Coronavirus Outbreak Setting Up ‘Very Bullish’ Coming Months for Bitcoin And Crypto Market

  • Dow Jones Industrial Average had its worst day since August and S&P 500 since October
  • “The current backdrop for gold is stereotypical of strong phases,” as gold scored a second straight monthly climb
  • BTC already up 27% YTD and gain further as coronavirus to lead to rate cuts and another round of quantitative easing

In one of its biggest declines, the Dow Jones Industrial Average fell by over 600 points on Friday as investors grew increasingly worried about the potential economic impact of deadly coronavirus.

While Dow had its 30-Stock average’s worst day since August, S&P 500 also had its worst day since October and the Nasdaq Composite fell 1.6%. This happened after the US declared the coronavirus a public health emergency within the country and American, Delta and United suspended all flights between the US and China.

Fear going into the weekend

First discovered in the Chinese city of Wuhan, the virus has now spread to at least 18 other countries. China’s National Health Commission confirmed 9,692 cases of the coronavirus with 300 deaths. The WHO also recognized the virus as a global health emergency on Thursday.

“There’s fear going into the weekend,” said Ilya Feygin, senior strategist at WallachBeth Capital.

“The theme coming into this year was the Fed and Trump are going to bail us out of any problems, but the virus is something neither one can do anything about. That’s a reason to become more fearful.”

Morgan Stanley’s chief US equity strategist, Michael Wilson says a major stock market pullback since October may be underway.

Gold scored a second straight monthly rise

Meanwhile, gold though pulled back from over six-year high scored a second straight monthly climb.

“The current backdrop for gold is stereotypical of strong phases,” said Adrian Ash, director of research at BullionVault.

“Over-priced stock markets are wobbling, global growth is slowing hard, and political uncertainty is worsening.”

“We are operating in an environment in which safe assets are scarce … Investment demand will continue to flow to gold because capital is seeking shelter from negative real yields,” said TD Securities commodity strategist Daniel Ghali.

Setup for the crypto market in coming months very bullish

Bitcoin meanwhile is holding steady above $9,000 since Tuesday. Currently, BTC/USD is trading at $9,413, up 27% YTD.

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As can be seen, crypto markets have diverged from the equity markets ever since we entered into a new year.

While market strategist and economists were “talking up the global economic outlook and hailing 2020 as a good year for markets with no major risks on the horizon,” in two weeks the deadly coronavirus outbreak has changed that prognosis, said the former partner at Goldman Sachs, Spartan Black of crypto hedge fund The Spartan group.

With the affected cities coming to a halt, the factory output in the near term would be affected. And the “travel curbs and related impact will likely take a few bps off global GDP growth in the next 2-3 quarters. The equity markets have started to price that in. Further signs of weakness and market instability may cause central banks to spring into action,” said Spartan Black.

That means, further rate cuts and another round of quantitative easing are likely to follow with the ECB already having started its bond-buying program in Sept. All of this combined with halving event coming up, “the setup for the crypto market in coming months is very bullish,” he said.


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Bitcoin Price in USD. 1-31st January 2020
Ethereum Price USD. 1-31st January 2020

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Bitcoin Price Back at $8,700 As Institutional Investors Appetite for BTC Grows Exponentially..

  • Market gets excited as bitcoin makes way, a big move this week could be in order
  • Altcoins surged as well, with Bitcoin Gold, Dash, Zcash, and Bitcoin Cash being the top performers
  • Bakkt’s bitcoin futures delivery grows by over 1,600% while CME traders remain more bullish than any others

Today, Bitcoin yet again took a jump to climb to $8,700 level. This surge in price also saw the volume rising, from around $350 million, but it is still down at $522 million, as per Messari. Altcoins climbed in tandem, with Ethereum Classic (19.4%), Bitcoin Cash (13.09%), Zcoin (10.4%), EOS (7.56%), and Dash (7.45%) being the top performers, as per Coincodex.

Coin360-Prices
Source: Coin360

As Bitcoin tries to run away with the bulls, it has key resistance present at $8.6 – $8.7k where trader Credible Crypto expects BTC to reject. He said,

“Could be something small, could be more significant. Once we get past that region we are off to the races.”

