- Bitcoin topped $12,000 for the second time in three days on Wednesday as risk assets fell on fears of a global recession.
- The cryptocurrency is acting more and more like a safe-haven asset where investors seek refuge when other assets fall.
- Even though bitcoin is itself a volatile asset, some experts argue it’s shielded from some of the geopolitical news that moves other markets.
- Watch Bitcoin trade live on Markets Insider.
Bitcoin rose more than 2% Wednesday, breaking the $12,000 level for the second time in three days. The gains come as traders seek refuge as global risk assets sell off on worries that global recession is on the horizon.
US stocks sank on recession fears Wednesday just two days after turning in their worst day of 2019. Bonds rallied, with the yield on 30-year Treasurys sinking near record lows. Other safe-haven assets also boomed as gold topped $1,500, a six-year high.
“The recent Bitcoin rally strengthens the argument for Bitcoin as a store of value,” Ken Xuan, a data scientist at Fundstrat, said in a note Monday.
Bitcoin also topped $12,000 briefly on Monday after markets sank when China let the yuan fall below a key psychological threshold versus the dollar. The nation also said it would stop buying US agricultural products to retaliate against the threat of further US tariffs.
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Bitcoin is mimicking a safe-haven asset because its correlation with other assets more linked to geopolitical news has diminished, Thomas Lee of Fundstrat wrote in a note.
He noted that the cryptocurrency is becoming less tied to the US dollar, while its adherence to equity performance has also decreased in 2019. Meanwhile, bitcoin has gotten more closely correlated with gold over the last 100 days, according to Fundstrat.
Because bitcoin is decentralized and operated by a distributed network as opposed to a central bank, it is less likely that its price could be fixed, Sky Guo, CEO of Cypherium, told Markets Insider in an interview.
“It’s harder to manipulate the circulating supply, and that’s why some people think it is a safe haven,” Guo said.
To be sure, Bitcoin is still facing tailwinds, especially over the next four to six weeks, Lee wrote in an earlier note. Risk of regulatory action spurred an 18% fall in July after US lawmakers criticized Facebook’s digital coin, Libra, which raised concerns about the overall legitimacy of crypto.
But still, the “crypto winter” is likely over, Lee says. Bitcoin is up roughly 215% this year, though it’s far below its highest price near $20,000 set in 2017.
Ethereum (ETH) Price Could Retest $200 Before Fresh Increase
- ETH price is currently correcting lower and it recently broke the $212 support against the US Dollar.
- The price is facing a lot of hurdles on the upside near the $212 and $215 levels.
- There is a key bearish trend line forming with resistance near $214 on the hourly chart of ETH/USD (data feed via Kraken).
- The pair could extend its decline towards the $200-$202 support area before starting a fresh increase.
Ethereum price is currently declining below $212 versus the US Dollar, similar to bitcoin. ETH price is likely to retest the $200 support area before the bulls might take a stand.
Ethereum Price Analysis
After testing the $225 level, ETH price started a downside correction against the US Dollar. The price broke the $215 and $212 support levels to move into a short term bearish zone. Moreover, there was a close below the $212 level and the 100 hourly simple moving average. The recent decline gained pace below the $210 level and the price traded as low as $206.
At the moment, Ethereum price is correcting higher above the $210 level. It broke the 23.6% Fib retracement level of the recent decline from the $218 high to $206 low. However, the bears are protecting the $212 resistance area and the 100 hourly SMA. Moreover, the 50% Fib retracement level of the recent decline from the $218 high to $206 low is sitting tight near the $212 level.
There is also a key bearish trend line forming with resistance near $214 on the hourly chart of ETH/USD. The trend line is close to the 61.8% Fib retracement level of the recent decline from the $218 high to $206 low. Therefore, the price is likely to face a lot of hurdles near the $212 and $215 levels. To start a solid upward move, the price must climb above the $215 level and settle above the 100 hourly SMA.
On the downside, an immediate support is near the $206 low. However, the main support is near the $202 and $200 levels. It seems like the price could extend its decline towards the $200 support area before it might start a decent upward move.
Looking at the chart, Ethereum price is clearly trading in a short term bearish zone below the $212 and $215 levels. If there is an upside break above $215, the price will most likely climb towards the $225 monthly high. If not, the price could revisit $200.
ETH Technical Indicators
Hourly MACD – The MACD for ETH/USD is slowly moving into the bullish zone.
Hourly RSI – The RSI for ETH/USD is currently below the 50 level, with a few bearish signs.
Major Support Level – $202
Major Resistance Level – $215