Bitcoin bulls are relentlessly pushing for new local highs as the world’s largest cryptocurrency by market capitalisation reaches $950 for the second time this year.
Meanwhile, a survey from Deloitte found that most money managers expect crypto to rival or replace fiat currencies within 10 years.
However, warning signals on the charts and in traditional financial markets suggest that volatility could come back with a vengeance in September.
Let’s dig in.
Deloitte: Crypto will Replace Fiat Within 10 years
A survey by one of the big four accounting firms found the financial professionals expect bitcoin and crypto to rival or replace fiat in the next ten years.
The one caveat is whether these professionals answered the way they did simply because the market was booming. Would they have changed their tune when bitcoin was threatening to fall below $28,000?
Check out the full article here!
BTC/USD Reaches $50,000
As bitcoin trends higher and more capital flows into the asset, it’s important to keep your feet firmly on the ground. As such, it’s worth considering what makes a good investor. Briefly, a good investor knows the power of known unknowns and unknown unknowns, and all his actions are confined within that frame of reference. Regardless of how deeply you believe in a project, the fundamentals of a project and prevalent human psychology are rarely aligned in a raging bull market with infinite wads of cash.
With that out of the way, BTC/USD is inching closer to weekly super-trend resistance ($54,300), against which a reaction should be anticipated. The weekly resistance coincides with the .618 and .786 fib extension levels, ranging from $51,200 to $57,200, respectively.
As mentioned in prior newsletters, both fib extension levels are common take-profit areas for investors.
As of today, Bitcoin is currently entering into its 6th consecutive green week ever since its bounced from $29,100 in July. Since this is crypto, there is nothing stopping Bitcoin from printing 10 consecutive weekly candles.
However, Bitcoin is still within precarious waters unless the daily relative strength index resolves conflicting divergences.
Technically, bitcoin’s price is increasing as the RSI is decreasing. This means that bullish momentum is waning, and until the trend is broken (daily RSI close above 71), then a flash correction is on the cards. If the daily RSI continues higher, then it would be wise to take profit before the RSI overheats and hits 90.
All in all, now would be a good time for traders to consider reducing risk and plan for the next opportunity when price-action is less overheated. Needless to say, now is definitely not the time to go all in.
Hodlers will hodl regardless. As you may know, a $200,000 — $300,000 Bitcoin is not a matter of ‘if’ but ‘when’, provided central bankers keep printing money. In 2020, over 22% of the entire USD currency was printed and distributed through various means. This trend is unlikely to stop until there is total fiat-currency collapse, which is to say that digitally scarce assets like bitcoin and litecoin are a good place to park money. Since this problem grows exponentially for central bankers, bitcoin could be worth $1,000,000 by the end of the decade.
S&P VIX volatility incoming?
One major warning signal is the S&P volatility index (VIX), which is signalling that a bout of volatility in traditional markets is due. Unless the hyper-inflationary collapse is about to happen (unlikely), that means the S&P could experience a downturn in September.
In that case, high risk assets like crypto will sell off, in particular anything that isn’t bitcoin and litecoin; though most likely even emergent digital ‘safe haven’ assets would tumble.
While Bitcoin is not correlated to traditional markets in the long run, a strong-enough downturn in the S&P typically has an immediate knock-on effect on BTC/USD. As such, keeping a close watch on traditional markets as a predictive proxy indicator as we head into September is worth considering.
All in all, Bitcoin is showing strength and despite the warning signals could continue to rally.
Levels to watch
- Break above $54,300 suggest acceleration to $57,000
- LTF move below $48,000 suggests retracement to $45,000
Bulls lead the way.
Catch you later.
Read More: Crypto Will Replace Fiat Within 10 Years
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Originally published at https://mailchi.mp.