Cryptocurrency Analysis

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Warren Buffett does not want to buy bitcoin, and JPMorgan recommends including cryptocurrency in portfolios



We continue to monitor news related to the cryptocurrency segment. The latest ones suggest that not all world-famous investors are ready to buy bitcoin at breakneck speed. For example, Warren Buffett's companies are not going to invest in bitcoin under any circumstances. This was stated by the chairman of the Board of Directors of Berkshire Hathaway, Charlie Munger. He said in an interview that bitcoin is too volatile, so it does not attract the company's interest. Also, Munger could not answer the question of what surprises him more, the capitalization of Tesla to $1 trillion or bitcoin worth $50,000 per coin? Previously, Buffett himself stated: "Cryptocurrencies do not have any value and do not produce anything. In terms of value, this is a complete zero. I don't have and will never have any cryptocurrencies." Charlie Munger, who is already 95 years old, said earlier: "I never thought for a second about buying bitcoins. I was disgusted with it from the moment it appeared. The more popular it became, the more I hated it. It's just disgusting how passionate people are about it." Thus, many old school investors not only do not want to deal with bitcoin, but also openly hate it, calling on governments to put as much pressure on it as possible. This means that bitcoin is unlikely to ever become an investment tool for everyone, for example, Apple shares.

The government itself, or rather the Fed, believes that bitcoin will never become a competitor to the dollar. Rather, it can compete with gold, but not with the American currency, which holds the whole world. This was stated a few weeks ago by the chairman of the St. Louis Fed, James Bullard. Bullard also noted the disadvantages of cryptocurrencies in general and said that it is unlikely that they will ever replace fiat money. Thus, we still conclude that bitcoin is good as a means of investing or earning money. But it is unlikely that it should be used as a means of preserving value. In daily calculations, it is just as bad as other tokens. Therefore, it turns out that its main value lies in anonymity, which is naturally used by various criminal structures. Although, as repeatedly conducted studies have shown, the dollar is no less criminal than bitcoin. Therefore, the elimination of bitcoin clearly will not solve the problem of money laundering and international terrorism.




Paolo Greco
Analytical expert
InstaForex Group © 2007-2021

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Bitcoin continues to fall in price, but the support of $44,000 continues to maintain the growth prospects of the cryptocurrency



It is good when news comes every day or two that can move the cryptocurrency market. Elon Musk posted on Twitter about bitcoin - plus $5,000, Tesla bought bitcoins - plus $5,000, MicroStrategy raised a couple of billion to invest in bitcoin - plus another couple of thousand dollars to the cost. And when there is no news, there is no new hype and bitcoin quotes begin to slowly fall. Of course, it does not indicate that this is the beginning of the end. On the other hand, it is very similar to this. The quotes of bitcoin sank by $14,000 and have yet to find the strength to resume the upward trend. There are no reports that any other large companies are going to invest in the cryptocurrency. Elon Musk is silent, Tesla produces electric cars, and does not buy crypto assets. Therefore, traders and investors are deprived of new information that could provoke a new increase in demand for bitcoin. But in recent days, information has been received that bitcoin is being sold by large investors. Not all in a row, but only some, but the bell for bitcoin is bad. Cryptocurrency exchange Coinbase generally believes that the alleged creator of bitcoin Satoshi Nakamoto should remain in the shadows and not enter the market. In 2017, the collapse of the bitcoin quotes occurred presumably after 1.1million bitcoins were moved, which presumably belonged to the creator of the cryptocurrency. Back then, the exchange rate was also at absolute highs of about $20,000 per coin. Thus, considering that there can be no more than 21 million coins in total, of which about 2 million coins have not been mined, and more than 15 million coins are lying on the wallets of their owners without movement, only 3 or 4 million participate in the auction. Accordingly, a sharp sale of several thousand or tens of thousands of coins can lead to a collapse of the bitcoin exchange rate. Just recently, two transactions were recorded on one of the exchanges for the sale of several tens of thousands of bitcoin coins. It is possible that these transactions provoked the fall of the cryptocurrency. In general, we continue to hold the view that bitcoin can fall down almost at any time. So, when working with this tool, it is necessary to never forget about Stop Loss, otherwise one fine morning you may wake up and see an empty account. Since bitcoin is a highly volatile instrument, many institutional investors and large banks do not want to deal with it. It can be said that the probability of a new drop in bitcoin is much higher than a new growth. It should also be noted that other cryptocurrencies are falling in price. For example, ether fell in value from $2,000 per coin to $1,300, and litecoin - from $241 to $160.





