During the 2020 crisis, Bitcoin showed a strong uptrend. The cryptocurrency rate fell to $ 3,800 in March amid panic in the stock and commodity markets, but then began to grow and by November 10 grew by 300%, to $ 15.193 thousand.
Yesterday, November 9, the digital coin fell sharply amid news from Pfizer and Biontech. They announced that their coronavirus vaccine was 90% effective. Immediately after that, the price of the cryptocurrency dropped from $ 15.8 thousand to $ 14.9 thousand. At the same time, the value of protective assets - gold and silver - fell, and the S&P 500 stock index updated its all-time high.
Some of the medium and long-term risks associated with a pandemic will fade into the background when a vaccine becomes available. Therefore, on Monday, precious metals fell in price and risky assets rose in price, explains Mikhail Karkhalev, an analyst at the currency.com exchange. Against this background, the bitcoin rate dropped slightly and has almost recovered, and the news about the vaccine itself is local, he believes.
According to Karkhalev's forecasts, the crisis caused by the coronavirus pandemic could drag on for another year and a half. Crises last about 1.5 - 2 years on average, after which the world economy starts to recover. The current crisis has dealt a fairly strong blow to the economy, in connection with which the transition to the stage of recovery can take up to 2.5 - 3 years, the expert admitted.
Alexey Markov, a leading trader at United Traders, agreed that it is too early to talk about the end of the crisis after news from Pfizer and Biontech. The one-time appearance of a drug against coronavirus will not solve even a small fraction of the systemic problems that have arisen in the global economy, he said.
Bitcoin has shown a confident trend throughout the last year, and there has also been a gradual uncorrelation of BTC with other instruments, Markov continues. Investors will continue to increase their investments in cryptocurrency, perhaps this process will intensify due to the decrease in the cost of precious metals.
The news of the vaccine release will continue to negatively affect bitcoin and gold, says Anton Kravchenko, CEO of Xena Financial Systems, but this factor will not be key. The market will pay much more attention to new measures to stimulate the American economy. Bitcoin, according to Kravchenko, looks good as an investment with a horizon of 2-3 years. According to him, cryptocurrency is clearer than gold for a new generation of investors. In addition, institutional investors started transferring capital to BTC.
Karkhalev also called the dollar's decline likely. The DXY index, which shows the strength of the dollar against a basket of national currencies, has declined 7% since May, to 92.9 points. The economy needs support, in this regard, the governments can continue to accept packages of financial assistance, which will lead to a decrease in the quotations of the American currency and an increase in the cost of gold, the analyst said.
In the coming years, the value of bitcoin is more likely to rise than decline, regardless of what happens in the global economy, Karkhalev said. The cryptocurrency is of interest to investors, in particular because of its advantage - it demonstrates both high profitability and protective properties, the expert summed up.
During the crisis, large investors, including institutional investors, began to invest in bitcoin. Among them is billionaire Stanley Druckenmiller, whose fortune is estimated at $ 4.4 billion. He said that he holds capital in gold and cryptocurrency, and also said that he opened a short position on the dollar, as he expects its value to decline in the next 3-4 years
At the beginning of September, bitcoin fell in price from $ 12 thousand to $ 10 thousand. Then the rate began to grow and by November 6 increased by 60%, to $ 15.8 thousand, setting an annual maximum at this level. After that, the price of the cryptocurrency dropped slightly and now amounts to $ 15.3 thousand.
There were three main factors driving the rise in value of the main digital coin, according to Coindesk analyst Omkar Godbowl. The first reason he called the entry into the cryptocurrency market of new institutional investors. For example, in September MicroStrategy invested $ 250 million in BTC. At the moment, the deal has brought it about $ 110 million in profit.
Godbowl added that demand for cryptocurrency from institutional investors has also been seen on the Chicago Mercantile Exchange (CME). On it, the number of long positions on Bitcoin in October set a new record.
Later, several large investors followed the example of MicroStrategy. Among them is Square, founded by Twitter creator Jack Dorsey, which bought BTC for $ 50 million. George Soros' longtime associate, billionaire Stanley Druckenmiller, also invested an unnamed amount in bitcoin, explaining that a bet on digital money can work better than on gold.
The analyst called the second factor the reduction in the supply of bitcoins in the market. Large investors, including institutional ones, purchased coins, reducing their number on exchanges. Supply also declined due to the behavior of retail traders. According to the analytical service Glassnode, the number of BTC on trading platforms has dropped by 9% since the beginning of September, to 2.4 million coins. This means that market participants are determined to hold a digital asset with long-term goals, Godbowl is sure.
The third factor, he named the technical aspect. At the end of October, the bitcoin rate broke through an important resistance level, rising above $ 12.5 thousand. After that, buyers began to invest more actively in the coin, which accelerated its rise in price, the expert summed up.
Earlier, analysts at the Binance exchange named several more factors that contributed to the strengthening of Bitcoin. Among them, researchers have highlighted the growing public recognition of the potential of BTC as a global macro-hedge asset. The demand for it could arise due to the uncertainty associated with the US presidential elections and the spread of the coronavirus.
Over the entire history of the cryptocurrency, the bitcoin rate has approached near-zero values several times. However, these were either special cases on individual exchanges, or technical problems. For example, in March 2019, the price of BTC on the BitMax platform dropped from $ 10,000 to $ 0.3. At this level, the unknown sold 48 coins. And in May of the same year, the quotes of the asset dropped to 0 on the BitMEX site due to a malfunction in the trading mechanism, but no transactions were recorded at this price.
