Cointelegraph By Joseph Young
Holger Zschaepitz, a market analyst at Welt, emphasized that Bitcoin (BTC) is nearing the valuation of Google, as it heads toward $1.5 trillion in market capitalization.
Currently, as of April 17, the market cap of Bitcoin is hovering at around $1.12 trillion as the entire valuation of the crypto market remains comfortably above $2 trillion.
What is the similarity between Bitcoin and Google?
The similarity between Bitcoin and Google that Zschaepitz pointed out is that both have dominance in their respective sectors.
Bitcoin has the strongest network effect in the cryptocurrency market, accounting for more than 51% of the global cryptocurrency market.
Google has dominance over the search engine market and has a massive share of the video-sharing and streaming sector with its ownership of YouTube.
“The Exponential Age: Thanks to network effects, the value of #Bitcoin is increasing and w/$1.159tn has almost reached the stock market value of a classic network share #Google which is worth $1.5tn.”
Whether Bitcoin’s dominance over the cryptocurrency market would be sustained over the long term remains in question, due to the rising valuation of Ethereum and layer-one blockchain networks.
However, the major difference between Bitcoin and the rest of the market is that there is clear institutional demand for BTC as a store of value due to its unrivaled blockchain network computing power and therefore, security and trustlessness.
Hence, investors generally view Bitcoin as a hedge against inflation and the de facto reserve cryptocurrency.
In January, JPMorgan strategists wrote that Bitcoin could rise to as high as $146,000 as it competes against gold as a store of value.
The strategists said:
“This long term upside based on an equalization of the market cap of bitcoin to that of gold for investment purposes is conditional on the volatility of bitcoin converging to that of gold over the long term. The reason is that, for most institutional investors, the volatility of each class matters in terms of portfolio risk management and the higher the volatility of an asset class, the higher the risk capital consumed by this asset class.”
Traditional financial institutions are also acknowledging the importance of Bitcoin’s network effect and its dominance in the crypto market as the go-to store of value.
Where is the price of Bitcoin heading from here?
In the foreseeable future, the sentiment around Bitcoin remains mixed after the public listing of Coinbase.
Following the listing of COIN, there is speculation that it could mark the top of the crypto market.
However, most on-chain data and market indicators such as funding rates do not necessarily suggest that a blow-off top is near.
For instance, popular crypto trader known as “Crypto Capo” said:
“I read many people saying that funding is high, not only in Bitcoin, but also in altcoins. This is relative. If we compare the current funding levels with those of the top of 2017, we see that they are low levels, taking into account that the price is three times higher. Also, the current trend is led by spot trading, and not by derivatives.”
Meanwhile, key on-chain metrics also suggest that Bitcoin price is still far from the bull market top. On the contrary, BTC price may easily reach six figures, as forecast on the popular stock-to-flow model, and even go as high as $400,000, according to Bloomberg analysts.
Not sure if the bulls are back? Here’s how the golden cross spots trend reversals
Cointelegraph By Rakesh Upadhyay
The most important aspect in trading is to correctly identify the long-term trend. Once this is done, the rest of the steps are not very difficult because all a trader needs to do is look for buying opportunities in an uptrend and selling opportunities in a downtrend.
In reality, many traders complicate the process by waiting for lower levels to buy in a bull market and missing a large portion of the rally. Then, when the trend reverses and the price starts falling, the same traders start buying, which usually results in losses.
To avoid this pitfall, traders can incorporate the use of key moving average convergence patterns in order to have a better gauge of market momentum and the direction of the trend. In last week’s article, we reviewed the Death Cross, and this week we will look at the golden cross pattern. This setup can help keep traders at bay in a downtrend and give them a green signal to start buying when the trend turns bullish.
Let’s investigate this pattern and learn how to use it when trading.
What is a golden cross and how does it form?
A golden cross is a setup that signals a possible change in a bearish downtrend. It is formed when a faster period moving average, usually the 50-day simple moving average, crosses above the longer-term moving average, generally the 200-day SMA.
In a downtrend, both the 50-day SMA and the 200-day SMA are sloping down. However, when the price reaches an attractive valuation, long-term investors start accumulating, which arrests the pace of the decline. As more investors start buying, the trend starts to turn up.
