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(Kitco News) The bitcoin bull market may prove to be more resilient than before and current June prices will one day look cheap, according to Bloomberg Intelligence.
“Selling Bitcoin around good support and similar declines below most means that around $ 30,000 this year has not ended well, and if the key question this time around is whether it ‘is different, we see a more sustainable bull market, “said Bloomberg Intelligence senior. commodities strategist Mike McGlone. “Reinforced by the migration to the general public, the price of Bitcoin in June 2021 could one day look cheap. “
After briefly dropping below $ 30,000 on Tuesday and wiping out all gains for the year, bitcoin rebounded, last trading above $ 33,000, up more than 15% on the year.
Bitcoin is setting up a new trading range in a more sustainable bull market, McGlone wrote on Wednesday. This is in part because of how bitcoin has come to mainstream.
“Long-term buy and hold investors are on the rise in the benchmark crypto as it gains adoption and traction in portfolios. Our chart depicts the conditions that have typically sparked responsive and supportive investors. Bitcoin in the past, when the price drops about 30% below its 20-week moving average. Similar extremes below this average have marked around $ 4,000 as key support in 2018 and the short-lived fading of 2020 “, did he declare.
On top of that, China’s crackdown on bitcoin mining will ultimately work in favor of bitcoin’s price in the long run by limiting supply.
“What’s different now – aside from higher prices – is less supply and more demand, as ETFs testify, especially in Canada. The Chinese crackdown is extolling the benefits of this unique digital reserve asset and independent, ”McGlone said. “This bitcoin hash rate and processing power measure has plummeted due to the crackdown in China, but we see this as a longer term bullish indication of the value of the digital asset.”
Over the weekend, the crackdown on crypto mining in China spread to southwest Sichuan province. There was also a report from Chinese state media Global Times over the weekend, which said more than 90% of China’s bitcoin mining capacity was going to be shut down, at least in the short term. , while local regulators are implementing measures similar to those in Sichuan province.
On top of that, the People’s Bank of China said it called on the big banks and Alipay, a payment service run by the Alibaba Ant Group subsidiary, to crack down on crypto trading.
In terms of future price direction, the cryptocurrency is more likely to revisit resistance to $ 40,000 rather than plunge towards $ 20,000, McGlone pointed out.
“Selling Bitcoin during initial declines below its 50-week moving average in the past has proven to be a good way to lose money, even in bear markets. Our chart shows the first test of this average. year since the crypto broke through this moving average resistance in May 2020 to launch the current bull market. Now serving as support, when the 50 week average was initially revised at the start of the 2018 bear market, Bitcoin rebounded by more than 40% and took about six months to keep prices lower, ”he wrote.
Another bitcoin-friendly driver is the increase in the global debt-to-GDP ratio and widespread quantitative easing combined with the digitization of finance.
“The digital reserve asset that has arrived may have the main benefit of good timing, as the world goes digital at about the same rate as increasing levels of monetary and fiscal stimulus. Our chart illustrates favorable macroeconomic trends for the price of Bitcoin – US debt and G4 central bank balance sheets are growing rapidly relative to GDP. Even as the trajectory of these trends eases, the digitization of finance and money should maintain the basics of benchmark pricing crypto, ”McGlone said.
Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to trade in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.
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