Paolo Greco
Analytical expert
InstaForex Group © 2007-2021

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$ 44,000 per coin – a critical level for bitcoin



After the strongest growth in the last five months, bitcoin has started a second serious wave of correction. In theory, if the current downward movement is a correction, then a new wave of upward movement will inevitably follow, which can bring the "digital gold" to the levels of about $ 70-80 thousand per coin. However, we draw the attention of traders to the fact that the market is not showing signs of readiness for new purchases. Perhaps traders are waiting for a new decline to buy at an even better price, and perhaps the markets are waiting for some kind of push that will tell them what to do next. The price hovered near the critical Kijun-sen line and most experts agree that the zone of $ 44-45 thousand per coin is the key for the "cue ball". If the price falls below this area, then, most likely, a new wave of sales of "digital gold" will follow. Therefore, we recommend that traders keep a very close eye on this area. It should be recalled that no matter what forecasts are given by experts, there is always a probability of a move in the other direction. Back in 2017, many people were talking about $ 50,000 per coin, but later the "cue ball" rate collapsed from $ 20,000 to $ 3,000.

At the same time, large investment and management companies openly state that they could deal with bitcoin if its volatility was lower. Companies also want to see the liquidity in bitcoin and clearly understand the relationship between cryptocurrencies and regulators in the future. The question of the legality and control of transactions with bitcoin is really in the air. Representatives of the Federal Reserve and the ECB (as well as other central banks) have repeatedly stated their skepticism about tokens that are not controlled by anything and no one. Thus, it is easy to guess that regulators would like to establish control over "digital currencies" or depopularize them as much as possible. It is this uncertainty in the relationship between tokens and governments that makes many investment funds and investment banks cautious. Some of them admit that bitcoin can be part of the investment portfolio, but in the proportion of no more than 1%. Rebecca Patterson, the chief analyst at Bridgewater Associates, believes that the current bitcoin movements of 10% per day, which depend on a single tweet, are 10 times higher than the volatility of the US dollar. "More stringent oversight of cryptocurrencies on the part of the States will give more comfort to investors. This will provide liquidity and reduce volatility. Perhaps this is what needs to happen in the first place," said Patterson. Perhaps bitcoin has reached its maximum value at the current level of popularity?




Paolo Greco
Analytical expert
InstaForex Group © 2007-2021

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Mastercard: Bitcoin cannot be used as a means of payment



Cryptocurrencies continue to take over the world, although this process is not fast. Every year, the public becomes more and more interested in cryptocurrencies. Of course, there is no denying the obvious. Janet Yellen, Christine Lagarde, and others are right when they say that bitcoin is often used for criminal purposes and money laundering. This is what makes bitcoin and other tokens stand out from ordinary money. With the development of the banking system, most of the payments go through banks, so it has become much easier for states to control the flow of money. But with the advent of anonymous digital currencies, which are not anything valuable, but at the same time the price for them is set by the market, the problem of anonymous, untraceable payments has been solved. Therefore, we continue to argue that bitcoin and its "brothers" are a great tool for investing or a great tool for hidden payments, but it is a weak tool for daily use and calculations. However, many companies and businessmen with investors continue to hold the same opinion. For example, Mastercard Executive Chairman Ann Cairns. He believes that bitcoin is an extremely volatile instrument, and the transaction takes too much time. "If you and I go for a coffee and I decide to pay with bitcoins, our drink may cost me, for example, 40% more from the moment of submission. And the actual completion of the transaction will take 10 minutes," says Cairns. According to Cairns, bitcoin is comparable to gold, but it cannot be used as a means of payment. At least when it comes to everyday transactions.