The fall of bitcoin to 0 is possible not only on a separate exchange, it can and should happen with the market rate. This assumption was voiced by the American investor Jim Rogers in June 2020. He stated that the first cryptocurrency remains in a bubble and will depreciate in the future, as digital assets will not be able to exist without the control of the authorities. But among the representatives of the cryptoindustry Rogers' assumption did not find support.
Tatiana Maksimenko, the official representative of the Garantex cryptocurrency exchange, questioned the possibility of reducing the bitcoin rate to 0. She believes that this could have happened in the first five years of the existence of the cryptocurrency, when it was interesting only to a narrow circle of users - "geeks". Now the situation has changed.
“Bitcoin is a digital asset with its own well-developed infrastructure, miners in the form of large enterprises with legal registration, financial reporting, computer manufacturers, stock exchanges, custodian services and much, much more. To drop to zero, bitcoin must completely lose demand from anyone: both users and participants in this system (miners, exchanges) and so on. This is no longer possible. There will always be a demand for bitcoin, ”Maksimenko shared.
She clarified that there are several factors that can greatly "knock down" the bitcoin rate. For example, a serious technical vulnerability, for example, if a supercomputer appears that can hack BTC wallets. Another threat is the sudden decision of financial regulators to ban bitcoin. But Maksimenko called both scenarios unrealistic.
Cryptorg.Exchange CEO Andrei Podolyan also does not believe in the prospects for a fall in the bitcoin rate to 0. In the 17th century, this happened with tulip bulbs, but today, in the digital world, such a scenario is impossible. Moreover, BTC can become a haven in case of bankruptcy of the state or depreciation of national currencies.
“Of course, one can imagine that everything can follow the path of“ tulip mania ”, when the cost of tulip bulbs has dropped to almost zero. But now is a different time, the world has changed and rushed towards digitalization. Bitcoin is the standard of digitalization. The popularity of bitcoin will only grow, ”Podolyan is sure.
Hodlhodl CEO Maxim Keidun adheres to similar views. He believes that the fall of Bitcoin to zero is impossible, including because it is unprofitable for large players and institutional investors who have invested in BTC. In addition, cryptocurrency is already accepted at the state level, for example, in Japan, Switzerland and other countries. Keidun named decentralization as another significant factor.
“Behind bitcoin is truly a decentralized community of thousands and thousands of people who, without agreement, without the participation of the central apparatus, took bitcoin as a measure of settlement and accumulation and use and develop it. Therefore, we can come to terms with the presence of bitcoin in our life. Even if some states prohibit it, other states will support it, ”explained Keidun.
The depreciation of bitcoin is also called unrealistic by Coinspaid CEO Maxim Krupyshev. From his point of view, a drop in the price of a coin to zero is possible only if it completely loses demand and it cannot be exchanged for other currencies or for goods and services. For this, it is necessary that all countries, without exception, introduce criminal liability for all operations with cryptocurrency. Even the fight against money laundering and financing of terrorism has not yet received such unanimity in the world, Krupyshev stressed.
“Even if suddenly some regulator of a large economy, say, the United States, completely prohibits bitcoin (which will never happen, but suppose this option), then regulators of other jurisdictions will immediately see in this situation an opportunity to become a financial hub for digital assets, and instead prohibitions will, on the contrary, be introduced, some more favorable conditions for bitcoin investors. So there will be no unanimous ban on bitcoin all over the world, ”Krupyshev said.
He, like Maksimenko, noted that bitcoin could be greatly depreciated if suddenly his system was successfully hacked. But this is an unlikely scenario, since the decentralization of the coin network is at a high level. In addition, even if some precedent of a successful attack on the cryptocurrency blockchain is discovered, the developers supporting it will be able to find protection methods.
All the experts we interviewed are sure that bitcoin is an asset that has come to the market for a long time. Despite the high volatility, the first cryptocurrency has almost no chance of completely depreciating; rather, on the contrary, it will only strengthen its position.
On Wednesday, November 11, the average bitcoin rate continued to rise. During the day, he added 3% and returned to the level of $ 15.65 thousand. In the near future, the cryptocurrency may again take $ 16 thousand - a two-year record broken in early November, suggested Dmitry Lavrov, trader and founder of Tradunity.
On the BTC rate chart, a triangle pattern is forming with a key resistance at the level of $ 16,000, he noted.
NewsBTC analyst Ayash Jindal added that the main bullish trend line formed with support at the level of $ 15.2K.Now that the cryptocurrency has overcome the resistance levels of $ 15.5K and $ 15.6K, it is moving towards the $ 15 mark. 85 thousand, the expert explained.
Nikolay Klenov, a financial analyst at the Raison Asset Management investment company, in a commentary to RBC-Crypto, predicted that in the long term, Bitcoin will cost $ 20,000 or more. In the global economy, the trend towards an increase in the money supply continues: a new support package from the Fed is expected, the European Union also uses a policy of quantitative easing. This gives bitcoin an edge as a limited issue asset.
“But I do not exclude the possibility that in the near future there may be a rollback to the support level of $ 12,000, and I do not even exclude its breakdown. Therefore, I would advise long-term holders now to enter bitcoin not with all the volume and without leverage, but in case of correction to $ 12 thousand and below, buy more, "Klenov recommended.
Earlier, Coindesk analyst Omkar Godbowle named three main factors that contributed to the growth of the bitcoin price by 60% since the beginning of September. Among others: the entry of institutional investors into the market, the reduction in the supply of bitcoins in the market and the technical aspect - the cryptocurrency overcame the most important resistance level of $ 12.5 thousand, after which buyers became even more active.