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Bitcoin price falls to $6,700 – Experts still bullish

  • The Bitcoin price fell again to $6,750 yesterday, but passed this “re-test”.
  • The long-term implications of the current macroeconomic conditions suggest a bullish trend for the Bitcoin market.

The crypto market experienced another setback yesterday that questions the bullish momentum of recent weeks. Most of the top 20 cryptocurrencies by market capitalization have fallen between 4% and 7% in price, with Bitcoin falling well below the important $7,000 mark and trading at $6,885 at the time of writing. Ethereum has fallen to USD 173 (-5.8 %), Ripple to USD 0.1845 (-4.6 %), Tezos to USD 2.18 (-7.1 %) and Cardano to USD 0.0435 (-5.4 %).

As numerous experts noted, the impulse for the setback once again came from the traditional financial market, which continues to be strongly dictated by the coronavirus. Bitcoin slipped shortly after an oil futures contract that was to be delivered via West Texas Intermediate in May fell by more than 100%. The event marked the first time in history that an oil futures contract fell into negative territory. Driven by fears that the US economy will continue to collapse, the Dow Jones subsequently fell by 600 points (-2.44%) and the S&P500 by 51 points (-1.8%).

Bitcoin passes the “re-test”

Due to yesterday’s drop in the price of Bitcoin, the price of Bitcoin went to a critical level. However, as analyst “Teddy” explained on Twitter, Bitcoin was able to hold above a descending trend line that was recently broken. As Teddy further noted, it is also noteworthy that Bitcoin has been able to hold above the resistance of the horizontal area, which is why the trend of a larger trend is still bullish. Nevertheless, Bitcoin was facing a “retest” and a possible “invalidation”.

However, as analyst Big Cheds stated via Twitter, the important support of the 50-day Simple Moving Average (SMA) was maintained and the “re-test” passed, so that a further upward movement could follow.

Macroeconomic factors speak in favor of Bitcoin

Even though Bitcoin is currently still relatively strongly influenced by events in the traditional financial market, the long-term implications of the macroeconomic environment could be bullish for Bitcoin. As George Saravelos, the global head of foreign exchange research at Deutsche Bank, explained in a special report entitled “The End of the Free Market: Implications for Currencies and Beyond”, there is “no such thing as a free market any more”:

In a matter of weeks, policymakers have become a backstop for private-sector credit markets. At the extreme, central banks could become permanent command economy agents administering equity and credit prices, aggressively subduing financial shocks. It would be a bi-polar world of financial repression with high real economy volatility but very low financial volatility. A ‘zombie’ market.

Financial author Glen Goodman, who made a name for himself during the global financial crisis of 2008, made a similar statement to Forbes, describing how the commodity and cryptocurrency markets are a last haven that central banks have less control over:

There’s no doubt stock markets and currency markets are being hugely manipulated by central bankers, […] Commodities markets and cryptocurrency markets are thankfully one step removed from the Federal Reserve’s decisions. The Fed still affects them, but it doesn’t control them in such a direct fashion. This could end up working rather well for crypto exchanges, as traditional traders start looking more fondly at one of the last refuges of free trading in the world.

In this respect, the crypto market could benefit from the current macroeconomic situation in the long term, as Steve Ehrlich, CEO of the crypto trading platform Voyager Digital, told Forbes. He said that “crypto is the freest market we have left because it is independent of central banks and monetary policy”. At the same time, he also referred to Bitcoin Halving as a catalyst for a bullish reversal:

This [the Halving], combined with the overprinting of fiat currencies, directly highlights the value of bitcoin and decentralized currencies. We believe that because of this, the halving will again catapult the price of bitcoin over the next year.

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About Author

Jake Simmons

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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