Why Bitcoin Fell Under $10,000 and What It Means
Bitcoin has been in a downwards spiral ever since the Bakkt launch...despite theories that it would rise to new heights. But it’s not exactly a surprise – Bitcoin was being held at an artificial floor set by institutional investors buying up Bitcoin whenever it would dip to $9,000, thus creating support. With that support gone, Bitcoin now has the chance to adjust to a more market-determined price.
Is Bakkt the only reason for the price dip? Not quite. After months of sideways movement, it was clear that Bitcoin had to go somewhere once the Sept. 23rd turning point was reached – and, absent sudden, major investment in Bakkt, that move was downwards.
So what else caused it? Theories abound, as always, but some analysts blame position liquidation, following the Bakkt launch, as a likely culprit. Others point to the fact that the bull run that took off in the summer of 2019 wasn’t supported by fundamental changes, and that Bitcoin was due a correction regardless.
What could cause the price trend to reverse? A big point that’s often ignored is the bitcoin halving, a little less than a year from now. That means that supply will be constrained (by half) and will most likely push prices up once traders start pricing in the halving. Bakkt futures volumes could also pick up and provide buying pressure on Bitcoin.
Wut We Think: Going up or down doesn’t necessarily correspond to good or bad – financier George Soros famously netted a 1 billion pound profit by shorting the pound sterling in 1992. So a canny trader can make money in any conditions. For the next few days, expect further consolidation, but unless buying pressure builds up, further breaks down are likely.
Libra’s Future is Looking Cloudier by the Day
Facebook’s golden project, Libra, opened to a lot of hype...but national and international regulators are making it less likely that the project will ever get off the ground. Some of the biggest banks in the country are advising the Federal Reserve that Libra is a threat.
A threat in what way? Well, the banks say that Libra could create a ‘shadow banking system’, unregulated by current financial standards, as well as make it harder for local governments to monitor their own economies. Remember, Libra isn’t technically a cryptocurrency – it isn’t decentralized, and will be controlled by the Libra Association.
And even some of the founding members of the Association are getting cold feet: Technically, Libra’s governing body hasn’t been constituted yet, but some major players, including Visa, Mastercard, and Stripe, have previously signed non-binding letters of intent. But with all of the regulatory scrutiny on the coin, they may not reconfirm their interest at the upcoming charter signing in two weeks.
But Facebook isn’t giving up yet: Facebook CEO Mark Zuckerberg has made it clear that launching Libra is a major goal for the company. And despite regulatory pushback, Facebook can still make amends with regulators if it can convince them that it’ll comply with KYC and AML laws. And with Facebook’s deep pockets, it’s never wise to rule out their influence.
Wut We Think: Libra may never launch, or at least not in its ambitious original form. But Libra isn’t the only coin aiming for a mass market – Gram, the token being launched by the Telegram messaging app on its Telegram Open Network blockchain, has a good chance to beat Facebook to the punch. Unlike Libra, it’s decentralized and a real cryptocurrency, and is aiming for a launch by October 31st. Gram has the potential to completely revolutionize social media – but we’ll have to wait and see if it does.
Trading Spotlight: Support and Resistance
Support and resistance are among the most common terms a trader will encounter when reading technical analysis. But this basic concept is often misunderstood. However, proper evaluation of support and resistance can lead to better bets and predictions, so a wise trader always keeps an eye out for support and resistance prices for an asset.
Support and Resistance: These two terms refer to price boundaries that set a range for a price in some given timeframe. They are generally established when a price bounces off a certain level at least three times – if those touches keep prices from falling further, that’s known as a support. In other words, the price is being supported at at least that level. On the other hand, if the price bounces but doesn’t manage to break some level – that is a resistance. To learn more about the mechanics of support and resistance, check out this article on the Monfex Trading Academy.