A sustained up-move results in the 50-day SMA changing its direction from down to up. However, the 200-day SMA is slower to respond, hence when it is either falling or has flattened out, the 50-day SMA rises above it, forming the golden cross.
When a golden cross forms, it is a sign that the downtrend has ended and a new uptrend could have begun.
However, like every setup, the golden cross is not foolproof. It gives false signals several times but with a few filters, traders may reduce the whipsaws.
Related: Here’s 5 ways investors can use the MACD indicator to make better trades
A profitable golden cross
Bitcoin (BTC) bottomed out at $3,858 on March 13, 2020, and the most recent golden cross formed on May 21, 2020, when the price closed at $9,061.96. That means, the BTC/USD pair had already moved 134% from the lows by the time the golden cross confirmed a change in trend.
Inexperienced traders may have felt the price has run up too fast and would have waited for a deep correction to happen before buying. However, when a trend changes, it rarely gives an opportunity to buy at much lower levels as was the case here.
The rally never looked back and it hit an all-time high at $64,899 on April 14, 2021, a massive 616% gain from the level where the golden cross formed. This shows that the trader who just bought and held after the formation of the golden cross would have earned huge returns.
However, every golden cross does not provide such outsized returns and sometimes traders fall victim to whipsaws.
A failed golden cross
Bitcoin dropped from a local high at $13,868.44 on June 26, 2019, to a local low at $6,430 on Dec. 18, 2019. The golden cross formed on Feb. 18, 2020, when the pair closed at $10,188.04.
However, traders who bought after the golden cross formed may have suffered quick losses as the pair plummeted to $3,858 just a few days later. This shows how traders may sometimes get caught on the wrong foot by just buying after the golden cross.
Related: Unsure about buying the dip? This key trading indicator makes it easier
Filters can when the golden cross throws a false signal
Traders could avoid buying if the golden cross forms when the 200-day SMA is still sloping down. They can wait for the 200-day SMA to flatten out or turn up before buying as that may reduce the whipsaws.
As an example, EOS formed a golden cross pattern on Feb. 8, 2020 when the price was at $4.76. This price cleared the filter as the 200-day SMA had flattened out. However, had traders taken the trade, it would have turned into a loss as the EOS/USDT pair topped out at $5.49 on Feb. 17, 2020, and then plunged sharply to $1.35 on March 13, 2020.
The second golden cross on Aug. 22, 2020, did not clear the filter as the 200-day SMA was sloping down when the pattern formed. This would have kept the bulls from getting sucked into this trade.
The third golden cross on Dec. 12, 2020, cleared the filter but it would have hit the stop-loss as it breached the strong support at $2.20 on Dec. 23, 2020. Finally, the fourth golden cross that formed on Feb. 08, 2021, turned out to be profitable.
The above example shows that when the price is stuck in a range, the golden cross does not act as the ideal indicator. Therefore, traders may add another filter to buy only after the price breaks out of the range. This may reduce the whipsaws further and help traders buy only in uptrends.
When a cryptocurrency is in a downtrend, traders may wait for the golden cross to occur before starting their purchases. This could keep traders out of trouble in a falling market.
After the golden cross sustains and a new uptrend is confirmed, traders may look for buying opportunities. Among the many possibilities, one that was highlighted in an earlier article to buy on dips to the 20-day EMA or the 50-day SMA could come in handy.
A golden cross can confirm that a downtrend has ended and a new uptrend could have begun. Until a golden cross forms, long-term investors may avoid cherry-picking as that may result in losses in a downtrend.
However, like every other pattern, the golden cross is not perfect. It may result in whipsaws if the coin enters a consolidation during the bottoming formation. Therefore, traders must take precautions to avoid being sucked into bull traps.
Once the uptrend is established after the golden cross, traders may look for buying opportunities and stay with the trend till a reversal is signaled.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Bitcoin price edges higher as Fed inflation meeting sends DXY to 2-month high
Cointelegraph By William Suberg
Bitcoin (BTC) stayed below $40,000 on June 17 as a surging U.S. dollar added to downward BTC price pressure.
