Bitcoin Rejected at $40,000 Amid a Dwindling Bull Run

  • Bitcoin has seen meteoric growth in the past 24 hours as fueled by news from Amazon.
  • Despite the uptrend which stirred a growth of up to 15% in the latest run, the market bears rejected a push-up beyond the $40,000 resistance point.
  • Ethereum is also seeing a rejuvenation as it looks to breach the $2,500 price level.

Unique fundamentals unraveled in the past days have stirred a rejuvenation in the cryptocurrency industry. For a market that has been begging for a bullish awakening in months, the 8.65% in the global crypto market cap to $1.53 Trillion is perhaps enough to suggest a major rally may be brewing. This, however, is dependent on how Bitcoin and Ethereum can sustain their current growth trends.

Bitcoin Sees Impressive Price Growth and a Simultaneous Rejection

The premier cryptocurrency is currently changing hands at $38,282.8, up 9.84% according to data from CEX.IO the price feed. The news that Amazon is looking to hire a crypto expert to help chart its pursuit of accepting Bitcoin payments can be tipped as a major cause for this recent growth.

With the institutional backing which has seen the likes of Tesla, MicroStrategy, and recently SpaceX places a Bitcoin holding on their balance sheets set to be complemented with the Amazon push, market bulls went on an unbridled accumulation, pushing the price to a weekly and monthly high of $39,280.42.

The uptrend as seen on the BTC/USD 4h chart is attaining the peak at the current price level, suggesting a bear action that is repressing the price growth from crossing the $40,000. The RSI and MACD indicators are still showing positive signs of growth, and while we may see a little retracement, crossing the $40,000 resistance point remains the short-term target for investors.

Ethereum Maintaining a Steady Growth

At a current price of $2352.31 and a growth rate of 8.01% in the past 24 hours, Ethereum’s uptrend correlation with BTC was reiterated. However, unlike Bitcoin which has started seeing a gradual bear action, Ethereum bulls are pushing the coin to a new price point, such as has never be seen in the past month.

With prices trading above the short-term Moving Average, a sustained buyup can push Ethereum to the $2,500 to $3,000 price level in the coming weeks.

Why MicroStrategy Stock Is Down By 8% Today

MicroStrategy Stock Falls As Bitcoin Drops Towards $32,000

Shares of MicroStrategy found themselves under strong pressure amid strong sell-off in crypto markets. Bitcoin managed to settle below the support at $35,000 and made an attempt to settle below the next support level at $32,000 after China banned crypto mining in Sichuan province.

Today, the company announced that it purchased approximately 13,005 Bitcoins for $489 million at an average price of $37,617 per Bitcoin. MicroStrategy noted that it holds approximately 105,085 Bitcoins.

MicroStrategy is a business intelligence company, but it has emerged as one of bets on the growth of the crypto market after it started to buy Bitcoin. In this light, the dynamics of Bitcoin are a bigger catalyst for MicroStrategy compared to its main business.

What’s Next For MicroStrategy Stock?

MicroStrategy has recently completed an $500 million offering of 6.125% senior secured notes due 2028 and immediately used the proceeds to buy Bitcoin. Back in February, MicroStrategy completed a $1.05 billion offering of convertible senior notes due 2027 which was also used to buy Bitcoins.

At this point, MicroStrategy’s average purchase price is approximately $26,080 per Bitcoin, inclusive of fees and expenses, so the company has “paper profits” despite the major pullback in Bitcoin.

However, it should be noted that Bitcoin is trading not far from MicroStrategy’s average purchase price, and a move towards $26,000 may put significant pressure on MicroStrategy’s stock which remains very dependent on market sentiment.

At the current Bitcoin price of about $33,000, MicroStrategy’s Bitcoin are valued at approximately $3.47 billion, which is more than half of the company’s market capitalization.

Recent crackdown on miners in China has already led to increased volatility in crypto markets, and this volatility will likely remain intact in the upcoming trading sessions. MicroStrategy stock will be very sensitive to Bitcoin’s trading dynamics so traders should be prepared for fast moves.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Rebound At The Start Of The Week

Traders Buy Stocks After Sell-Off

S&P 500 futures are gaining ground in premarket trading as traders rush to buy stocks after the recent sell-off.

The yield of 10-year Treasuries has recently made an attempt to settle below 1.36% but lost momentum and rebounded towards 1.44%. It looks that traders rushed to buy U.S. government bonds to increase exposure to safe-haven assets, but optimism prevailed, and yields moved higher.

Meanwhile, the U.S. dollar is losing ground against a broad basket of currencies after the recent rally. Weaker dollar provided some support to precious metals so gold and silver are moving higher at the start of the week.

