Bitcoin: USD/BTC (BTC=X) becoming more and more appealing to investors as safe haven assets
As escalating trade tensions between the US and China have whipsawed markets and stoked fears of an economic recession, some investors are seeing cryptocurrencies in a new light.
Bitcoin in particular has become more appealing to investors because it’s not directly exposed to the political forces underlying market turbulence. Because it’s decentralized and not dictated by a single government, it’s not subject to the whims of a central bank or political leader.
That insulated nature helped bitcoin reach recent multi-month highs as trade-war turmoil sparked a vicious global equity sell-off. Put simply, traders sought refuge in the cryptocurrency because they weren’t sure where else to hide.
“In a slowdown, since the global economy is so interconnected, there are only a limited number of assets that are isolated,” Evan Kuo, CEO of Ampleforth, a digital asset protocol, told Markets Insider in an interview.
To that end, bitcoin is not subject to the same forces as normal currency. This is why people who feel less trust towards the government see it as an alternative, said Aries Wang, cofounder of Bibox, a digital asset exchange that uses artificial intelligence technology.
But there’s a catch: bitcoin and other cryptocurrencies are quite volatile. Take recent trading for example. Even after bitcoin soared above the $US12,000 level on global macro fears, it has since fallen back below the $US11,000 threshold.
Countries experiencing currency issues have seen bitcoin trade at a premium on local exchanges, according to Daniel Dixon, cofounder of Interdax, a cryptocurrency trading platform focused on derivatives.
In Venezuela and Argentina, two countries where political tensions have led to inflation and poor economic conditions, bitcoin trading has picked up, he told Markets Insider in an interview.
The case against bitcoin as a safe haven
To be sure, not everyone agrees that bitcoin – or even safe haven assets broadly – are a good bet right now, even as uncertainty rocks global markets.
“They are collectibles,” Dev Kantesaria, portfolio manager of Valley Forge Capital Management told Markets Insider in an interview, referring to both bitcoin and gold. “You are actually not buying any protection, you’re simply speculating. To me it’s no different than any other speculative activity in your life.”
Bitcoin has fundamental structural issues, he said, and one is its limited use today. Few would sell their house, car, or laptop for bitcoin he said. In addition, he thinks that buying assets that don’t yield much in the way of returns is unproductive.
“You have to think about lost opportunity and lose buying power when buying gold,” he said.
Even though US markets have been up and down as of late, he is still very bullish on equities for the next five to 10 years, he said.
The best strategy, then, is to “hold, wait it out and have the long term view of the markets and the economy,” he said. “It’s an exceedingly good time to buy into equities today if interest rates are low for the long term.”
Overall, the bias in prices is: Upwards.
The projected upper bound is: 12,091.89.
The projected lower bound is: 9,372.85.
The projected closing price is: 10,732.37.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 77.6215. This is not an overbought or oversold reading. The last signal was a buy 5 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 50.39. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 54 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -25. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.
Rex Takasugi – TD Profile
FOREX BTC= closed up 57.550 at 10,728.000. Volume was 96% below average (consolidating) and Bollinger Bands were 20% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 10,645.32 10,769.22 7,154.81
Volatility: 60 80 79
Volume: 80,481 90,142 81,269
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX BTC= is currently 49.9% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of BTC= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on BTC= and have had this outlook for the last 15 periods.