Cryptocurrency Analysis

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Cryptocurrency exchange Kraken prepares to enter the stock market



The bitcoin exchange rate has been around below the $60,000 per coin level for more than a week. To be more precise, it has been trading in the range of $56,500 - $59,500 for a week now. Thus, questions arise as to whether bitcoin is capable of continuing to grow. From our point of view, there are plenty of factors that speak in favor of its possible rise in price. Starting from the large savings of Americans during the pandemic, some of which they are ready to invest, ending with a new package of stimulus measures for $2 trillion and the growing interest in bitcoin among institutional traders. However, there is one factor that speaks in favor of the fact that bitcoin should collapse in the near future by 50% of the value. This factor is the same as it has always been. Bitcoin is not worth anything by itself. Official data confirms that 70% of bitcoin transactions are investment transactions. Traders and investors consider BTC mainly not as a means of payment, but as a means of investment. But since bitcoin is not a company's shares, not gold, and not even an ordinary currency, which is at least provided by the central bank, everyone understands that it can collapse at any time. Thus, the institutions can certainly afford bitcoin in their portfolios for many years, but will they want to do it? From our point of view, this is the main danger for BTC.

At the same time, the Kraken cryptocurrency exchange is preparing to enter the US stock market. Representatives of the company say that the exit can take place in 2022. At the moment, the company's management is considering options for a direct listing on the stock exchange or a merger with a company that does not have assets. The crypto exchange is currently engaged in increasing its capital and increasing its capitalization. The company was registered back in 2011 and ranks third in the world in terms of the volume of transactions passing through it, after the Binance and Coinbase exchanges.



As for technical analysis, it has recently been seen that it is difficult for the cryptocurrency to continue its upward movement. The bullish momentum is weakening. Thus, despite the fact that many experts assure about the increasing interest of institutional investors, bitcoin is not yet positioned to grow to $70,000 per coin. Perhaps the reasons lie in the negative fundamental background. In recent weeks, there has been plenty of news that could cool the interest of traders and investors in bitcoin. Thus, there are two important supports for digital gold right now: the $52,200 level, where the Kijun-sen line runs, and the $43,000 - $44,000 area. In the coming days, the bitcoin exchange rate may again begin to strive for these supports, as it is not yet able to continue growing.





Paolo Greco
Analytical expert
InstaForex Group © 2007-2021

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Bitcoin: long term - up, short term - down.



The prospects for bitcoin and other cryptocurrencies are indeed amazing. It should be remembered that the very first cryptocurrency in the world is still very young - it is only 13 years in the market. Many companies or assets took much longer to form. Therefore, if we take a long-term perspective, we would prefer a further rise in the price of BTC. Unfortunately, as we found out in the previous article, every year, it is more likely that central banks and governments will find a way to control cryptocurrency flows and identify the owners of the bitcoin. This will immediately depopulate all cryptocurrencies, since their main attraction is precisely in their lack of state control. In the short term, however, it is high time for bitcoin to go down. If you look at the entire trend over the past 13 years, you can distinguish the last two waves of growth. After the first one, from $ 20,000 per coin, bitcoin fell by 90% and consolidated for more than 2 years. It is hard to believe that such a young asset after 13 years of its existence will reach its maximum value, which will remain for many years. Most likely, bitcoin continues to be in the process of becoming. And if it is not crushed by governments and central banks, then there will be several more waves. It should be understood that most of the world is still skeptical about bitcoin. When the attitude to it is the same in the world as to stocks or ordinary currencies, then we can talk about price stabilization in the long term and reduce volatility. But before a new wave of bitcoin growth begins, it needs to seriously roll back down. Maybe this time the rollback will not be 90%, but 50% of the value of digital gold is quite capable of losing.

In the long term, Anthony Scaramucci, head of the SkyBridge Capital hedge fund, also supports the growth of Bitcoin. The functionary believes that bitcoin may well repeat the path of the shares of the retailer Amazon. In his opinion, the volatility of bitcoin will fall as it is accepted by the masses. The head of the fund notes that over the past 12 years, Amazon shares have grown 64 times and are now trading much more stable than 10 or 20 years ago. Thus, there are still extremely attractive prospects for bitcoin, but it should be understood that Amazon shares are shares of a real company that is engaged in activities, has various types of assets that also cost a lot of money, and also brings profit to its shareholders and owners. Bitcoin does not bring any profit if you do not take its investment properties. In fact, it does not cost anything, it can lose up to 90% of its value at any time and is determined only by people's faith in it. And it has risen in price by 58,000% over the past eight years.