Meanwhile, some analytical companies recorded quite large sales of bitcoins at the moment when the number one cryptocurrency began to fall in price. Many experts believe that in the coming weeks or months, bitcoin will stop its growth. This is attributed to an increase in the yield of US government bonds. As we said earlier, the sharp increase in demand for bitcoin in recent months could be caused not only by Elon Musk's tweets but also by a significant increase in the money supply in almost all developed countries of the world. Moreover, negative or minimal interest rates force investors to look for new ways to earn money. As a result, a new wave of cryptocurrency purchases began. Recently, the world has started vaccinating the population, which means that there is hope that in the next year or two, life will return to normal. Thus, the demand for bitcoin may begin to fall sharply, as economies will recover, and investors will find more attractive tools for investing. Therefore, the goal of $ 100,000 per coin may be unattainable.




Paolo Greco
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Bitcoin continues to lose value. Will Tesla shares go down on Monday?



Bitcoin continues to trade with a decline for a whole week. Recall that the cryptocurrency market continues to function at the weekend. And at this time, the crypto community continues to think about the question, will there be a new round of bitcoin growth? Or maybe far from one? Recall that bitcoin is not constantly growing. For example, three years have passed since its last strong strengthening. For three years, the cryptocurrency has been trading in a relatively narrow range and only in the last few months shows the strongest growth. Such cyclicity and frequency still suggest that the majority of bitcoin holders consider this cryptocurrency only as a means of earning money. Therefore, when most investors say "stop, that's enough", bitcoin will crash down. In fact, in the last week, it has already collapsed, losing almost a quarter of its value. Interestingly, just recently, Tesla, Microstrategy, as well as several other large companies with a global name, invested in Bitcoin. Many experts then believed that the investments of these companies would serve as an example for others and mass investment in bitcoin from large companies would begin. However, as practice shows, many people are still quite skeptical about bitcoin and do not want to get involved with an asset that can lose a quarter of its value in a week. Moreover, for example, the company Tesla is now associated not with the production of electric cars, but with bitcoin investments. As we wrote earlier, Tesla receives most of its profits not from the sale of electric cars, but other activities, for example, from the sale of environmental loans to other automakers. Now many investors associate the name of Elon Musk with bitcoin and draw patterns between the value of Tesla shares and the value of "digital gold". Since stock markets are closed over the weekend, it is easy to assume that Tesla shares may fall even more on Monday. The last jump in the stock market led to the fact that Tesla shares fell in price by 8%, and Elon Musk lost $ 15 billion thanks to this. Bitcoin continues to fall in price and many are waiting for a synchronous fall in Tesla shares. Thus, we once again draw attention to the realities of the 21st century, where the value of shares no longer depends on objective market realities. It depends on the exchange rate of an unsecured asset. And the rate of unsecured "digital gold" depends on the statements of the head of the company, whose share price depends on the rate of unsecured assets. A huge number of books on the stock market can be thrown out as unnecessary. Now you need to monitor not the monetary policy, the state of the economy, the economic condition of the company. Now you should follow the news on the Reddit forum and the tweets of Elon Musk.




Paolo Greco
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Trading Signal for BITCOIN for February 26 - 28, 2021: Key level $43,750



After hitting new records last week at the $ 58,335 level, Bitcoin now materializes the worst of the fears of those who invest in it: its high exposure to volatility. At this time of writing it is trading at $ 46,600 below the 21 SMA and above the 200 EMA.

Bitcoin is trading below the psychological level of $ 50,000, which is a sign that there could be downward pressure if the cryptocurrency breaks the 200 EMA on 4-hour charts, and it could hit lows of $ 37,500.

We can see a downtrend channel in 4-hour charts, this means that there could be some downward pressure for a short term, we only expect the $ 43,000 zone to break for a drop to 30,000 levels.

For now our recommendation is to buy when it technically bounces above the 200 EMA and sell below the 21 SMA, levels that we have plotted on the chart.


