This article was written exclusively for Investing.com
- New property group
- The bearish trend continues
- 1. Governments love the blockchain and hate crypto
- 2. A reversal of bears from the peak rates of mid-November
- 3. Other insurer beach properties took the bullshit
- We may have reached the bottom in crypto; Rise is expected to rekindle the bullfight due to war and geopolitical tension
After weeks in which Russian President Vladimir Putin cited historical reasons why he believes Ukraine is only the western part of his country, he ordered on February 24 200,000 troops to invade Ukraine. The United States, Europe and Ukraine itself consider the Eastern European country as sovereign territory.
The invasion has ignited a series of geopolitical risks, putting pressure on world governments, their citizens and global financial markets – perhaps the most worrying of risk factors recently.
Some market participants believe that the relatively new cryptocurrency asset group can serve as a hedge against and a safe haven in days of geopolitical upheaval. At the beginning of March 2022, when inflation soared, and global political reality degenerated to a point where the chance of another world war is the highest it has been since 1945, why did digital currencies not take off?
| New property group
Burst into consciousness only in 2010, but the cryptocurrency market is even newer. Digital currencies have achieved a critical mass in just the last five years.
The creation of the end of 2017 brought the leading crypto currency to the mainstream, pushing it above the $ 20,000 token rate. The token, however, has already risen in particularly volatile conditions.
In 2010, Bitcoin traded at a rate of five cents per token. At the end of 2013, its rate rose to a high of $ 1,135.45, before falling back below $ 1,000 by 2017, when it soared. In recent years, the annual ranges have been downright amazing:
- In 2017, the range ranged from $ 762.38 to $ 19,862 per token
- In 2018, the range ranges from $ 3,158.10 to $ 17,224.62 per token
- In 2019, the range ranges from $ 3,355.25 to $ 13,844.30 per token
- In 2020, the range ranges from $ 3,925.27 to $ 29,301.78 per token
- In 2021, the range ranges from $ 28,957.79 to $ 68,906.48 per token
So far in 2022, the range of the crypto currency ranges from $ 33,076.69 to $ 47,937.17. The Bitcoin slump in 2022 has continued the pattern of higher lows, and it can still achieve a record high of 75% remaining from the current year.
Despite the increase in geopolitical risk, there are three factors that have weighed on the value of cryptocurrencies even in early March 2022. However there is an increase in the potential for higher rates.
| The bearish trend continues
On November 24, CME futures on CME reached an all-time high of $ 69,355. Then, he lost momentum.
Source: CQG
Since then, Bitcoin has reached lower record rates. As marked in the weekly chart, Bitcoin futures fell to a low of $ 32,855 per token on January 24, a period in which the leading cryptocurrency lost most of its value.
Since then, exchange rate moves have not broken the January 24 low, and Bitcoin reached a higher low of $ 34,295 at the end of February.
The pattern of lower peak rates and higher lows has recently developed a peg structure, signaling the possibility of a more significant upward or downward move.
Bitcoin is one of the most volatile assets, so it is possible that soon, the leading crypto currency will decide to launch upwards, or fall to another lower lows.
Three accelerators have stood in the way of a huge rise in bitcoin and other cryptocurrencies in the passing weeks of early 2022.
1. Governments love the blockchain, but hate crypto
Speculators and many of the market participants accepted the cryptocurrencies as a group of mainstream assets. But governments are not among the supporters.
Much of the regulatory scrutiny focuses on the illegal use of anonymous coins, which evade the radar of government control and law enforcement systems. His pull out of it.
And yet, governments are adopting blockchain technology, the basis for crypto assets, because it is the essence of the fintech revolution, with the goal of improving the speed, efficiency and record keeping of financial transactions.
At the same time, the threat of cryptocurrencies to control the supply of money is causing governments to reject and hate the evolving asset group, which includes more than 18,000 tokens floating in cyberspace.
2. A reversal of bears from the peak rates of mid-November
The two leading cryptocurrencies, Bitcoin and Etherium, have been very volatile in recent years. On November 10, 2021, both reached all-time highs. They both also had a bear reversal, which caused the goals to lose most of their value.
Source: Barchart
As the graph shows, Bitcoin rose to an all-time high on November 10, closing the trading day below the November 8 low, and recording an important bear reversal pattern in the daily chart. The price plummeted after the reversal, as sellers overcame buyers.
Source: Barchart
According to the chart above, the second leading crypto currency, recorded the same bearish reversal pattern on November 10, losing more than half its value at the January 24 low.
The technical reversal caused many of the new entrants to the cryptocurrency group to lose money from speculation on Bitcoin, Etherium and the plethora of other cryptocurrencies that followed the leaders.
After the losses, many of the market participants remain on the sidelines, despite the signs that the cryptocurrencies have reached the bottom.
3. Other insurer beach properties took the bullshit
Long before there were cryptocurrencies, it was the ultimate safe haven property. But when Bitcoin and other cryptocurrencies soared to their peak rates in November 2021, before plummeting after the bear reversals, many investors assumed a new safe haven arena had been created.
At that time, the precious metal, the classic safe shore device, developed a wedge pattern of lower peak rates and higher lows, i.e. bearish development.
Source: CQG
After lowering highs since August 2020, when gold reached an all-time high of $ 2,063 an ounce, the precious metal began to reach higher lows in March 2021. In February 2022, gold broke the pattern, moving upwards.
It’s been more than a year since $ 1,800 an ounce was the turning point for gold, before it was rescued from the upswing pattern. Last weekend, gold traded above $ 1,970 an ounce, and this morning jumped and passed $ 2,000. The peg pattern has clearly become a bullish trend.
It is therefore likely that the technical condition of gold causes market participants to prefer the precious metal over cryptocurrencies. And yet, given the ease of transfer of cryptocurrencies in times of economic and / or political distress, their suitability for use as capital for escape certainly supports the rise of digital currencies. Cryptocurrencies are easy to transfer, are anonymous, and are a liquid alternative to other assets.
| We may have reached the bottom of the crypto ‘Rise is expected to rekindle the bullfight due to war and geopolitical tension
Vladimir Ilyich Lenin, the Soviet leader, has a famous quote:
“There are decades when nothing happens, and weeks where decades happen.”
His remarks take on prophetic significance after Russia’s invasion of Ukraine. It changed the geopolitical reality, forcing people from all over the world to adapt to the risks of the new dynamics. In my opinion, the war in Ukraine only strengthens the argument in favor of the developing asset group, with China blowing the back of Taiwan, and Russia trying to rebuild the Soviet Union.
One can understand why Bitcoin, Etherium and other cryptocurrencies remain closer to their January 24 lows on March 7 than to their November 10 highs. Russia’s invasion, however, significantly changed the geopolitical dynamics, thus reinforcing the argument in favor of holding cryptocurrencies.
In my opinion, new record prices are expected for the asset group, as happened in gold. Also, cryptocurrencies now have a good chance of breaking free from the peg pattern and moving upwards.