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A huge risk-off move in the market helped Bitcoin fall in early trading on Friday (March 5), falling below $465,000. However, the stock market saw a dramatic reversal, with the S&P 500 closing up nearly 2% after falling nearly 2% a few hours earlier. At the same time, the price of Bitcoin also reversed and is currently trading at $49,000. (Source: Coindesk)
While Bitcoin could suffer a deeper drop due to traditional market instability, its broader bullish trend will remain valid as long as historically strong chart support remains intact. “The 21-week SMA (simple moving average) is a level that bulls should defend,” said Michal van de Poppe, a trader and technical analyst. “As long as the SMA support holds, the bias remains bullish.”
(Bitcoin weekly chart, source: Coindesk)
The cryptocurrency repeatedly found demand on dips near the 21-week SMA (marked with an arrow) throughout the rally from October 2015 to December 2017, rising from $300 to $19,783. If history repeats itself, a bigger pullback this year, if any, could run out of steam near this year’s 21-week SMA. The technical line currently sits at $32,240, while Bitcoin is approaching $46,500. A sustained rise in U.S. Treasury yields could push the dollar higher, pushing Bitcoin toward the support of the SMA.
MicroStrategy, a major supporter of Bitcoin, is still buying in large amounts. The company said on Friday that it had purchased approximately 205 bitcoins for approximately $10 million in cash, further increasing its holdings of Bitcoin. As of March 5, the company had nearly 91,064 bitcoins, with a total purchase price of approximately $2.196 billion and an average purchase price of approximately $24,119 per coin. In this regard, Hunain Naseer, senior editor of OKEx Insights, said: "In my opinion, Bitcoin is increasingly relying on purchase announcements to achieve short-term rebounds, which is not an entirely healthy trend." Konstantin Anissimov, executive director of the British cryptocurrency exchange CEX, said: "While Bitcoin's fundamentals remain strong, the currency is under great pressure to return earnings to corporate investors who may need to announce quarterly earnings."
And now investors' interest in Bitcoin seems to still be at a high point. A Goldman Sachs client survey on digital assets shows that investors are positive about the future of cryptocurrency investment. The survey showed that 40% of respondents hold cryptocurrencies, and 54% predict that the price of Bitcoin will be between $40,000 and $100,000. 61% of respondents expect their digital assets to increase in the next 12 to 24 months, and 32% of respondents are most interested in physical or spot brokerage to gain exposure to cryptocurrencies. Looking ahead, 22% of respondents expect the price of Bitcoin to exceed $100,000 within 12 months, and 34% of respondents believe that regulation and authorization are the biggest obstacles to starting to allocate funds to digital assets.
Data released on Friday showed that cryptocurrency trading volume surged 17% last month after Tesla bet $1.5 billion on Bitcoin, with large exchanges accounting for an increasing share of total trading volume. Research firm CryptoCompare said that trading volume jumped to $2.7 trillion in February, and trading volume on major exchanges jumped more than 35% to $2.4 trillion. Among them, Binance had the largest trading volume in February, reaching $761 billion, up 66% from the previous month. It was followed by Huobi and OKEx, which are popular with Asian investors, with trading values of the two companies increasing by 12% and 26% to $214 billion and $188 billion, respectively. Trading volume on small exchanges fell 36% to $381 billion, indicating that trading on large exchanges is consolidating. And on February 23, when the price of Bitcoin fell 10%, trading volume reached an all-time high of $159.9 billion.
Riding on the momentum of Bitcoin, related companies are also applying for listing. Following Coinbase, Bitcoin miner Cipher Mining said it has agreed to go public through a merger with blank check (SPAC) company Good Works Acquisition Corp, with a transaction valuation of $2 billion. "I think the U.S. Securities and Exchange Commission (SEC) will continue to analyze Bitcoin in the future and hope to support Bitcoin in particular," said Tyler Page, CEO of Cipher Mining. In January this year, cryptocurrency platform Bakkt also agreed to go public through a merger with a blank check company. When asked why the company chose the SPAC route, Page said: "We want to enter the market quickly and efficiently. After evaluating different paths, the SPAC market allows us to enter the market as quickly as possible." Influenced by this news, Good Works' stock price rose 11.2% to $11.12 today. (FX168 Financial Network)
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