Paolo Greco
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Pros and cons of bitcoin as an investment tool

While the bitcoin rate continues to push in the $54,000-$60,000 range, Bank of America published a report that does not see a compelling reason to own bitcoin. The bank's economists concluded that bitcoin has only one advantage over many disadvantages. It should be understood that we are talking about bitcoin as a financial instrument or derivative, with which you can build various trading strategies and make money.



Many cryptocurrency enthusiasts have recently argued that one of the main speculative advantages of cryptocurrency is the ability to hedge inflationary risks, which, by the way, is the time for central banks of the developed countries to think about. But that's not the point. The point is that Bank of America does not see the benefits of diversifying risks with bitcoin, since it is impractical as a store of value or payment mechanism.

There is only one good reason for owning bitcoin, and that is the rise in its price. Obviously, bitcoin is a rather risky asset, as it is not tied to inflation, and therefore it is subject to serious volatility. This makes it impractical as a store of value. There are also few places where you can use bitcoin for calculations, and given the current transaction fees, this function is now generally meaningless. Therefore, the only argument for adding bitcoin to your investment portfolio is not diversification, stable profitability, or inflation protection, but rather the expectation of a clear price increase in the future - a factor that depends on outstripping demand.

The Bank of America report downplayed the diversification benefits of cryptocurrency. Experts are confident that the price of bitcoin is more strongly correlated with stocks and commodities. Correlation with safe assets such as the dollar and US Treasuries, however, is the least visible. It is difficult to disagree with this because since January this year a very strong correlation trend has been observed with the American stock market - the S&P 500 index.



The markets began to overlap most sharply during the onset of the coronavirus pandemic crisis when the collapse of stock indices led to a similar decline in cryptocurrencies. Then, as it recovered throughout 2020, the S&P 500 index managed to return to its highs and update them, and at the beginning of 2021, Bitcoin already followed it. In recent months, these two markets have been very strongly correlated with each other, and when one falls, there is a noticeable correction in the other.



An equally interesting study was published today by Glassnode, which says that large bitcoin investors have sold part of their assets amid rising prices this year. This confirms the theory that it is retail buyers who have become a key factor in supporting the market. According to Glassnode, the number of unique addresses containing more than 1,000 BTC has dropped by more than 8% since February 8 this year. And although the wallets of the whales are gradually getting rid of some of their assets, it is more likely to take profit than to run out of the market. It is unlikely that the upward trend in bitcoin will end before the middle of this year, as long as there are programs to help economies in several developed countries.

As for the technical picture of bitcoin, much depends on the behavior of investors at the level of $59,200. Its breakout will provoke a new large wave of growth with a return to the level of $60,000 and the subsequent renewal of historical highs around $62,000 and $65,000. It will be possible to talk about a downward correction in Bitcoin only after the trading instrument drops below $54,400, which will lead to a rapid collapse in the area of $49,600 and $44,900.





Jakub Novak
Analytical expert
InstaForex Group © 2007-2021

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Trading Signal for BITCOIN for March 19 - 22, 2021: Key level $59,200



Bitcoin this morning of the American session is trading above the SMA of 21 and above the EMA of 200, with a bullish trend but limited to the psychological level of 60,000.

Our outlook remains bearish at least up to the 50,000 level, as long as the bullish trend channel is not broken in 4-hour charts, this expectation will only be a hypothesis, we will see the fact when it trades below 55,000.

On the other hand, it is likely that there will be a pullback towards the bearish channel line, just formed from its maximum, if the Bitcoin trades below that area, we could expect a bearish movement until the support of the bullish channel at 56,250.

A definitive break below the channel and below the +1/8 of murray could be a downward movement of correction to the zone of the 200 EMA, located at 52.150 and lower to the 8/8 of murray at 50,000.

Our recommendation is to sell below 59,200 and buy on the technical bounce at 56,250.


Support And Resistance Levels For March 19 - 22, 2021

Resistance (1) $59,637
Resistance (2) $61,406
Resistance (3) $62,728

Support (1) $56,547
Support (2) $55,225
Support (3) $53,456




Dimitrios Zappas
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Technical Analysis of BTC/USD for March 19, 2021

Crypto Industry News:

It's been 37 days since Tesla announced the purchase of $ 1.5 billion in Bitcoin in a document filed with the US Securities and Exchange Commission.

