Bitcoin Jumps Above $7,000 with an Influx of Retail Interest

  • The world’s leading cryptocurrency yesterday went below $6,500 only to climb back above $7,000 in a strong move today.
  • Bitcoin rose alongside US equity futures on Thursday that shed some losses from a day earlier as investors gauge the extent of damage caused by the coronavirus.

The major European indexes went green while shares fell in Japan and Hong Kong with China seeing modest gains. The main three US benchmarks climbed after sliding Wednesday amidst miserable data of retail sales. S&P 500 rose 0.63%, Dow 0.19%, and Nasdaq 1.17%.

Meanwhile, the new jobless claims topped five million for the week ending April 11, bringing the total tally to over 22 million. Economist and trader Alex Kruger said,

“Let’s not forget people lost their jobs because governments ordered businesses to close. This is temporary. Most jobs will be back and fast.”

“The market hasn’t fully factored in the uncertainties or potential risks in terms of earnings downgrades,” said Tai Hui, an Asia-Pacific chief market strategist at JPMorgan Asset Management.

Meanwhile, President Donald Trump said the US has “passed the peak” on new cases and that he will announce the guidelines or relax stay-at-home rules on Thursday.

COVID-19 has affected 2 million people globally, as of now, with fatalities reaching 134,000.

“We don’t know what the economy is going to look like over the next year — there is a lot of uncertainty with the virus,” said Mark Kiesel, global credit chief investment officer at Pacific Investment Management. “We are not through the woods yet — there could be a second wave.”

Key Inflection Point

Today, the dollar extended the gains. Just like bitcoin, gold also strengthened 0.47% to $1,748.30 per ounce. However, for Bitcoin, $7,000 is a strong resistance level.

Trader Crypto Michael says, “The $7,600-8,000 area isn’t tested yet and we could still have a slight rally pre-halving.”

Cryptocurrencies continue to move in tandem with riskier assets as coronavirus pandemic shuttered economies all over the globe. Digital assets came under pressure during the initial risk-off phase but have recovered 80%. Ed Moya, a market analyst at Oanda Corp said,

“If financial markets are at a key inflection point and the overall risk-on trade has run out of steam, cryptocurrencies could be the first major asset class that gets sold.”

“Bitcoin could be very vulnerable here as investors become nervous that the snapback rebound is about to get faded.”

However, retail interest in BTC is increasing as global markets are plagued with more uncertainty and doubt.

Crypto exchanges, from Kraken, OKEx, Paxful, to Bitfinex and Luno, have all been seeing an influx of new users since the start of the lockdown. Moreover, new user activity on the Bitcoin network is also accelerating with new growth of entities tripling over the past month, increasing from 6000 to over 17,000 new entities per day.

Source: Glassnode

However, despite this, BTC continues to flow out of the exchanges causing bitcoin balances on exchanges falling even further, “implying long-term holding intent,” noted Glassnode.

Source Link