Meanwhile, popular trader Majin sees it testing $8,800 or $8,900. But trader BitBit is feeling extremely bullish as he says, “it’s getting bullish af here,” as he notes 8,250 support level, 8,500 resistance level, Mex OV above 100k, CME bitcoin futures Friday close was at 8,505, Jan futures expiry this coming Friday, and 106 days to end this buy the halving narrative.

All this means “Big move is coming this week,” he said.

Bakkt’s Futures Delivery Grows by 1,600%

Bitcoin price took a jump while the interest in the world’s leading cryptocurrency is growing among the institutional investors.

Bakkt by Intercontinental Exchange which is also behind Nasdaq delivered 230 BTC worth more than $2 million in notional value on January 17.

This has been a significant increase, of 1,625% from 2019’s average of 13.3 Bakkt Bitcoin futures contract deliveries. Last year, only 15, 17, and 8 BTC contracts were held on Bakkt until expiry in October, November, and December respectively.

Although a small amount in comparison to daily trading volumes, in itself, is huge as the physical delivery of Bitcoin shows that institutional investors not only want to trade in Bitcoin but are also interested in holding BTC.

CME Traders Remains More Bullish than any others

Last week we reported how CME traders have been more bullish than other platforms and they continue to be bullish as CME’s June futures contracts are close to a 5% premium.

The premium rate for June contracts suggests investors are bullish on Bitcoin in the mid-term. However, both January and March premium rates fell this week meaning short-term expectations are bearish.

In separate news, Bakkt and Twitter CEO Jack Dorsey’s Square might soon be competing against each other.

Recently, at the World Economic Forum (EEF) in Davos, while sharing the plans for their consumer-facing app, Bakkt president Adam White said this new offering would involve a range of digital assets including virtual goods, equities, and other forms of digital assets, making a shift from its original plan for being solely focused on Bitcoin.

Interestingly, payments company Square obtained a patent earlier this week that will allow the users to pay and receive in any denomination which may extend to support securities, and derivatives in the future as well.

There hasn’t been a crypto’s “killer app” created which has White confident in his latest product that he says would closely resemble PayPal for digital assets, instead of just an exchange.


Global Uncertainties and a Weak US Dollar to Raise the Price of Bitcoin in 2020

According to a Bloomberg report from Monday, it’s very likely the price of Bitcoin (BTC) will increase in 2020, as a result of a weak US dollar and global uncertainties.

The predictions say BTC can reach its 2019’s top range of $14,000 if the geopolitical situation is still tensioned and the stock market continues to be volatile. Bitcoin has always been seen as the digital version of gold, mainly because it’s a limited asset that can’t easily increase to meet demands, just like gold. The halving that will take place later this year should reduce block rewards to 6.25 BTC, not to mention the BTC supply is expected to increase by 2.5% in 2020 as a result.

BTC Investment May Take Many Forms

The more investments in BTC are increasing, the more they can take different forms, analysts are saying. More than this, the derivatives market is continuing to expand and integration to major markets is possible. All this may have incredible effects on the BTC price and decrease volatility. Not everyone is convinced though, that the BTC has a strong connection with gold. For example, Quantum Economics founder Mati Greenspan called this relationship weak and mentioned the 2 assets may grow to be negatively correlated.

Bitcoin Had Its Moments of Volatility

There have been many volatility moments for BTC. For instance, it surged over $10,000 immediately after China’s President Xi has made a speech in which he encouraged the adoption of blockchain technology. For now, analysts think volatility doesn’t help BTC to be a stable store of value. However, this won’t stop investors to value their digital assets and keep the BTC price stable. Bloomberg thinks the Tether market cap will continue to expand in 2020, so many other cryptocurrencies will struggle to keep their investors according to how supply outstrips are demanding. Here’s exactly what the report continues to say:

“Bitcoin should again outshine most crypto assets in 2020 as the unique and appreciating digital version of gold. Bitcoin is winning the adoption race, notably as a store of value in an environment that favors independent quasi-currencies.”