While the exact amount of BTC purchased was not disclosed in the document, with a Bitcoin value of between $ 29,000 and $ 37,000 in January, Tesla's investment of $ 1.5 billion could mean the company owns at least 40,000 Bitcoins.

Based on this speculative data and the Bitcoin price increase since late January, Tesla's minimum 40,000 BTC is now worth $ 2.2 billion. This figure translates into an unrealized profit of $ 700 million.

So Tesla has almost $ 19 million in unrealized profit per day within 37 days of announcing the purchase of Bitcoin.

The electronic vehicle maker earned $ 31.54 billion in sales of 499,550 cars in 2020, a profit of $ 721 million. Tesla's ownership of Bitcoins nearly overshadowed this profit margin, especially considering that the above analysis only considered the company's likely minimum stock of BTC.

Taking car sales for the year as a constant average, Tesla sold approximately 1,368 cars a day with a daily profit of $ 1.98 million.

As mentioned earlier, Tesla was making $ 19 million in unrealized gains per day while holding Bitcoin. To achieve this feat in its normal operations, the company would need to increase daily car sales by more than 860%.

Thanks to Bitcoin, which some predictions say will experience a year-round boom and six-digit values, Tesla's unrealized gains from ownership could outweigh car production by several orders of magnitude.


Technical Market Outlook:

After the BTC/USD pair had broke through the short-term trend line resistance around the level of $58,233 the rally was capped at the level of $60,084. It looks like bulls have a problem to increase the momentum and rally higher. The next technical support is seen at the level of $56,733 and if this level is violated, then the corrective cycle might expand towards the next technical support seen at $54, 314 and then $49,422. The intraday technical resistance is seen at the level of $60,609. Please notice the market keep making higher highs on the daily time frame despite the bearish divergence building since the level of $41,917.

Weekly Pivot Points:
WR3 - $77,718
WR2 - $70,065
WR1 - $65,682

Weekly Pivot - $57,463
WS1 - $53,537
WS2 - $45,060
WS3 - $41,147


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 $70,000. 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 on the e daily time frame chart.






Sebastian Seliga
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Technical Analysis of ETH/USD for March 19, 2021

Crypto Industry News:

Messari's Ryan Watkins predicts that once the Eth2 initialization routine is complete, ether could overtake Bitcoin as the world's largest digital asset.

In his media speech, Watkins noted that while he does not know "if and when" Ethereum will replace Bitcoin, he believes that ETH could prove to be the leading digital resource in the future for Eth2's sake:

"The advantage of Bitcoin over Ethereum as a store-of-value asset is that its monetary policy is very predictable and the Bitcoin blockchain is very secure. I think that after switching to Eth2 and Proof-of-Stake, [...] Ethereum could potentially be more secure than Bitcoin. "

Watkins also highlighted the changing economy of Ether during the transition to Eth2. He stressed the importance of the expectation that the incoming Ethereum combustion mechanism would cause ETH to burn at a rate that exceeded the creation of new supply.

"Ethereum's monetary policy will actually change in Eth2 so that it will actually not just be less inflationary than Bitcoin, but it will actually be deflationary. So every year there will be less and less ether as it will be burned.

The representative of Messari also noted the "mass" and "diverse" economy built on Ethereum. He suggested that the booming sector of decentralized web applications would attract new users at a faster pace than Bitcoin over time.


Technical Market Outlook:

The ETH/USD pair has made a false breakout and got back to the consolidation zone located between the levels of $1,720 - $1,816. The false breakout happened because the consolidation zone is very close to the lower channel line that was recently violated and now bulls are not quite able to come back up inside the channel. Moreover, the breakout has ended with a Doji candlestick, so the bears are still defending the channel. If the price will go back to the consolidation zone, then the false breakout to the upside will be invalidated and there will be more chances for a bearish breakout to the downside.

Weekly Pivot Points:
WR3 - $2,266
WR2 - $2,113
WR1 - $1,975

Weekly Pivot - $1,820
WS1 - $1,716
WS2 - $1,552
WS3 - $1,423


Trading Recommendations:

The longer term up trend on the Ethereum continues despite the local counter-trend corrections. When the correction is terminated, the next long term target for ETH/USD is seen at the level of $2,100. The key long term technical support is seen at the level of $1,412, so only a weekly candle close below this level will invalidate the bullish scenario.