Support and Resistance Levels For February 26 - 28, 2021

Resistance (1) $49,181
Resistance (2) $50,722
Resistance (3) $53,571

Support (1) $42,925
Support (2) $41,133
Support (3) $40,146




Dimitrios Zappas
Analytical expert
InstaForex Group © 2007-2021

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Technical Analysis of BTC/USD for February 26, 2021

Crypto Industry News:

At the time of this publication, with bitcoin regaining its balance, some key on-chain metrics seemed to suggest that selling pressure may not have been fully achieved yet, especially on the part of BTC miners.

According to Glassnode, Bitcoin Miner Outflow Multiple hit its monthly peak after the BTC price dropped. The aforementioned metric relates to the period when the amount of bitcoins flowing from miners' addresses is higher than the historical average.

At the same time, the outflow volumes of Bitcoin miners also increased to a monthly high from over $ 4.5 million in the average of the last 7 days.

Now, while at first glance this may seem alarming in the short term, the fact is that the long term is still green.

It is worth taking a look at the Miners' Position Index. As the market corrected in mid-January, the MPI rose to a high of 12.65, which underlines the unusually high sales pressure from miners (an index reading above 2 suggests that most miners are selling). On the contrary, the recent decline in Bitcoin's price only pushed the MPI to 3.50 and thus to 2.56 at the time of publication.

Moreover, other data seem to suggest that miners' small outflows may have contributed to the high outflow volumes as they need to consistently balance their cash reserves.


Technical Market Outlook:

The BTC/USD pair has been seen going down towards the recent swing low made at the level of $44,940. The recent rally had been capped at 50% Fibonacci retracement located at the level of $51,599. The next target for bears is seen at the level of $43,714 and $41,759. The key technical support from the daily time frame chart is located at $41,944. The weak and negative momentum supports the short-term bearish outlook for the BTC market.

Weekly Pivot Points:
WR3 - $75,571
WR2 - $67,184
WR1 - $63,246

Weekly Pivot - $54,169
WS1 - $50,671
WS2 - $42,010
WS3 - $37,979


Trading Recommendations:

The bulls are still in control of the Bitcoin market, so the up trend continues and the next long term target for Bitcoin is seen at the level of $60,000. Any correction or local pull-back should be used to open the buy orders. This scenario is valid as long as the level of $41,125 is clearly broken.






Sebastian Seliga
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Technical Analysis of ETH/USD for February 26, 2021

Crypto Industry News:

The exchange's trading platform recorded an event the day before yesterday, which surely made many hearts beat faster. Ethereum, the second largest cryptocurrency, has undergone a flash crash on the Kraken stock exchange.

In a one-hour candlestick, the price of ETH plunged to $ 700 - a massive 63% drop from the stock market's daily high. The volume of this hourly candle was also significant. A total of 75,500 ETH worth approximately $ 131.5 million was passed by traders from its opening to closing.

"Please don't trade with leverage if you are not aware of the risks"

That's what Jesse Powell from Kraken said to one of the users who got upset after the significant drop in the ETH / USD rate is racing Kraken. As the cryptocurrency markets plunged on Monday, the Kraken ETH price hit $ 700. As previously reported, the lowest level of Coinbase for ETH at that time was just over $ 1,500.

Shortly thereafter, Jesse Powell posted on Twitter an explanation that the flash crash in the ETH market was due to extreme selling rather than a failure of the stock exchange's trading engine.


Technical Market Outlook:

The ETH/USD has been seen approaching the level of $1,365 again after the recent ETH bounce had been capped at the level of $1,700, which is the 50% Fibonacci retracement of the last wave down. The nearest technical resistance is located at the level of $1,648 and if this level is violated, then the next targets for bulls are $1,700 and 1,779 again. The intraday support is seen at the level of $1,438. Please notice the momentum is still weak and negative, so that might be the end of the correction. The weekly and monthly time frame trend is still up. The bullish scenario is valid as long as the level of $1,365 is broken.

