Bitcoin news, price analysis and fundamentals
Let's go over some of the important things to consider for bitcoin, ranging from the meaning of the recent dip in price to the reasons for holding bitcoin in the first place. In the video below I detail the points outlined in this post.
Coinbase faces partial outages
The bitcoin price crashed 15% within just four hours today, as news of Coinbase experiencing partial outages was being discussed in cryptocurrency communities. Other exchanges were not facing any outages during this time. It is unlikely that this outage was entirely (or atall) to blame for the decrease in price as the exchange also experienced outages as price was rallying to $8900. The good news is that unlike several years ago, there are now many prominent exchanges to trade crypto on so one exchange facing outages is not going to mean the end of bitcoin.
Technical Price Analysis
We saw a swift pullback in price down to $8,122 on Binance with strong volume, suggesting a possible end of the daily uptrend. However, unless we get a daily close below $8500 (price is currently at $8662), the uptrend will be moreorless intact. That is because it is common to see wicks of candles close below previous lows to shake out traders with stoplosses. If the wick is long and the daily candle closes above $8500, it suggests the bulls are fighting back hard to maintain the uptrend.
The dip in price lined up with a diagonal channel trend support, indicating that this channel has not broken bearish yet. A break of the $8000 level would indicate a likely further price drop to the previous notable resistances (which become support) around the $7300-$7400 zone.
The weekly chart has been registering lower highs and lower lows since bitcoin topped out at $13,970 at the end of June this year, meaning that the bulls need to break the previous weekly double top at $10,500 to before the can show that they mean business.
Therefore I'm leaning towards bearish in the short term but I will be more bullish either if price dips down to the $7400 region or if we break the weekly downtrend by crossing $10,500.
There are a range of conflicting positive and negative factors influencing the price in terms of fundamentals. Let's discuss them.
The fact that bitcoin's newly minted coins will decrease by 50% in two days provides a great argument for price to go up. However, historically bitcoin only saw significant upside action 12-18 months after previous halvenings. The "buy the rumour, sell the news" phenomenon also applies here. There has been a lot of bitcoin hype approaching this halving with the "bitcoin halving" search term seeing record highs for searches on Google. Considering there has been a big run up in price already and that we are two days away from the halving, it is reasonable to assume that some whales will be taking advantage of the over exuberant bitcoin buyers leading up to this even by taking profits.
US government printing money
Forbes reported that the US government are injecting another $2.3 trillion into the US economy, thereby decreasing the purchasing power of its citizens. The fact that fiat money can be printed at any time and that bitcoin has a fixed supply has always been known. What makes the current situation unique is that governments are now printing substantial amounts of money due to the covid-19 induced economical problems at the exact same time that bitcoin is decreasing it's newly created supply by 50%. In the long term, this is is some of the best fundamental news bitcoin has had in a long time.
In 1918 when the influenza killed 50 million people, it was not the first but the second wave which proved to be the most deadly. Even if there was no signifant second wave, experts suggest it will be many months if not a year or more before we have a reliable and safe vaccine to calm people's fears. So even if the economy does open up again, it will be at diminished capacity. Despite all of this, the past 8 weeks have seen a delirious uprise in the stock market prices, suggesting that some investors might be getting over eager in thinking that the worst has past. If we do see a second wave of stock market crashes, it is highly unlikely that bitcoin will see upside price action.
I have been a long term bull for bitcoin ever since I first invested over 90% of my money into crypto three years ago. That being said, I'm slightly bearish in terms of the coming couple of weeks, fairly bullish in terms of the coming 3-6 months and very bullish in terms of the coming 6-18 months. Please note this is not financial advice.
What excites you most about bitcoin? What was the last price you bought bitcoin at? Let me know in the comments below!
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