The price of the Bitcoin has made a good start of the week as it extended its profits and jumped to $7,464, last seen just before a 40% drop.
Based on the DVAN Buying and Selling Pressure Gauge, a crucial level of resistance, Bitcoin has triggered a positive divergence and a buy signal. This trend last played out in January this year ahead of the crypto asset hitting $10,500.
“The potential for downward moves remains in these next two weeks, depending on what new health and economic data shows. But the long-term case for crypto has been made stronger by the impacts of this pandemic,” said Richard Rosenblum, co-head of trading at GSR. “As the dust settles, people will begin to look for a store of value.”
While the world’s leading digital asset saw significant losses along with the S&P 500, Bitcoin has seen an upside of more than 90%, unlike the stock markets. Large-cap US banks and payment processors continue to see sell pressure and when it comes to year-to-date price change, bitcoin is outperforming the largest banks and payment processors.
Now, according to Craig Erlam, a senior market analyst at Oanda, Bitcoin can climb to $7,500 level and “If it breaks through those levels, then we could be looking at a healthy surge and another run towards $10,000.”
“It’s struggling to gather the momentum required to break the barrier down but as we know with Bitcoin, that can change dramatically in a heartbeat,” Erlam said.
The gains recorded this week came on the back of coronavirus outbreaks starting to stabilize in some of the worst-affected countries like Spain and Italy. As such investors sare moving back into risky assets.
As such, not just bitcoin but stock markets also jumped. Gold, however, pared some of its gains after hitting an all-time high and topping at $1,700.
“Bitcoin performs well when the world markets are performing well. The correlation is higher towards SPX than Gold. It’s a risk-on asset. If you think there’s no recession(6 months GDP down) then buy Bitcoin because it’ll outperform. Otherwise, be patient and stay hedged,” noted trader Crypto Squeeze.
However, on-chain analyst, Willy Woo says bitcoin is still exhibiting safe haven properties which “in part due to the nuances of Bitcoin production costs creating a floor in price, and partly due to it getting an uplift in price due to its adoption s-curve (other assets are at adoption saturation).”
He plotted S&P 500 in log charts to show the losses suffered by the equities have been so far in 2020 much more severe than those by Bitcoin and that it is a “better ride” than other assets.
The ongoing market is not a bullish one and this bear market reveals the inefficiencies and weeds out the “junk”.
And as we have been seeing, the bitcoin network is keeping strong, with new hash rate/mining rigs added since the sell-off.
“Bitcoin will survive because it has the strongest Network Effect in the Blockchain Ecosystem. Miners have more conviction in Bitcoin than Investment Funds and Hodlers,” said Matt D’Souza, a hedge fund manager and CEO of crypto mining service Blockware Solutions.