Cryptocurrencies Dive Amid Crackdown In China

China continued to put pressure on crypto mining and banned mining in Sichuan province. This move triggered a major sell-off in crypto markets. Bitcoin declined towards the support at $32,000 while Ethereum fell below the $2,000 level. Dogecoin was the biggest loser among major cryptocurrencies. Currently, it is trying to settle below the support at $0.2250.

It looks that the recent flight to safety in global markets served as an important catalyst for the current downside move, and traders preferred “safer” alternatives to cryptocurrencies.

It remains to be seen whether the current sell-off in crypto markets will have any notable impact on the stock market, but crypto-related stocks like MicroStrategy are under significant pressure in premarket trading.

WTI Oil Moves Higher After Hardline Candidate Wins Iran Election

WTI oil made an attempt to settle back above the $72 level after judge Ebrahim Raisi, who is under U.S. sanctions, won presidential election in Iran.

Traders bet that Iran nuclear deal negotiations may get more challenging after Raisi’s victory.  However, traders may be using political developments in Iran as an excuse to buy oil at higher levels, while the strongest drivers behind the recent rally are the robust rebound of oil demand and the successful implementation of OPEC+ deal.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin Bump: Looming Regulation Fails to Spook BTC Investors

Bitcoin is on everyone’s minds these days, including regulators. The Bank for International Settlements (BIS) has introduced a proposal for a regulatory framework surrounding cryptocurrencies, including bitcoin, that looks a lot like the stablecoin model.

Cryptocurrency market leaders warn that excessive regulation will stifle innovation. The bitcoin price has advanced more than 7% even with the potential banking regulatory oversight looming to currently hover at USD 37,568. Despite today’s gains, bitcoin has shed more than one-third of its value since its April peak of USD 63,729.

BIS Proposal

The proposal, which was submitted by Basel Committee for Banking Supervision, a BIS committee, was created in response to heightened demand for bitcoin and altcoins. Regulators can no longer stick their heads in the sand about the market, and they want banks to take a conservative approach to handling digital assets.

Under the proposal, banks would be required to hold USD in reserves that is commensurate with the amount of bitcoin they possess. The regulator is looking to attach a 1,250% “high risk weight” to bitcoin in search of ” a conservative outcome for direct exposures of cryptoassets,” according to the proposal.

The bank regulator in chief listed the following risks associated with digital assets, saying it is looking to address these concerns:

  • consumer protection
  • money laundering
  • terrorist financing
  • carbon footprint (think Elon Musk)

Mainstream Media Coverage

Alexis Ohanian, co-founder of Reddit, discussed cryptocurrencies on CNBC today, calling it a “fascinating time.” On one hand,  El Salvador is looking to name bitcoin as legal tender, while the U.S. is moving toward cracking down on the space.

Ohanian believes the industry requires a “delicate balance” between embracing innovative technology and thwarting the risks. He warned that any “heavy hand” regulation would be detrimental to the United States as other countries take leaps forward.

Meanwhile, bitcoin bull and MicroStrategy chief Michael Saylor on June 9 was featured as a guest on Sean Hannity’s prime-time show on Fox News. Hannity, whose show that bears his name reaches millions of viewers, also tweeted a profile picture of himself on Twitter with laser eyes, a sign that he is drinking the crypto Kool-Aid.

MicroStrategy recently announced it is selling USD 500 million in bonds, the proceeds from which it will direct toward buying more bitcoin. The software maker already holds billions of dollars’ worth of BTC on its balance sheet. Saylor believes that bitcoin is headed for the moon.

 

Internet Computer: Fast-Rising Crypto Challenging Amazon and Microsoft

Internet Computer at the time this report was drafted, is currently the eighth-most valuable crypto with a market value of about $43 Billion.

Though recent price actions reveal the token has suffered some pullbacks some hours ago, investors are however betting high on the crypto because it enables anyone publish anything they want onto the internet with so much ease without going through cloud service providers like Microsoft and Amazon with the main objective of reducing operational costs.

The Internet Computer traded at $346.91 with a daily trading volume of $1.3 Billion. The Crypto founded by Dominic Williams is down 22% for the day.

The project’s token is already listed on a number of high-profile crypto exchanges that includes Binance, Coinbase, OKEx

The newly listed crypto asset is the first blockchain that operates on web speed with unrestricted capacity with a capability of scaling contract computation and data, processes and keeps data adequately, and most importantly facilitates powerful software frameworks to developers.

The Internet Computer’s functionality is similar to Ethereum, taking to account it depends on the use of smart contracts, or software programs in carrying out instructions, thereby competing with other related networks that include Binance Coin Polkadot fighting hard to steal Ethereum’s market share.

