion to secure itself from loan losses. But if the recovery stalls–under the repercussions of a delayed stimulus or a renewed resurgence in coronavirus infections–then the bank would need another $20 billion in cash reserves.

That should also pause or reverse the ongoing Bitcoin rally. When stocks come under pressure, investors attempt to dump their crypto holdings to generate cash, as they did in March 2020.

BTC/USD was trading at 11,403 at the time of this writing, up 58.48 percent on a year-to-date timeframe.



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Analyst Claims Bitcoin Unlikely to Gain a Trend Until 2 Key Events Occur

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  • It has been a rocky past week for Bitcoin, as the cryptocurrency has primarily been subjected to a bout of sideways trading
  • Its inability to gain any trend is likely due to the stock market’s consolidation phase
  • For better or worse, BTC has grown incredibly tied to the traditional market
  • Its near-term trend may depend almost entirely on that seen by equities
  • That said, one analyst is now pointing towards two key events currently taking place that need to end before Bitcoin can make a movement

Bitcoin and the entire cryptocurrency market have been caught within a consolidation phase throughout the past few days and weeks.

This bout of sideways trading has done little to provide traders and investors with insight into where it may trend next.

Periods of consolidation as intense as this one are nearly always following by massive movements. The longer and tighter the consolidation phase, the larger the subsequent move will be.

One analyst is now specifically looking towards the conclusion of two ongoing macro events, noting that until they end, BTC will likely continue trading sideways.

Bitcoin Struggles to Gain Momentum as Consolidation Persists

At the time of writing, Bitcoin is trading up marginally at its current price of $11,520. This marks a notable climb from its recent lows but does not mark a break above any key technical levels.

The current trading range that it is caught within sits between $11,200 and $11,600. Until one of these levels is broken, it remains in a consolidation phase.

The longer this bout of sideways trading lasts, the bigger the subsequent move will be. Essentially, Bitcoin is like a spring coiling up.

The coming weeks will likely provide immense insight into how the crypto will finish the year.

Analyst: Election and Politics are Holding BTC Back 

While speaking about where Bitcoin might trend in the mid-term, one analyst explained that the politics stopping the phase 2 stimulus deal from being passed and uncertainty surrounding the election are both holding BTC back.

He doesn’t believe that the crypto will gain a sustainable trend until these two things come to an end.

“I think BTC trading will continue to be pretty boring until the uncertainty of elections/politics are over. Macro-trend says up. Micro-trend says ‘gimme your lunch money, kid.’”

This indicates that it may be a few more weeks before Bitcoin can garner a trend, which could make its next big movement explosive.

Featured image from Unsplash.
Pricing data source: BTCUSD on TradingView.





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Fool’s gold? Peter Schiff’s bank under investigation in tax evasion probe

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This morning, millionaire broker and noted Bitcoin skeptic Peter Schiff awoke to find his bank under renewed scrutiny due to an international criminal investigation. 

According to reporting from Australian newspaper The Age and The New York Times, the J5 — a joint task force of tax authorities from major Western governments convened in the wake of the bombshell publication of the Panama Papers — have placed “hundreds” of accounts at Schiff’s Puerto Rico-based Euro Pacific Bank under investigation for tax evasion and other financial crimes. 

The reports detail what appears to be a comically inept organization responsible for harboring the fortunes of a cast of shady businessmen and criminals. Employees hired after a quick Google search screening were tasked with attracting clients such as Simon Antequetil, the noted Australian fraudster and tax avoidance maestro.

The reports also shed light on how Euro Pacific may have tainted public holdings of Schiff’s favorite asset: gold. 

Former Australian Federal Police (AFP) investigator John Chevis discovered in 2017 that West Australian government-owned Perth Mint had a relationship with Euro Pacific. 

“I was very surprised,” Chevis told The Age. “I think there’s a significant risk that some of the gold held within the Perth Mint by customers of the Euro Pacific Bank may be held beneficially for criminals in other parts of the world.”

In an interview with The Age last month, Schiff denied wrongdoing on the part of Euro Pacific, saying the bank “turns down far more accounts than we approve because our compliance is so rigorous”. 

“It’s got nothing to do with reality,” he said of the allegations.

He later stormed out of the interview.

But nestled amid the reports is a key detail which may shed some light on why Schiff has been such a virulent critic of the world’s most popular cryptocurrency, Bitcoin. 

From The Age:

“The bank’s security was also a problem […] at one point, Russians tried to extort the bank for a ransom of 1000 bitcoins, worth millions of dollars.”

While Schiff was criticizing Bitcoin as early as 2013, the attempted extortion scheme might explain why he’s been particularly vocal as of late, most notably in a Twitter spat with Gemini co-founder Tyler Winklevoss.

Schiff has also demonstrated a history of paranoia regarding hacks, especially cryptocurrency-related hacks. In July, Schiff augured that the hack of multiple Twitter accounts by an American teenager might be a “harbinger” for a Bitcoin hack, and in April he tweeted about “the potential for improvements in technology to hack the blockchain and counterfeit Bitcoin.”

Despite Schiff’s concerns over the potential hacking of the Bitcoin blockchain, there is no equivalent in the digital asset world to iron pyrite. Unless we count BSV.





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Bitcoin May Plunge in Q4 Due to a Tax-Induced Selling Frenzy

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  • Bitcoin’s price action as of late has done little to offer investors with any tangible insights into where it may trend next
  • Analysts have been largely noting that the cryptocurrency’s outlook is being dimmed by turbulence within the stock market, which may persist until after the elections
  • Many traders do believe that the rest of Q4 will be a bullish month for BTC, as this may be when it can decouple from the stock market and garner some independent momentum
  • One analyst explained that he believes downside is imminent in the quarter ahead, noting that whales will have to cash out some of their crypto to cover taxes, which could spark a selloff

Bitcoin and the entire crypto market have lacked momentum throughout the past few days and weeks.

This has largely come about due to the turbulence within the stock market, with bulls and bears being unable to spark any short-term trends as the stock market consolidates.

This sideways trading pattern may not last for too much longer. One analyst noted that BTC might see a selloff induced by whales selling their crypto to cover taxes.

He notes that this sentiment is being reflected while looking towards options market makers.

Bitcoin Lacks Momentum as Stock Market Continues Consolidating 

The stock market hasn’t been able to form any clear trend as of late, with investors widely awaiting more insights into a phase 2 stimulus package that has yet to be agreed upon by Congress and the White House.

As the election also draws closer, investors are potentially awaiting its results before opening fresh positions.

This has caused Bitcoin to see a similar bout of lackluster price action. Both bulls and bears have largely reached an impasse and have been unable to spark any short-term trend.

At the time of writing, Bitcoin is trading up marginally at its current price of $11,400. This is around the price at which it has been trading throughout the past week.

Analyst: BTC Likely to See Tax-Induced Selloff Later in Q4

One analyst offered a bearish outlook on Bitcoin and the crypto market in Q4, noting that he expects it to see a selloff induced by whales taking out money to cover taxes.

“Its hard to for me to imagine a Q4 pump mega. All whales selling in order to prep to tax. Unless you’re telling me that the majority of crypto are in tax havens such as SG and HK. Sentiments shared amongst options market makers who are pricing monthly IV at 30%+,” he explained.

Image Courtesy of Theta Seek.

If the options market makers prove to be correct, then it could be a turbulent coming few months for Bitcoin.

Featured image from Unsplash.
Charts from TradingView.





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