The price of the largest of the digital currencies in market capitalization, Bitcoin, has the crypto community on the lookout. Yesterday, the price of the same had a significant upward movement that could allow it to overcome the barrier of $ 12,000.
The determining factor in this new Bitcoin bullish episode, has been the setback suffered by the stock market. The panic that gripped the markets, following the statements of senior representatives of the International Monetary Fund (IMF), is one among other causes of the current strengthening of the value of this cryptocurrency.
In this way, the thesis of Bitcoin enthusiasts seems to continue to gain strength, which affirms that it is a “safe haven”. Consequently, the price of Bitcoin rose 3.4% this Monday, reaching $ 11,801 per coin. It subsequently dropped slightly to $ 11,708 at time of writing.
Why is it important that the price of Bitcoin reaches $ 12,000?
According to analysts from major portals claim that the price of Bitcoin has caused a break in the resistance zone of 11,000-11,200, it is a remarkable fact. In this sense, such a breakout has allowed 12K resistance zone tests to be carried out.
In other words, for Bitcoin to have a chance of breaking the $ 12,000 barrier, it is imperative that it remains above 11,200. Now, with the rise on Monday, an important test is carried out, which has been rejected for the moment.
At the same time, it should be borne in mind that several zone tests weaken the resistance, so the price of Bitcoin could be close to 12K. The fall in equity markets has been a factor that could be the great boost to the value of the pioneer cryptocurrency.
If Bitcoin manages to reach $ 12,000 and stay above it, the next test is set at $ 16,500, says the aforementioned portal.
COVID-19, IMF alarms and money laundering
As has been repeatedly highlighted in CryptoTendencia, the COVID-19 pandemic has accelerated a crisis that was already seen coming. In the current scenario of economic chaos, IMF representative Kristalina Georgieva called on governments to take measures related to increasing their debts.
According to the official, to face the current situation, it is necessary for the most advanced economies to take the first step. In particular, it is about the increase in the level of debt for the next year 2021 in an equivalent of 125% of GDP. Likewise, emerging and dependent countries should do the same with 65% and 50%, respectively.
Of course, the official’s statements have set off alarms in the markets. They reacted negatively to such an extent that comparisons with “Black Monday” of 1987 already appear. The truth is that the price of Bitcoin has reacted upward before this.
Parallel to the IMF’s statements, panic also erupts at the second wave of coronavirus on the one hand and financial laundering on the other. According to information, JPMorgan, Deutsche Bank and HSBC are being investigated for irregularities in operations between 1999 and 2017.
Stocks fall to a two-month low
This whole perfect storm has led large sectors of investment to turn to havens of value. The fastest, safest and cheapest to handle is Bitcoin, which is why its price is experiencing a remarkable rebound.
Among the setbacks in the markets, the S&P 500 stands out, which presented a negative streak for four days in a row. This is the largest drop since February. It should be noted that the lowest points were presented by stocks of raw materials, industrial and financial.
Similarly, JPMorgan Chase & Co., Bank of America Corp. and City Group Inc fell to around negative 3%. The same as the markets of the United States, Europe and Asia did not have very good numbers.
This is how some of the markets behaved
Performance of some of the most important markets this Monday.
- Down Jones: -1.84%.
- S&P 500: -1.55%.
- Nasdaq: -0.13%.
- S & P / BMV IPC: -1.45%.
- Colcap: 0.81%.
- Ibovespa: -1.53%.
- Euro Stoxx 50: -3.74%.
- FTSE 100: -3.38%.
- CAC 40: -3.74%.
- DAX: -4.37%.
- Ibex 35: -3.43%.
- FTSE MIB: -3.75%.
- Nikkei: 0.18%.
- Hang Seng: -2.06%.
Other IMF Topics
It is important to note that another of the possible driving forces behind the price of Bitcoin was the subject addressed this Monday by the IMF at a conference. It addressed issues related to digital currencies and cross-border payments and was attended by the Chairman of the Federal Reserve, Jerome Powell.
Consequently, the highest representative of the institution that serves as the central bank of the United States released an interesting note. It is related to the steps that the RRFF is taking in order to evaluate the costs and benefits of a digital currency.
It’s likely, Bloomberg explains, that this discussion, which featured Facebook’s Libra, has brought momentum to the price of Bitcoin. Be that as it may, in recent weeks, the number of investors in Bitcoin, as well as the movement of whales, indicates hoarding.
It is no coincidence that these types of movements, accompanied by a significant drop in the markets, lead to an increase in assets that serve as a store of value.
US and Bitcoin stocks no longer move together
Another issue of great importance is that the trend was broken according to which the price of Bitcoin moved at the same rate as US stocks. Consequently, the value of the main cryptocurrency fell when the markets were down and rose when the movement of this changed.
On this occasion, the fall of the S&P 500 caused, as already highlighted, by the nervousness of investors, was not accompanied by an expected decline in the price of Bitcoin.
It all brings out what, for many, is a growth in the maturity of Bitcoin as one of the most valuable assets. Its scarcity, security and other attributes have allowed it a great acceptance among high-weight investors.
It should be remembered that recently, firms such as Square, MicroStrategy and Stone Ridge invested significant amounts of capital in Bitcoin. These facts, along with the statements of Bloomberg Intelligence analyst Mike McGlone, seem to leave patent where the finances are headed.
“There should be no doubt that technology and digitization will continue to advance, but the supply in Bitcoin will continue to shrink, which will support its price.”, He highlighted.
Before there was no solution, now there is
During the 2008 crisis, many large-scale institutions and investors went bankrupt due to the inability to access a store of value. Certainly, there was the gold, but this metal has some limitations that are not in line with a developing market technology.
Had Bitcoin existed back then, many companies and funds would have been spared the tragedy. Now, cryptocurrencies are active as an emergency lifeline for times of crisis.
The response of governments has been to print more money, as well as other antediluvian measures to “solve the crises.” The generation of inflation and the increase in debt, as already stated, are the current engine that will take the price of Bitcoin to a very high point.
Although it is uncertain to say that, after the events of this Monday, the value of the largest of the cryptocurrencies reaches a historical point, it must be taken into account that the crisis is still there. If to this is added that the means that are being applied to solve it, are those that tend to give strength to Bitcoin, it is not unreasonable to expect a prompt escalation in the price.
Regardless of the scenario, it should be taken into account that the data presented in this work should not be taken as a reference to invest. The writing has purely informative objectives.
Data to take into consideration
- At the time of writing, the price of Bitcoin is $ 11,708 per coin.
- The fall of the markets in the US, Europe and Asia have been the main boost of the value of Bitcoin.
- At the same time, the fall in the markets was induced by nervousness over the IMF’s statements, the whitewashing of some institutions and the outbreak of the coronavirus.
- The limited offer of the pioneer cryptocurrency has allowed it to win the sympathy of an increasing number of investors.
- Although this Monday’s episode does not lead to the expected Bitcoin bullrun, the economic conditions that point to it are still there.