A senior Bloomberg strategist believes that a return to the price of Bitcoin to $ 60,000 is more likely than a fall to $ 20,000. Known for his bullish predictions about bitcoin, the strategist has cited recent Chinese bans as a fundamental upside factor.
to the Report Coin Telegraph Mike McGlone, Bloomberg’s chief product strategist, believes that a return to the $ 60,000 price of Bitcoin is more likely to break the $ 30,000 support and then fall to the $ 20,000 level.
Bloomberg strategist has compared the trend of bitcoin prices with the conditions of 2018 and 2019, according to a picture published by Eric Balchunas, chief analyst at Bloomberg Stock Exchange Funds (ETF).
According to McGlown, in 2018 the price of Bitcoin entered a long-term stabilization phase near the level of $ 4,000 after experiencing an 80% decline, but a sudden jump in 2019 brought the price of this digital currency in some exchanges close to 14 , $ 2,000.
Known for its uptrend, McGlone said the bitcoin price, which has been hovering around $ 30,000 since May, could trigger another surprising uptrend as it approaches $ 60,000. To begin.
When the price of Bitcoin is supported within the 30% below the 20-week moving average (MA20), the number of sellers with a short-term approach seems to increase, as this is an opportunity for them to buy for long-term hold.
Three key moving averages
Bitcoin uptrends usually revolve around the three main moving averages; 20-week moving average (EMA) within the chart, which acts as a temporary support and price resistance, the 50-week moving average (blue inside the chart) and the 200-week moving average (orange inside the chart).
As shown in the chart, during uptrends, the price of bitcoin is usually above these three key moving averages. Meanwhile, in the downtrend, the price of Bitcoin fluctuates below the 20-week moving average and the 50-week moving average.
The 200-week moving average is usually the last support in the bearish market. So far, Bitcoin has hit the orange line in the chart twice, and each time the price has risen sharply after hitting this level. For example, the return of the price from the level of the simple 200-week moving average in 2018 was followed by the price of Bitcoin reaching a peak of $ 14,000.
In a similar case, in March 2020, at the same time as the fall in the price of bitcoin caused by the Corona virus epidemic, the line appeared as support, and the price continued to rise from a low of $ 3,858 to a record high of $ 65,000.
Bitcoin is now on the verge of its third fall below this trend line since 2018. The price of this digital currency broke the 20-week moving average after reaching the price of $ 39,000, and now the simple 50-week moving average, which is near $ 32,200, supports the price. If the old cycle repeats itself, it could continue to push prices down to a 200-week moving average at $ 14,000.
However, McGellon believes that the price can return quickly. In a surprising comment, he cited China’s recent bans as a rising fundamental factor.
Also read: How to use simple moving averages for trading?
Tetr takes his share
In May, the Chinese government banned all digital currency-related activities. The decision hampered digital currency mining activities and forced Chinese miners to suspend operations or relocate their devices to other countries. Following these bans, the price of bitcoin also fell sharply.
However, McGellon cited the ban on digital assets based on open source software in China as an obstacle to the country’s economic growth. The Bloomberg strategist added in a tweet on Friday that it showed the significant volume and value of the dollar-backed digital asset market, which included Tetra.
In his tweet, McGlown compared the growing demand for digital versions of the dollar and the price of the US dollar against the Chinese yuan. The logarithmic scale of the market value fluctuations of these two assets between 2018 and 2019 was below the zero line, which means that the Chinese yuan was losing value against the US dollar.
When the benchmark returned above zero, it was a sign of a temporary rise in the value of the yuan against the US dollar. However, this growth seems very small compared to Tetra, whose market value is 40% away from the zero trend line.
The ban on digital assets based on open source software in China may be an obstacle to the country’s economic growth, and we believe that [این اتفاق] Increases the value of the dollar and bitcoin.
In addition, Peter Kozyakov, founder and CEO of Mercuryo International Payment Network, said that while the US government has not yet formally launched its national digital currency like China, there are many alternatives, such as Tetra, USAID. The Quinn (USDC) and the US BainD (BUSD) could challenge the digital yuan controlled by the Chinese government.
These digital currencies are backed by the dollar overnight, and as McGellon’s chart shows, the dollar is ahead of the Chinese yuan in terms of digital advancement.
Since Bitcoin traded above $ 30,000 on July 23, it can be said that China’s bans have affected the price, however, fundamental factors have been growing rapidly since 2018, and this is because The formation of a sense of fumo among institutional investors. Bitcoin should reach $ 50,000 by the end of the year.
China’s economy continued to grow
Yuriy Mazur, senior analyst at CEX.IO, disagrees with McGellon. He said China’s economy would continue to thrive with or without digital currencies, and that this had nothing to do with rising demand for digital assets.
The Chinese government is far smarter than wanting to lose what the world values. So it is expected that [در آینده] Take significant steps to launch a yuan-backed digital currency; [ارزی] Which they have complete control over.