Source: PaxForex Premium Analytics Portal, Fundamental Insight
So, are we getting ready for the return of cryptocurrencies? If you are positive about blockchain-based tokens in general, consider buying the "progenitor" of cryptocurrencies, bitcoin. After all, cryptocurrencies are volatile enough as it is, so investors can somewhat reduce their volatility by buying an expensive token, which tends to move more slowly than low-cost cryptocurrencies such as Ripple and Cardano.
On the other hand, a five-figure token like bitcoin is not capable of skyrocketing - or is it? So don't think of bitcoin as a dinosaur among digital assets. Under the right conditions, it can provide the perfect combination of stability and explosive growth.
Every time bitcoin has collapsed since its inception in 2009, critics have predicted its demise. However, they have invariably been proven wrong after the token has fully recovered. This time around, bitcoin needs time to get back on its feet, but a full recovery to its previous peak of $69,000 would represent a 3-fold step.
Whether or not this is a "takeoff" depends on your definition of the term, but a 3x move is certainly worthy of respect. Cryptocurrency critics like to say, "It's different this time," but bitcoin's impeccable track record of fully recovering from at least half a dozen crashes puts the burden of proof on the bears until proven otherwise.
In addition, investors should ponder the reasons for bitcoin's collapse this time around. Concerns about the increased regulation of cryptocurrencies and the issue of legitimacy are certainly part of the bigger picture. But the main factor contributing to bitcoin's fall, which began in late 2021, was undoubtedly the market's fear of rising interest rates.
This fear puts negative pressure on risky assets, such as previously high-yielding technology stocks. One could argue that the Federal Reserve is closer to the end than the beginning of its rate hike cycle, but there is no need to go down that road. Instead, consider whether bitcoin is really competing with government bonds like stocks of big companies are.
While that may change someday, currently 401(k) plans and other large investment funds consist primarily of stocks (and/or mutual funds and exchange-traded funds containing stocks) and bonds. You won't see bonds competing with bitcoin for space in these funds. If anything will be temporarily squeezed out of this list when bond yields rise sharply, it will most likely be stocks. Hard-core bitcoin advocates, meanwhile, are known for holding on to their tokens for all time. For them, the "bitcoin vs. bonds" debate will never arise.
Meanwhile, for better or worse, bitcoin's battle for legitimacy and regulatory recognition is currently being fought in the courts. In particular, Grayscale has sued the Securities and Exchange Commission (SEC), claiming that the regulator unfairly rejected its application to convert its Grayscale Bitcoin Trust fund (which can now trade under the ticker symbol GBTC) into a full-fledged spot bitcoin ETF.
Grayscale claims that approved bitcoin futures ETFs already exist. With that said, one could argue that the SEC is not being consistent or impartial. Grayscale is reportedly willing to take this battle to the Supreme Court if necessary, but even if Grayscale does not prevail this time, it is likely that someone will eventually do so.
At this point Bitcoin is too big and influential to ignore; its market value has already surpassed that of Visa and Mastercard. Regulators must be quick to check and slow to embrace new technology, especially when it disrupts the status quo.
Of course, there is no guarantee that a legal Bitcoin ETF will appear in the near future, but if and when it finally does, the doors will open, opening up convenient and affordable access to the world of cryptocurrency to the masses. The creation of bitcoin-based investment vehicles available through popular stock brokers, 401(k) plans, and investment advisors should be a watershed moment. This prospect, along with Bitcoin's past propensity for a dynamic recovery when it finally happens, suggests the possibility - perhaps even the likelihood - of a rocketing takeoff sooner rather than later.
So feel free to take a moderately large position in Bitcoin before that spaceship leaves the launch pad.
As long as the price is above 21300.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 21955.00
- Take Profit 1: 27000.00
- Take Profit 2: 30000.00
Alternative scenario:
If the level of 21300.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 21300.00
- Take Profit 1: 18300.00
- Take Profit 2: 15600.00
