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Bitcoin Could Decline Below $5K In April – These Are Three Key Reasons

Bitcoin Could Decline Below $5K In April – These Are Three Key Reasons

Bitcoin price declined sharply over the first three months of the year as concerns about the global coronavirus pandemic and its impact on the economy grew.

The benchmark cryptocurrency closed the year’s first quarter at a 10.53 percent loss, trading at circa $6,424 on Coinbase as the marked headed into April session. At its lowest, bitcoin was changing hands for a mere $3,858 per token. But its sharp rebound from there led prices up by as much as $6,090.

BTCUSD in a giant downtrend cycle | Source: Yahoo Finance

The cryptocurrency’s rebound was among the most attractive ones, beating even Gold that fell but maintained its first-quarter gains. The assets recovered happened as central banks across the globe launched aggressive stimulus programs to safeguard their economies from the impact of coronavirus.

Even stocks retreated after registering their worst performance since the 2008 financial crisis.

Expansionary policies led many top analysts to predict an extended upside rally in the bitcoin markets. Robert Breedlove, the founder & CEO of Parallax Digital, said the cryptocurrency would rise higher owing to central banks’ expansionary policies.

“When central banks cut interest rates, they are engaging in money supply expansion and stealing wealth from everyone holding their freshly depreciated currencies. Bitcoin fixes central bank thievery.”

The narrative is clear: Bitcoin’s supply cap of 21 million tokens makes it a scarcer and, therefore, a more attractive asset to hold than central banks’ money with an infinite supply. Bulls are also increasing their bets on bitcoin’s upcoming supply rate cut in May 2020, hoping that it would pump the cryptocurrency’s price in the new quarter.

But the Q2’s first month is looking bearish. Bitcoin continues to face extreme selling pressure as the Coronavirus pandemic grows further. Here is a combination of catalysts that explain why the cryptocurrency could go below $5,000 in April.

1. “Very, Very Painful Two Weeks”

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Donald Trump warned the US citizens of a “very, very painful two weeks” in the wake of the country’s high Coronavirus-induced infection and death rate. The statement also left the US economy under the stress of an extended bearish assault heading into April.

Futures linked to the Dow Jones Industrial Average fell 3 percent. In Europe, the Stoxx 600 index shrank by 2.9 percent.

Bitcoin, whose correlation with stocks grew higher during the Coronavirus pandemic, also fell 2.83 percent into the first day of April. It showed that cryptocurrency is more likely to tail the global equity market for the rest of the month, as noted economist Nouriel Roubini predicted earlier in March.

Bitcoin fallen by 33% in the last month (other Shitcoins 40%+) while US equities have fallen by about 20%, more so likely today. So not only crypto doesn’t provide an hedge against equities; it actually falls more during risk-off episodes. Shitcoins galore have zero hedge value!

2. Cash Demand

In recent weeks, the US dollar’s value has risen sharply as investors and companies are hoarding bundles of it to offset the blow to incomes and revenues from economic shutdowns. The capital outflow has left a huge dent on all the traditional and new markets. Even gold, which behaves as safe-haven against dwindling equities, plunged because of the strong cash demand.

With governments looking to extend lockdowns, global demand for the greenback is likely to go up in April. Kyle Rodda, an analyst at Melbourne-based broker IG Markets, told CNBC that the dollar is under downside pressure as Fed prints trillions of it. But its demand is somewhat balancing the sentiment.

“The Fed clearly wants to do everything it can necessary to ensure dollar liquidity, which puts downward pressure on the dollar,” he said. “But by the same token, there is still this very structural push to buy dollars right now because liquidity is coming at an absolute premium with so much risk in the market.”

The global rush to the greenback in March led investors to dump bitcoin. The cryptocurrency is now trading about 61 percent higher from its local bottom, which could allow traders to sell it at tops for cash in April.

When there is extreme fear in the markets, people rush to safety (USD) and major markets move together. That is why we saw Bitcoin and Stocks fall in unison.

3. Confluencing Bitcoin Technical Indicators

Bitcoin’s recovery from $3,858-bottom is attractive but remains capped by a strong resistance area near $7,000. The price has rebounded thrice after testing the ceiling in March, once forming a bearish Double Top pattern, as shown in the chart below.

BTCUSD Double Top Formation | Source: TradingView.com, Coinbase

The pair is now testing a short-term ascending trendline. Macroeconomic factors could lead it below the line and a break below the Double Top support of $5,657 could increase the selling pressure. As a result, the price can fall below $5,000 to test the downside target setup by even a bigger technical pattern – the giant Symmetrical Triangle.