The company has been able to raise about $121 million from leading venture capital firms that include, SV Angel, Aspect Ventures, ZeroEx, Scalar Capital, Andreessen Horowitz, Polychain Capital, Electric Capital, Multicoin Capital, and several Ethereum fans.

Internet Computer officially went open-source on Monday a move that will permit developers in building the code and affirm that it derives from the same binary image that is referenced in upgrade proposals issued via the Network Nervous System

Bitcoin – The Surge, The Outlook, and The Beneficiaries

Following greater regulatory oversight and disclosure, Bitcoin has drawn the interest of private and public companies in addition to traders and investors.

A number of companies currently have sizeable Bitcoin holdings. Not only have they benefitted from the 2020 breakout but will see even more impressive gains should Bitcoin hit 6 figures this year.

The Beneficiaries

According to Bitcoin Treasuries, a large number of public trading companies have benefited from holding Bitcoin.

These include:

Microstrategy Inc. (“NADQ:MSTR”) – A U.S entity, with a reported holding of 70,470 BTC.

Galaxy Digital Holdings (TSE:GLXY”) – Canadian entity that purchased $134m worth of Bitcoin on 30th June 2020, equivalent of 16,651 BTC.

Square Inc. (“NADQ:SQ”) – U.S entity, with a reported holding of 4,709 BTC.

Hut 8 Mining Corp. (TSX:Hut-8”) – Canadian entity, with a reported holding of 2,953 BTC purchased in Q2, 2020.

Private Companies

MTGOX K.K – Japan private entity, with a reported 141,686 BTC holding.

Block one – U.S private entity, with a reported 140,000 BTC holding.

The Tezos Foundation – Swiss private entity, with a reported 24,808 BTC holding.

Stone Ridge Holdings Group – US entity, with a reported 10,889 BTC holding.

In addition, there are ETF like entities holding Bitcoin, where institutional and private investors have benefited from the Bitcoin surge.

The largest Bitcoin holders include:

Grayscale Bitcoin Trust – A U.S entity holding a reported 572,644 BTC

CoinShares / XBT Provider – An EU entity holding a reported 69,730 BTC.

Ruffer Investment Company – A UK entity holding a reported 45,000 BTC.

While some entities are established and directly involved in the crypto markets, other Bitcoin holders are not.

With Bitcoin price stability having returned after the slide to the 2020 low of $4,000, the upward trend has drawn sizeable institutional money.

In considering the more than 700% surge since the March low, balance sheets for these entities would have seen marked improvement.

Looking ahead, the number of entities is likely to increase. Existing Bitcoin holders are certainly well placed to reap greater rewards. Existing holders will also benefit from a significantly lower risk of being Bitcoin holders.

Looking Ahead

There have been plenty of Bitcoin price projections for 2021 flying around. When considering the upward surge from last year’s low of $4,000, $100,000 would be a conservative price forecast for 2021.

The largest reported public company Bitcoin holder, Microstrategy Inc., would see its Bitcoin holdings of 70,470 surge in value to $7.05bn. As of the end of 2020, its Bitcoin holding was valued at approximately $2.04bn.

Galaxy Holdings, the 2nd largest public company Bitcoin holder would see its $134m BTC investment hit the dizzying height of $1,665.1bn. With a current market cap of C$1,014bn, a Bitcoin visit to $100,000 would double the companies market cap. Not a bad return for shareholders…

Private companies have an even more impressive exposure to Bitcoin and have seen unprecedented rewards from their Bitcoin holdings.

Japan’s MTGOX K.K., would see its Bitcoin holdings rise from $1.1bn to $14.2bn should Bitcoin reach $100,000 in the year ahead.

Finally, looking at the Bitcoin ETFs, Grayscale Bitcoin Trust reportedly holds 572,644 BTC. A Bitcoin jump to $100,000 in 2021 would give Grayscale and its investors $57.3bn in Bitcoin investment income.

Investor Returns

For investors that have no direct exposure to Bitcoin, indirect benefits to Bitcoin’s newfound strength will boost returns.

Shareholders may also look to pressure companies to rejig balance sheets and have some exposure to Bitcoin. Short and long-term bonds and cash holdings may not cut it anymore.

There are fiduciary obligations, however. So, we may not see public and private companies purchase Bitcoin in the numbers seen to-date.

Few shareholders would complain about the likely dividends that would result from a Bitcoin surge to $100,000.

Downside risks are ever-present, however, and the more risk prudent investor will be mindful of the impact of any Bitcoin meltdown.

The good news, for the companies discussed above, however, is that Bitcoin would need to take quite a hit to give them a Bitcoin loss.