Sebastian Seliga
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Bank of America: Bitcoin is of no value, and its only advantage is the constant increase in cost



The word "bitcoin" continues to appear very often in various news reports. Indeed, the cryptocurrency, which a year ago was worth $4,000, is now valued at almost $60,000 per coin. Recall that no cryptocurrency itself has a cost (value). It's just a piece of useless code. However, if everyone in this world is willing to pay any money for a piece of useless code, then it certainly becomes more expensive. This is the reality of the 21st century that a piece of code that has only ephemeral value is used in anonymous international payments, is a "bone in the throat" for all governments and central banks, and heavily pollutes the environment. Despite the fact that the absolute majority of experts believe that it does not perform the function of money, it also can not be used as a means of saving or payment instrument. Just the other day, the same opinion was voiced by Bank of America analysts. One of the authors of the report "Bitcoin's Dirty Little Secrets" said that bitcoin cannot be used as a means of preserving value. Even the money under the pillow, lying there for years, retains value much better than bitcoin, which you hold in your hands for only 10 minutes. It is not tied to inflation and is extremely volatile, according to Francisco Blanch. "The main argument in favor of buying BTC coins is not the diversification of investment risks, stable income or protection from inflation, but a simple and banal price increase simply because the demand for bitcoin outstrips the supply," the BofA analyst believes. Blanch also notes that about 95% of all bitcoin is contained in 2.4% of wallets, which can greatly hinder the introduction of "digital gold" to the masses. Rather, bitcoin will become a means of investment for the rich, because at its current cost, not everyone can afford to buy even a certain percentage of it. It should be recalled that at the moment about 19 million bitcoin coins have been mined, and about 15 of them have been in their wallets for a long time. Simply put, there are 3 or 4 million coins in circulation around the world, which is certainly very small to proclaim bitcoin as the "world digital currency." Analysts also focus on the fact that mining farms consume a lot of electricity, and the network itself provides a very low transaction speed, which will also prevent bitcoin from becoming a digital analogue of fiat money. Analysts also note that the production of cryptocurrency annually costs the Earth's atmosphere 60 million tons of carbon dioxide. Bear in mind that bitcoin is a useless piece of code, but the planet pays a high price so that humanity can mine this code. In the end, bitcoin will have a hard time, according to BofA analysts, as central banks will launch their digital currencies, which will make a tough competition for bitcoin.




Paolo Greco
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Visa expands its crypto strategy, Ireland tightens cryptocurrency regulation, Morgan Stanley to give access to bitcoin funds



Bitcoin is hesitant to pick up a trajectory whether to keep rising or start a new round of correction. Nevertheless, a string of news about bitcoin shows how popular it is becoming. However, as we have already mentioned, these pieces of news are mostly about storing, mining, and converting bitcoin, as well as related services. For example, Visa, the largest payment company, aims to provide the opportunity to buy bitcoin, as well as to convert cryptocurrencies to fiat money at any time and spend from wherever Visa operates. According to Visa, it has developed a multi-faceted cryptocurrency strategy that is designed to expand the work with digital assets. The head of the company, Alfred Kelly, believes that cryptocurrencies will be used as a means of payment, especially in emerging economies. Kelly also suggested that cryptocurrencies would be used everywhere within the next five years, but he did not rule out the possibility of a decline in the public interest. Notably, earlier the company stated that it was preparing a new API that would allow customers of all banks to buy and sell cryptocurrencies anywhere in the world.

At the same time, Ireland is going to tighten the regulation of cryptocurrencies. Reportedly, the Central Bank of Ireland is planning to expand the law on combating money laundering and the financing of terrorism. Cryptocurrency companies in the Republic of Ireland will have to comply with various laws. This will bring cryptocurrency organizations on the same footing as traditional financial companies. Registration of cryptocurrency companies with regulatory authorities will become mandatory. The government believes that the new measures will bring real commercial benefits and help in terms of creating new jobs and tax revenues to the budget. Earlier, India announced its intention to completely ban bitcoin mining and its transactions on its territory.

