13 October 2021: After a brief hiatus and some deeper research, we are back this Wednesday with another market assessment. Since our last update, Bitcoin has successfully punched through resistance and has since been coasting along support. Alts have more or less been hanging around at similar levels for the past several weeks. In this update we are going to take a hard look at Bitcoin, external markets, and the broader world economy as we move into mid-October.
News from Around the Economy
Over the past week, we have seen some major developments and changes involving both the cryptocurrency markets and the broader economy. Some of the key takeaways to know going forward:
- Bitcoin has broken its correlation directly with the US500 stock market trends after breaking through $51,000 last week
- China and Europe are experiencing an energy crisis that may spread to North America
- Global supply chains are still swamped and behind by weeks to months
While not directly intuitive for moves within the cryptocurrency market, it is important to be informed on the sentiment of the broader economy especially in the case of alt coins (particularly small caps). We will explain why in the sections below.
Bitcoin Should be the Biggest Piece of Your Portfolio Right Now
After Bitcoin was able to smash through resistance at $51,000, it has actually broken above a long term upward trendline once again that it has not been above since the May market correciton. This is massively bullish for Bitcoin. Additionally, with market pressures on other asset classes as the economy weakens due to rising inflation, Bitcoin has emerged as a near-perfect asset to hold in the coming years.
Take a look at the YTD Bitcoin chart below:
As you can see, Bitcoin is now at levels where any neutral or bearish sentiment should be squashed. It is important to note with inflation, which will be covered in more detail shortly, takes years to show itself after major monetary injections into the economy. It is entirely possible the majority of inflation does not show itself until 2022 or even 2023. Buying Bitcoin at or above $50,000 will look like a gold mine a few years from now.
Here is the recent price action of Bitcoin:
After the breakthrough the downward trend, Bitcoin has found its support at a rising $54,000. Anything at or below that level you should feel confident in buying or holding. Bitcoin even made a quick candle to test the downward trend line and immediately bounced way back above support.
This possibilities of all time highs on Bitcoin possibly by the end of October should be a real probability on your radar.
Global Energy Crisis Creates Price Spikes in Energy
Rolling blackouts in China and parts of Europe followed by shortages in fuel and coal due to labor shortages and flooding have created the potential for a global energy breakdown as the northern hemisphere heads for winter. This is going to keep pushing the price of normal goods even higher as spikes in energy costs consequently result in higher costs to produce and ship household goods.
The price of oil is up over $80 USD per barrel again and China is seeing an absolutely parabolic price spike and demand spike for coal as shortages in oil & gas as well as flooding in a major coal mining area of China continue to put pressures on the energy grid.
For those in north america, the energy crisis is expected to spread west as winter approaches. This is due to the increased demand for energy to keep residences and businesses warm during the colder months of the year.
In terms of the cryptocurrency market, there is one major takeaway from this news: higher inflation. This will be a common theme.
Global Supply Chain Crisis is Literally Off the Charts
Global supply chain issues are certainly not going away anytime soon. The shipping crisis has only intensified as demand increases for daily items. Currently, there is half a million ships waiting to unload off the Southern California coast alone. The crisis at Chinese ports is even worse. As the holiday season approaches, demand for items is expected to increase further.
Check out this 10x spike in demand for container shipping:
Depending on where you live, you should expect shortages of various household and food items in the coming weeks to months. It is possible there are already shortages where you live now based on your location within the global supply chain. Shortages will put even more pressure on the price of goods as inflation increases.
All major issues emerging within the global economy today are all putting even more pressure on one thing: inflation. This is going to push the price of everything higher from energy to food. As inflation intensifies, the global economy will ultimately see some negative effects. The good news of these builidng crisises is that Bitcoin is poised to cash in and become a very desirable asset over the medium to long term.
For cryptocurrencies there are some key takeaways here. Bitcoin is ultimately set to move higher. As liquidity in the economy dries up or moves to safe assets, alt coins may struggle more than they have recently. Not all alt coins are created equal and small caps without sound fundamentals or development should be considered extremely risky assets to be holding right now.
Most start ups fail. Keep this in mind the next time you buy the hype on a small cap with no real development yet as the global economy continues to shake on rocky ground.
Note from RekTimes
We have had some difficulties with connectivity to the Publish0x site as well as some external setbacks which had put us a little behind on content release the past several days. We should be back to a normal posting schedule soon. Thanks everyone!
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