Weekly Pivot Points:
WR3 - $2,476
WR2 - $2,254
WR1 - $2,101

Weekly Pivot - $1,876
WS1 - $1,724
WS2 - $1,492
WS3 - $1,337


Trading Recommendations:

The up trend on the Ethereum continues and the next long term target for ETH/USD is seen at the level of $2,100, so any correction or local pull-back should be used to open the buy orders. Please notice, the up trend starting to go vertical, so the volatility will be higher than average. The bullish scenario is valid as long as the level of $1,412 is broken.







Sebastian Seliga
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

The need to adopt digital currencies of central banks and the phasing out of credit cards



Massimo Buonomo, a former United Nations expert on blockchain and cryptocurrencies, says that consumers can benefit greatly if countries around the world adopt central bank digital currencies, because this will not only reduce costs and the number of security breaches, but also eliminate the need to have a bank account.

"The future will not require credit cards to process transactions, but only digital currency wallets," said Massimo, who serves as an adviser and consultant to many international organizations, central banks, and corporations.

Buonomo said that the only advantage of having a bank account in the current interest rate environment is that it allows for electronic payments without remuneration.

"But there are a lot of costs associated with having a bank account, especially those that charge a fee for each transaction. There is a fee for electronic transactions using credit cards," he said. In addition, there are fewer securities in bank accounts due to the risk of hackers breaking into the system.

Buonomo, who has more than 20 years of experience in international finance, said using a digital currency could eliminate the need to open a bank account.

With the adoption of central banks' digital currency, consumers will not have to pay a fee to credit card processing companies such as Visa, MasterCard, and even SWIFT. "No fees will be required for banks to transfer money or open a bank account," he said.

According to Buonomo, banks do not support the introduction of digital currencies because they will be most affected if a single-tier system is adopted in the long run.

In a single-tier model, digital money will be transferred directly from the central bank through the social security system to one person. This social security system will contain all updated information about individuals. In this way, digital payments will facilitate faster money transfers to people according to their updated information, Buonomo said.

Giving an example, he said: "Because of COVID-19, money transfers that will be made in the US to people who need them can be made directly through digital currency transfers through a security system."

Massimo Buonomo stated that companies like Visa and MasterCard would be worse off because of the introduction of the digital currency. There may also be a two-tier model of digital money that can be transferred by intermediaries, mainly banks, to one person. This model will be adopted in China, as well as offered in the US and other countries.




Vitaly Kolesnikov
Analytical expert
InstaForex Group © 2007-2021

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Bitcoin's market liquidity is currently much lower than Gold



Bitcoin rose to $ 58,350 on Sunday and then fell to about $ 56,200 as of 2:30 p.m. in Tokyo on Monday. According to Nikolaos Panigirtzoglu, a strategist at JPMorgan Chase & Co., the token has roughly tripled in the past three months, but its liquidity has deteriorated.

"Bitcoin's market liquidity is currently much lower than gold or the S&P 500, meaning that even small flows can have a big impact on the price," he wrote in a note on Friday.

This background opens up the possibility of sharp movements up or down in the cryptocurrency, depending on the prevailing zeal for digital assets. Recently, even some of the token's biggest sponsors seem surprised by its growth. In a recent tweet, Elon Musk said that prices in bitcoin seem to be high.

Bitcoin's trading volume is about $ 10 billion a day in the spot and futures markets combined as compared to the equivalent figure of $ 100 billion for gold, Panigirtsoglu writes. This corresponds to "much lower liquidity in bitcoin than in gold," he said.

Cryptocurrencies showed a good start to the year, leaving other assets behind a shadow curtain. Bitcoin proponents argue that corporate treasurers and institutional investors are new sources of demand and that the token can hedge risks such as higher inflation. Others see a prime example of the speculative epic fueled by hedge funds and day traders in the markets.

"Bitcoin seems immune to the barrage of fear, uncertainty, and doubt directed at the industry," Paolo Ardoino wrote in an email.

Ethereum, the largest token after Bitcoin, also rose over the weekend, surpassing $ 2,000 for the first time on Saturday. It has grown by about 150% since the beginning of the year.





Vitaly Kolesnikov
Analytical expert
InstaForex Group © 2007-2021