After hitting $6,600 at the beginning of the last trading week, Bitcoin rallied +10,0% last Friday, jumping to $7,300 before retracing. Major altcoins have also reduced their losses. Bitcoin trimmed its weekly losses to -16,0% and it is down by -21,0% in the past month, but still up by +87,0% over the past year.
Bitcoin’s market cap share reached almost 65.6%. Major altcoins have also increased – ethereum rallied to almost $150 erasing all its daily losses. Bitcoin cash, Bitcoin SV and Stellar were up +1%-4%. The total market cap is now equal to $198B.
According to the technical analysis, should the $6,800 support level break, the next one would be around $6,100 where the price found a floor throughout the middle of last year and then the $5,000 level soon after.
BitOoda, a digital asset advisory firm, said that data from the U.S. CFTC and BitMEX, CME and Bakkt, show that “the latest sell-off to be mostly weak longs getting out of the market pushing the price lower NOT new shorts coming in.” “Because of this, we believe the sell-off shouldn’t be as long and as deep as previous bear markets. In general, we are wary of getting short here because we feel it might be a trap,” they added.
What markets are saying about the future of Bitcoin
The recent Bitcoin fall, driven by a lack of capital inflows, has raised new questions about its future in the long-term. Some analysts argue the its market is still far from reaching maturity phase. Others say its scarcity is the main factor for keeping its real price steady, now and in the future.
A poll conducted by Alex Kruger, a macro cryptocurrency analyst, shows the majority of Crypto Twitter participants concluded that Bitcoin will ‘eventually’ mature and settle into a wide price range, resembling the traditional commodities markets in real-terms. Kruger said “something that settles into a range in real terms still trends in nominal terms due to inflation, as most commodities do.” But by now Bitcoin seems to be still very faraway from maturity, where its price hovers around a defined range. The price and the market capitalization of the most famous crypto in the wrold has not been completely defined yet, with some traders who bet on a trillion-size business. Bitcoin’s market capitalization is currently equal to $204.4B, down from its yearly peak of $233B (June 27), according to Messari.
Volatily is another problem affecting Bitcoin’s future, due to the lack of total capital and the reduced impact to its price by large market participants. This is bad news for forex traders, as volatility has always been the most attractive incentive to cryptocurrency trading. For institutional investors, otherwise, it is of course good news. The mismatch between Bitcoin’s fixed supply and possible demand shocks hints volatily will remain high.
For instance, Bitcoin’s halving of miners’ reward for mining new blocks, is set to be triggered on May 14, 2020. Fixed supply is a fundamental driver that increases the value of an asset, based on the supply and demand from speculative investors and scarcity continuing to drive prices higher is likely to remain a constant forever. How far along Bitcoin’s market cycle is yet to be determined, but if traditional economics’ rules hold, Bitcoin price could increase in the very near future.
New German law might allow banks to store, trade cryptos
Germany’s Bundestag has passed a bill that will allow national banks to store and sell cryptocurrencies next year, Coindesk’s Jarosław Adamowski reports. The legislation is now awaiting for the approval of the Bundesrat. This occurs as Germany’s banking sector’s profits fell by -31.0% last year and Moody’s expect it to further drop, as net interest income falls.
The final version of the bill goes well beyond the initial draft, Handelsblatt reports. Should it be implemented in its current version, the legislation will not require banks to use the services of external custodians or special subsidiaries to store cryptocurrencies, but they will be able to provide their own storage capacities.
The bill has been well-received by the vast majority of German cryptotraders. Sven Hildebrandt, Partner for Corporate and Business Development at local firm Distributed Ledger Consulting, said it could make Germany a “crypto-heaven”, as the country is becoming a pioneer in the crypto regulation. Conversely, public authorities and politics have expressed concernes about the additional risks that German banks could face by entering this business.
Niels Nauhauser, a financial expert at a consumer consulting organization in Baden-Württemberg, said that, contrary to special bond offerings in which banks are required to inform their customers on related costs and provide them with key investor information, this is not the case in direct sales of cryptocurrencies.
Cryptonews.com recently wrote that Germany is willing to become the most crypto-friendly state in the European Union, and German public is likely to increasingly spouse the adoption of the cryptos over the next few years. There’s already a significant base of early users from which further adoption could be driven, while the country is estimated to increasingly see the tokenization of fiat currencies and securities.