Price Point: Bitcoin was higher as U.S. lawmakers revived hopes for a fresh stimulus package and the Tokyo Stock Exchange suffered an all-day outage.
Market Moves: Bitcoin is outperforming pretty much every other asset class this year, with a 50% YTD gain, and analysts are bullish heading into 4Q.
Bitcoin Watch: Dollar's strength could pose challenges for near-term price action, CoinDesk's Omkar Godbole writes.
What's Hot: Record ether fees, TRUMP tokens slide, MakerDAO adds Chainlink support, Talos emerges from stealth mode.
PRICE POINT
Bitcoin was higher to start off the final quarter of 2020, which has been an annus horribilis for the world but a good year for the largest cryptocurrency, up about 50% in the first nine months.
Lennard Neo, head of research at the cryptocurrency products firm Stack Funds, wrote Thursday in a weekly report that he's seeing "significant buying pressure" at the $10,000 price level and that "further consolidation" is expected "leading up into November."
A lot of crypto investors like to think of bitcoin as a bet on higher inflation, or as a futuristic hedge on some imagined economic-armageddon scenario — Gold 2.0, as they say.
Lately it's looking more like Gold 2x: As bitcoin heads into the final months of 2020, the largest cryptocurrency's 2020 investment returns are twice those of the yellow metal.
Bitcoin gained 50% in the nine months through September, versus gold's 25%, during a year when a global pandemic ravaged economies and prompted central banks to print trillions of dollars. Many investors, while acknowledging that recessions are usually deflationary, say the extra flood of money could eventually send consumer prices spiraling higher.
And bitcoin's performance looks especially stark when compared with the Standard & Poor's 500 Index, which has returned 3.5% this year. A gauge of the bond market's performance is up 19%.
Chart showing year-to-date performance for bitcoin, gold, U.S. stocks and bonds. (By Shuai Hao, CoinDesk Research)
CoinDesk's Bradley Keoun and Daniel Cawrey rounded up commentary from nine crypto analysts and investors going into the rest of the year. Global conditions could get better, or worse still, but the analysts are pretty bullish.
Denis Vinokourov, Bequant: The market is testing the upper bounds of its recent range and, with the absence of fresh macro news flow that could dampen the risk on sentiment, bitcoin may just find enough momentum to break through the $11,000 price level and, more importantly, stay there. Open options interest continues to show signs of recovery.
Charlie Morris, ByteTree: The vast majority of bitcoin’s past gains coincided with periods of a flat or weak dollar. The implication is that bitcoin is likely to be a powerful hedge against US dollar weakness. How likely is that? Quite likely given it is Fed policy.
IntoTheBlock: There are two areas of strong resistance for bitcoin based on on-chain data. The first one is the current resistance it is facing around the $11,000 mark, where 626K BTC has been bought by 1.17 million addresses. This creates resistance from many of these addresses looking to close their positions to break-even. After that, there is another similar resistance level between $11,400 and $11,700 as shown in the graph above. The good news is that past these resistance levels, there is likely to be less selling pressure past $12,000.
Matt Blom, Diginex: Despite the propensity to buy, hold, and not move bitcoin, the network remains buoyed by growth. The only thing going sideways in bitcoin is the price.
Jason Lau, OKCoin:Bitcoin’s price momentum is still positive, with its pullbacks leaving higher highs. This is signaling a possible further continuation of this upwards move. Bitcoin perpetual swaps funding rates have started turning positive. This indicates that investors are more willing to go long at current price levels.
George McDonaugh, Keld van Schreven, Kr1 Plc: We are currently seeing some correlation between bitcoin, other digital assets and movements in the equity and gold markets. We expect the trend of strengthening balance sheets and diversification into bitcoin to continue as the world’s monetary policies shift evermore towards unbridled money printing and higher inflation.
QCP Capital: The key support from the early month lows of $10,000 on BTC and $310 on ETH both saw substantial buying demand. This prevented any cascading short gamma selling into quarter-end, which had been our fear if those levels broke.
Constantin Kogan, BitBull Capital: We’re seeing a spike in activity by new participants coming into BTC not yet reflected in price. It doesn’t happen often. This is what traders call a divergence. In this case the trend looks more bullish.
Patrick Tan, Novum Alpha: While it may be tempting to subscribe to the notion that bitcoin will represent a safe haven in times of instability, there’s little evidence to support that view – especially since gold, tech stocks and Bitcoin have all tracked each other closely this year. A further round of stimulus, or a smoother than expected political transition, could pave the way for bitcoin to move higher as politicians get past electing and get back to spending.
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Bitcoin, gold, S&P 500, and dollar index daily charts. (TradingView)
Bitcoin is trading in the narrow range of $10,600 to $11,000 for the seventh straight day.
The long-term sentiment remains bullish, as evidenced by a continued decline in the number of coins held on cryptocurrency exchanges - a sign of investors shifting to holding strategies.
In the short-run, the cryptocurrency could continue to take cues from the U.S. dollar and stock markets.
"We can't ignore the greenback's breakout from its recent consolidation and expect a continued rally in the dollar to weigh over BTC," said Matthew Dibb, CEO of Stack Funds.
The cryptocurrency fell by over 7% in September, confirming its biggest monthly decline since March as the oversold dollar index rose nearly 1.8%. Bitcoin, gold and S&P 500 have moved largely in the opposite direction to the dollar index since March.
Imagination has always been a key part of what money is. That piece of paper in your wallet only has value because the payer and the payee have both invested belief in its value. The crypto community—and its many competing sub-communities—create that common meaning with their preferred form of money.
We've launched a new podcast to explore these ideas and the technological, political and social forces reshaping our financial system.
Listen to the Money Reimaginedpodcast, hosted by our Chief Content Officer and author of CoinDesk's Money Reimagined newsletter Michael Casey and Sheila Warren of the World Economic Forum, on Fridays at 10 a.m. ET.
ANALOGS The latest on the economy and traditional finance
Universities are often key to getting new industries off the ground, providing the infrastructure to take paradigm-shifting ideas to the next level. But in blockchain and digital finance technology, how do they measure up?
Introducing CoinDesk U, a ranking of the top 20 schools identified in our research in collaboration with Mousebelt.
During a special CoinDesk Live episode on Oct. 6, we will release the results of the first CoinDesk U ranking. We are inviting students from around the U.S. as well as representatives from student club networks, the crypto industry and leading institutions to discuss traditional academia’s relevance and support for the financial technology poised to fuel Web 3.0.
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