In the weekend BTC, ETH and Gold experience substantial price increases
Oh my God, was my reaction when I opened my computer and checked out prices of cryptos yesterday - 27th July, 2020. Bitcoin and Ethereum took off during the weekend - breaking resistance levels with BTC breaking the 10,000$ resistance level and ETH broking the 252$ and 294$ price resistance ranges and going way past 300$.
BTC price action. Resistance range of 10,150 is broken!!
And if that was not enough GOLD, the yellow metal touched All time highs of 1960$, the level it touched during 2012 year.
Gold All Time Highs of 1960$ is touched!!
Large cap cryptos move up while DEFI coins experience no major positive price movements
However, DEFI coins as of yesterday did not move, in recent times, BTC was range bound within the 9,200 to 9,400$ range while DEFI coins experienced major upside price gains.
Probably, BTC was consolidating for the next move, which could have been a downside action, or upside action, and looks like with BTC having passed the 10,000$ range and forming support much above this range shows that perhaps BTC is already geared for bullish upside price increases.
So, what is the catalyst for these latest price increases?.
News articles spoke about the spat between the US and China with the USA having the China Consulate at Houston closed down, while China retaliated by closing the US consulate in Chengdu. US-Sino tensions have earlier led to price increases of BTC and gold, with that hot tariff war between the two countries a year back.This is a geo-political factor that may have caused the recent price increases of Gold and BTC.
US Dollar loses value and falls
Also, yesterday the US dollar fell as well which is interesting. During March, everyone was buying US dollar selling off their assets (stocks, gold, cryptos) as they considered the dollar as a safe haven with the dollar enjoying the status of the World’s Reserve Currency.
US Dollar losing value and falling. Note during March Dollar was rising
Yesterday, people probably sold dollars and hedged dollar risk by investing in tradition safe haven assets like gold and silver. Maybe, the US dollar’s downfall has just began?.
Reasons why people may not view the US Dollars as a safe haven anymore
People are losing confidence in the US economy, with Covid-19, having further damaged the US economy. Obviously, the majority of the businesses are not performing well fundamentally, there is also a rise in unemployment numbers.
Plus, with the FED printing more money, effects of inflation would become apparent one day to the common man, as the value of the dollar is bound to depreciate with a major threat of the dollar completely losing value very much in existence.
Yesterday the US dollar lost value to the yen and the British Pound as well.
March period US Dollars was gaining value not so now.
This is in contrast to what happened in Black Thursday in March, when people sold off everything - stocks, cryptos, gold, silver to get their hands on USD. That time, US dollars were brought because firstly cash was king as it’s the most liquid form of money and second because everyone were viewing the US Dollar as a strong currency, something they brought to hedge against their own local currencies.
People would get money to invest with US Government initiating another round of stimulus
There was also news about US Govt.’s further stimulus measures, with more printing of money going to be done to give money to US Citizens, give them unemployment allowance etc. There is a possibility that people who receive this money put it on BTC, gold, silver causing further rise in prices of these assets that serve as safe haven because they are not linked with any Government, are independent, sovereign hard money, free from manipulation of Government and association with the economy of any country.
Factors behind surge of Ethereum
Finally ETH price also increased and this is because there is a lot of DEFI activity happening inside the Ethereum blockchain. For a while, DEFI project coins experienced exponential price increases, while ETH price did not, now well it has!!
ETH breaks price resistance - 252$ and 294$ and crosses 300$
During 2017 period, ETH network was used for launching ICOs (Initial coin offering) and now, almost a similar phenomenon is happening with ETH network being used by DEFI projects, it’s also the blockchain that’s most used by enterprises currently.