BTC/USD bounces at $38,000
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD trading at around $39,300 on Thursday.
The largest cryptocurrency fell during a meeting of the Federal Reserve the day before in which Chair Jerome Powell acknowledged inflation could run higher than planned in the short term. As Cointelegraph reported, May’s Consumer Price Index (CPI) report showed inflation hitting a 13-year high last month.
While traditionally a boon for Bitcoin, however, Powell’s confidence in inflation returning to normal long term ultimately served to boost the dollar more than BTC.
“Yes, they are anchored and they’re at a good place right now — it’s gratifying to see them having moved off of their pandemic lows,” Powell said in subsequent media comments about inflation indicators.
“It’s fundamental in our new framework to assure that longer-term inflation expectations are anchored at a place that is consistent with our goal.”
That goal is currently around 2%, with the Fed acknowledging that there would be periods where rates overshoot that threshold.
The dollar gained on the back of the meeting, with the U.S. dollar currency index (DXY) advancing to two-month highs.
This is a classic provider of friction for Bitcoin, and already tepid sentiment over the outlook for the bull run of 2021 continuing saw a further test.
Small futures gap provides possible target
Popular trader Crypto Ed nonetheless noted the positive implications of BTC/USD bouncing off $38,000 support at its intraday lows.
Related: Pantera CEO: Crypto market ‘panic’ is subsiding, now’s the time to buy
“Let’s not forget the possible extension to fill the CME gap,” he added as part of comments on the low, with the futures gap — another favorite short-term price influencer — at $37,000.
At the same time, fellow trader Peter Brandt highlighted a number of gaps which remain unfilled on BTC/USD, while adding that he doesn’t believe all gaps must get filled.
Previously, Cointelegraph reported on the changing face of Bitcoin investor habits during this prolonged period of lower prices.
Hodlers are storing coins for longer, and even those who bought during the first months of the bull market remain committed to not selling, data shows.
Bitcoin price falls after Fed shifts interest rate hikes forward amid inflation fears
Cointelegraph By Ray Salmond
Bitcoin dropped closer to a key support level and the Dow and the S&P 500 pulled back after the Federal Reserve moved forward its plan for 2 interest rate hikes in 2023.
Bitcoin (BTC) price extended its losses shortly after Federal Reserve Chair Jerome Powell announced that the Fed would move forward its timeline and schedule two interest rate hikes in 2023.
Bitcoin price was already seeing weakness in the early trading hours after losing the $40,000 level to mark an intra-day low at $38,300. The Dow and S&P 500 also pulled back 0.77% and 0.54% respectively.
The decision comes as economists worry about rising inflation in the United States and Powell said that the Fed had raised its inflation expectation from 2.4% to 3.4%. While Powell described the current inflation spike as “transitory”, consumer prices are at a 13 year high and analysts worry that rising inflation will impact the post-covid economic recovery.
Powell did not directly address whether, or when the Fed would begin tapering its $120 billion monthly bond purchases but the decision to begin raising rates in 2023 suggests that the program will see cuts way in advance of 2023 in order to be carried out in a moderate fashion.
Can Bitcoin price maintain its current range?
On June 15 Bitcoin price successfully completed its bullish inverse head and shoulders pattern (4-hour chart), but fell short of the $45,500 target after hitting resistance at $41,350.
While the price has slipped below $40,000 and failed to flip the level to support, analysts are viewing the current price action as nothing more than range-bound trading and at the time of writing, $38,300 looks like a lower support retest.
With less than 3 hours before the daily close, traders will likely look for BTC to hold above the 20-day moving average near the $37,000 level which is expected to function as support.
One thing to note is the steady inflow of BTC to major exchanges and an increase in miner outflows over the past few days as data from CryptoQuant suggests that Bitcoin inflows lead to bearish outcomes.
The 50- and 200-day moving averages are also enroute to converge, possibly forming a bearish ‘death cross’, but both are lagging indicators, meaning they are not entirely reflective of spot price action. Nevertheless, both moving averages could present considerable resistance for bulls.
A dip below the $37,000 to $36,000 range where many traders on crypto-Twitter have announced they have bids would likely take BTC price to the lower end of its current range in the $35,000 to $31,000 zone.
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