Global sell-off sentiment could push bitcoin prices down to retest the Triangle support. It is near $4,500.

Bitcoin Could Decline Below $5K In April – These Are Three Key Reasons – Source: https://www.newsbtc.com
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10 Reasons why Bitcoin is still a risky investment

Bitcoin is one of the most famous cryptocurrencies created back in 2009. Bitcoin is just a digital asset and not a physical property. It is protected via a mathematical encryption algorithm. It was the world’s first digital currency which is able to make instant payments. Currently, the price of one bitcoin is 3,573.36 United States Dollar (at the time of writing). Bitcoin is known to be the strongest digital currency by the crypto supporters. Bitcoin can also act as an alternative for national fiat money and traditional commodities like gold. Bitcoin can be purchased on a Bitcoin exchange as well as earned.

Bitcoin is still a risky investment:

1. Bitcoin was never designed as a normal equity investment. Some people were drawn towards the investment value of bitcoin rather than using it as a medium of exchange. The digital nature and lack of guaranteed value of bitcoin always appear as the inherent risks in investing in bitcoins. Alert issues have been raised by many organizations such as Security and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA) and few other agencies.

2. Bitcoin was created in 2009. Since all these years, bitcoin does not have much of a history of credibility. It means that it does not give complete assurance to the investors.

3. The bitcoins have been created eight years back but it still does remain in the developmental phase. It is still evolving.

4. It is said th at “It is pretty much the highest risk and the highest return investment that one can possibly make.

5. Bitcoin can be used for black market transactions, money laundering, illegal activities, and tax evasion. Most governments tend to ban the use of bitcoin.

6. Since Bitcoin is completely a digital asset, the risk from hackers, malware and operational glitches is always at the top.

7. Bitcoin exchanges and accounts are not secured by any governmental program.

8. Sometimes there is a risk of fraud in bitcoin exchange. Fake bitcoins can be sold by fraudsters and scammers.

9. Like every other investment, the price of Bitcoin is always on fluctuation. Therefore, the prices can fall down anytime.

10. The tax on bitcoin investment cannot be shielded by any means.

5 Reasons Why This Bitcoin Rally Is Different Than 2020

In This Article

If you were around in 2020, you’ll know that reaching $10,000 was a major milestone and was followed by a year-long bear market. However, there are multiple reasons which clearly suggest that this time is different.

Bitcoin BUY NOW is roaring back against all odds and, by many accounts, is stronger than ever. However, is this merely another bubble or are we due for another significant Bitcoin bull run which will push the market leader to new all-time highs?

Here are 5 reasons why, this time, things are different for Bitcoin.

Less Active Addresses

If we compare where we are now to the top of 2020, there are 24 percent fewer active addresses today. This means that we have not yet reached the frenzy that caused the bubble in 2020.

Chart courtesy of coinmetrics.io.

Network Fees Are Cheaper

With the implementation of SegWit (segregated witness) and transaction batching, transactions are significantly cheaper on Bitcoin now compared to in 2020.

Although still averaging around $2 or so, it’s a far cry from the $40 in transaction fees at the top of the bull market in 2020.

Chart courtesy of bitcoinfees.info.

Bitcoin Hash Rate Is at All-Time-High

Miners are becoming better and more energy-efficient.

Ultimately, the number of computation work done on Bitcoin’s network is growing and is now at an all-time high. What this means is that the network is fundamentally more secure than it ever has been.

The Media Hype Cycle Has Not Even Started Yet

We may have broken $10,000 but, by all metrics, it’s hard to tell.

Bitcoin’s Google search interest is only a tiny fraction of what it was in December 2020.

Likewise, the media has been slow to pick up on this recent rise.

Facebook’s Cryptocurrency Has ‘Legitimized’ Bitcoin

Regardless of what you think of the Libra, it has brought much publicity to the cryptocurrency space.

Although we can debate whether or not it really is a cryptocurrency, Libra did, for sure, do one thing right — it brought free publicity to the entire industry. That’s good news for Bitcoin and the entire cryptocurrency space, overall.

Although we are reaching the price levels that created the ‘mania’ phase in 2020, this time it really is different by all estimates.

It remains to be seen at what price point the ‘mania’ or ‘bubble’ phase of this rally will begin. Some are even speculating we may reach 6 digits this time around.

Do you agree that things are different this time for Bitcoin? Let us know your thoughts in the comments below.

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