empty
 
 
You are about to leave
www.instaforex.eu >
a website operated by
INSTANT TRADING EU LTD
Open Account

03.02.202217:05 Forex Analysis & Reviews: Why is Bitcoin the best form of money and "gold killer"?

This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here.

2021 has become a year of rethinking the possibilities of the main cryptocurrency. Bitcoin has significantly boosted institutional investment and helped large companies retain capital during a 30-year high inflation. Cryptocurrency has become the most profitable financial instrument in 2021, ahead of oil and real estate. And of course, the main crypto-asset became the third after Visa and Mastercard in terms of the volume of processed transactions.

All these factors suggest that JPMorgan's position that Bitcoin is only good as a hedge against inflation is somewhat underestimated. The main cryptocurrency continued its path of becoming a global means of payment thanks to the emergence of bitcoin wallets like Chivo in El Salvador, as well as the Lighting Network payment system. The only thing that hinders the introduction of a crypto asset everywhere is high volatility.

It is for this reason that JPMorgan has reduced the "fair value" of the asset to $38k. But at the same time, Bitcoin has increased its dependence on the S&P 500 trading index, which cannot be attributed solely to the current market period. In addition, it is important to remember that it is volatility that allows Bitcoin to compete with gold for investor attention. And even despite the excessive impulsiveness of the BTC price behavior, the coin ended 2021 with a gain of +60%, while gold fell by 2% over the same period.

Exchange Rates 03.02.2022 analysis

Exchange Rates 03.02.2022 analysis

Fidelity analysts do not believe that volatility will be a problem for BTC in the future and will not allow it to reach the value of $1 million per coin. In addition, the report of the company's experts states that due to the security and decentralization of the network, the main cryptocurrency will continue to be in demand.

The massive move of mining from China in the summer of 2021 strengthened Bitcoin's position as the "king of decentralization." Over the past year and a half, the mining industry has become more fragmented due to the equal distribution of shares among several regions.

Taking into account all the facts, we can conclude that during bearish or corrective cycles, it is necessary to accumulate the main cryptocurrency. Large investors understand this, while the retail audience is selling assets at a loss. This is evidenced by the Realized Loss on-chain metric.

Exchange Rates 03.02.2022 analysis

Exchange Rates 03.02.2022 analysis

Is Bitcoin going up or down?

Despite the fact that the coin is trading near the downward trend, there is a possibility of a second decline to the $35k-$30k area. Everything points to a repetition of the spring-summer period of 2021, where three local bottoms were formed during the correction cycle. Current volumes and active accumulation suggest that it is enough for the cryptocurrency to form a double bottom and subsequently exit the $30k-$40k range.

Exchange Rates 03.02.2022 analysis

This is also indicated by the formation of a local "ascending triangle" technical analysis figure. The potential of this formation is $40k-$40.5k, which suggests that the cryptocurrency will continue its upward movement after a short period of accumulation in the $36k-$38.7k area.

Subsequently, I assume a storming of the $ 40.5k level, where the 0.786 Fibo level passes, and the activation of sellers. The result will be a fall to the $30k-$35k area, collecting liquidity, averaging positions, and further recovery to $36k-$38k in order to re-storm $40.5k. In summary, I want to say that it makes no sense to go long before the price goes beyond $40k. Therefore, the current range of price movement should be used for averaging positions in order to make a profit in the medium term.

Artem Petrenko
Analytical expert of InstaForex
© 2007-2024

Open trading account

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.

Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade



You are now leaving www.instaforex.eu, a website operated by INSTANT TRADING EU LTD
Can't speak right now?
Ask your question in the chat.

Turn "Do Not Track" off