Is Bitcoin Running Out of Bullish Arguments Due to Stock Market Rally?
November 9th, 2019
Bitcoin price plunged below $9000 mark yet again. What looked like a possible break above $10,000, has turned into longer days of consolidation.
The narrative for Bitcoin [BTC] investment has taken many shapes and forms over the years. After its failure as a payment mechanism in 2016-2017, the ‘safe haven‘ narrative has become wildly popular.
Kolanovic, JP Morgans’ global head of macro quantitative and derivatives strategy, suggests strong bullish growth of the equity markets.
Gold prices slumped below $1500, at the beginning of the week. As the stock market continues to rally, and the trade tension relaxes and easing of the global monetary policies. Hence, the short term need for a safe haven, which was a strong catalyst in the upward price movement, seems to have slowed down.
Can Halving Keep the Momentum Going?
Bitcoin [BTC] halving is due next year in May. The event will reduce the rewards for mining Bitcoin by half. This represents a massive shift in the supply of the cryptocurrency. It acts as a reliable bullish indicator as the ecosystem looks to keep the price above the break-even price for miners.
Nevertheless, the overall demand for Bitcoin has been questionable with a lack of retail interest. An analyst, KernelTrader noted on Twitter,
$btc has shown one thing, with current supply, the demand just isn’t there to maintain 5 digit prices over a sustained period
Is a small reduction in daily issuance going to suddenly change that?
Based on current demand, I’m not convinced it will
But Bitcoin is More than That
Bitcoin [BTC] competes with gold as a store of value. However, the demand for gold has been subdued by the demand for other reserve currencies like USD, Euros, and YEN. While gold bugs continued to argue against them, the market went towards short term gains.
Hence, in a world where there isn’t a strong demand for sound money, how will Bitcoin present its case? Alex Kruger tweeted,
I think only a very small (loud) minority care or will ever care about “sound money”. Goldbugs did not succeed in getting widespread support for their sound money crusade. Don’t see why Bitcoiners will succeed were gold bugs failed.
Bitcoin investors are now counting on a ‘paradigm shift’ in the economy on a large scale. A fall in the economy of large proportions sounds like the perfectly opportune moment.
Willy Woo, a prominent on-chain crypto analyst, replied to Kruger on similar lines,
n the 6000 yr arc of gold as money, this 48 yr reign of fiat is a stop-hunt wick on century candles. Fiat happened before, it’ll happen again far after this candle closes.