Meanwhile, Morgan Stanley has become the first big US bank to offer its wealth management clients access to bitcoin funds. Two of the funds on offer are from Galaxy Digital, a crypto firm founded by Mike Novogratz. All clients of the bank who have at least $2 million in assets held by the firm will be able to buy shares in Novogratz investment funds. However, Morgan Stanley is limiting bitcoin investments to as much as 2.5% of their total net worth. It is still difficult to say whether this will increase the overall aggregate demand for digital currencies. As we said earlier, in the coming weeks, dynamics in the crypto market will depend on the activity of miners and hamsters who at any time may start selling off their coins.





Paolo Greco
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Bitcoin: the "dirty little secrets" of the main cryptocurrency

Banks and the traditional financial system have a specific relationship to cryptocurrencies. Recently, Bank of America published a review called "Dirty Little Secrets of Bitcoin". In that matter, the main cryptocurrency was criticized because of its attractiveness for speculation. The second claim was the high level of energy consumption for its extraction.

According to the report, the growth of bitcoin over the past year was triggered by the influx of Bitcoin Trust to Grayscale, the halving of the main cryptocurrency which occurred in May 2020, as well as an increase in interest among institutional investors.

At the same time, Bank of America claims: there are no good reasons to own the main cryptocurrency. The only thing that can be expected from the purchase of bitcoin is an increase in its price. It is impractical as a means of payment or a means of accumulation due to its high volatility. Some correlation with risky assets and the lack of an inflation link is another negative.

Therefore, bitcoin will be bought not by those who seek diversification, stable profitability and protection of funds from inflation, but by speculators who expect the price to rise.

According to the Bank of America experts, the cryptocurrency needs an inflow of $ 93 million to increase the value of bitcoin by 1%.

The high energy intensity of the mining process is the second reason for the bank's skepticism about the main cryptocurrency. Now, according to experts, the bitcoin network needs as much electricity as the whole of Greece.

But, not all financial giants are so skeptical. Morgan Stanley, for example, said that it intends to provide its clients with access to three bitcoin funds. However, it will still introduce some restrictions.

Meanwhile, today, the open interest in bitcoin options has risen above $ 13 billion for the first time in history.

Bitcoin was able to move up from yesterday's consolidation range today. The main cryptocurrency has overcome the level of the previous historical value of 58340.66 and is on the way to Sunday's highs around the mark of 61657.98 (resistance at the level of 161.8 on Fibo Expansion).






Ekaterina Kiseleva
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Will miners start selling off mined bitcoins, and will they be supported by small and private investors?



Bitcoin rushed up again after the announcement of the results of the Fed meeting last night. However, its growth was hardly caused by new purchases of "digital gold" this time. The US currency fell in price yesterday across the entire spectrum of the market, so bitcoin, the value of which is determined in dollars, rose in price precisely because of the fall in the dollar. The growth of the number one cryptocurrency has already stopped today and the correction movement may even be resumed. Recall that all the latest news concerning "digital gold" was, as is usually the case, contradictory. For example, one of the most important news of recent times was the statement of the Indian authorities about the possible complete ban of bitcoin and other cryptocurrencies on their territory. Many other countries continue to impose taxes and restrictions on the cryptocurrency sphere. And various researchers warn that miners may soon begin to get rid of the mined bitcoin coins and bring the rate down. In addition, in the first quarter of 2021, most of the investors in bitcoin were individuals, and not institutions. It is individuals, and especially small investors, who pose the greatest danger to bitcoin. Such investors are chasing short-term profits and are not ready to keep bitcoin for years in the hope that it will grow to $100 or 200 thousand. So if the market goes south, many small and private investors will rush to get rid of bitcoin. And after that, the future of bitcoin will depend only on whether institutional traders maintain a high demand for the coin. If all the coins that small and private investors want to sell immediately go to the institutions, the demand for bitcoin will not fall or will fall, but for an extremely short period of time. Just like its course. But if the institutions support the sale of bitcoin, there may be a collapse of 50-60% of its current value. So far, the number one cryptocurrency continues to trade near its absolute highs.



As for the technical picture, the bitcoin quotes are still located above the critical Kijun-sen line at the moment, which lies at the level of $52,340. Another strong support area is located between the levels of $43,000 and $44,000. Thus, these two supports maintain the upward trend on bitcoin for the time being. However, it is worth noting that in recent weeks, the upward momentum has weakened, and there is no new positive fundamental background for bitcoin. Ergo, it is possible that a new attempt to fix the price below Kijun-sen will be successful, which in turn will provoke a drop to $43,000 per coin, at least.





Paolo Greco
Analytical expert
InstaForex Group © 2007-2021