Wednesday, December 8

Bitcoin hides its head for fear of tapering

The price of bitcoin fell more than 3 percent on Monday and returned to $ 57,000, after unsuccessfully trying to cross the round level of $ 60,000 over the weekend.

The digital currency lost more than 20 percent in less than two weeks and was unable to sustain the rebound, showing that extreme volatility is still the order of the day in this market.

As reported by, The indicators pointed to the consolidation of levels that is being seen, to which must be added the fear that the Fed will tighten its monetary policy, which affects all risk assets equally.

And bitcoin is no exception, insofar as the dollar would increase its attractiveness as an alternative investment.

Tapering as an excuse to collect profits on bitcoin

The massive derivatives sell-off that occurred last week continues to echo in a market that was already heavily overbought and was up more than 40 percent in October alone.

But the main factor that is taking its toll on investors’ spirits is the expectations that the Fed will accelerate the tapering, the withdrawal of stimuli, they explained in market sources.

In fact, the US central bank dropped that this possibility is already on the table for the December meeting, as advanced on Monday, which would further boost the price of the dollar and damage bitcoin.

Runaway inflation

“It is very possible that this meeting will discuss the possibility of increasing the rate of reduction” of asset purchases, said Fed Vice President Richard Clarida.

If this idea is “repeatedly stressed” it will increase the likelihood that the December tapering will be faster than the pace announced in November, analysts at Prestige Economics said.

Although bitcoin is considered a natural hedge against inflation, a runaway price rate above 6.2 percent is alarming for the market.

And things could get worse when holiday shopping spikes after Black Friday, which could accelerate the upward trend in inflation and further stress equity markets.

Too many regulatory restrictions

On the other hand, the market took very badly the reasons that justify Invesco’s surprising decision to cancel the launch of its exchange-traded fund (ETF) in bitcoins, informs Financial Times.

This decision was partly due to regulatory restrictions that would make this vehicle too expensive, says the British newspaper.

The cost of the fund and the suitability for its investors were the factors that precipitated the decision of Invesco, which saw the cost of renewing the fund’s futures contracts rise to levels that were difficult to manage.

$ 58,000, key to sustaining the rebound

After the falls of the last sessions, bitcoin lost the level of 58,000 dollars, a support zone that is “key”, he said. Javier Molina, eToro spokesperson in Spain.

In the event that this area was permanently lost, this expert identified $ 52,000 as an “initial target for bearish development.”

At the top, for the rebound to take flight, Molina added that it is necessary to return to the psychological zone of $ 60,000, as a preliminary step to think about new highs.

The problem in which the bitcoin crashed against this wall up to two times during the last sessions, with which the consulted analysts foresee strong downward pressure in the vicinity of $ 60,000.

Leave a Reply

Your email address will not be published. Required fields are marked *