A Period of Uncertainty Begins That Could Make Bitcoin More Volatile
Just be a Bitcoin HODLer.
|Sylvain Saurel||Oct 3|
The first quarter of 2020 was marked by high volatility in the Bitcoin price especially during March. The coronavirus pandemic that hit the world extremely quickly triggered an economic crisis on a scale not seen in decades.
This has caused a liquidity crisis affecting all liquid markets. Even gold was hit. Bitcoin, the only truly free market in the world, was heavily impacted seeing its price lose more than 50% in a few hours in the middle of March.
The Bitcoin price then rebounded sharply, proving to all non-believers that Bitcoin was a great store of value in times of crisis.
Bitcoin price volatility has reduced since the beginning of June 2020
After the third Bitcoin Halving, its price has been much less volatile since the beginning of June 2020. We did have a sharp increase in price on Sunday 26 July, but other than that, Bitcoin’s volatility seemed to have disappeared.
Many even dared to call Bitcoin boring in the summer of 2020. These people clearly did not understand that you need to appreciate this boredom to learn more about Bitcoin and the economy.
HODLing Bitcoin is a boring strategy, but it is worth it since it is the best strategy that exists to take full advantage of Bitcoin.
As September just ended, Bitcoin has broken its historical series of the most days with a price above $10K. Bitcoin has finished every day with a price above $10K for more than 67 days.
With September being a historically difficult month in terms of Bitcoin’s price performance, many had doubts about whether Bitcoin could continue its run. However, this was held, and Bitcoin’s fundamentals continued to strengthen in September.
CFTC is going to sue BitMex
The beginning of October is usually much more positive for the Bitcoin price if the past is any indication. However, this month began with two major news events that added uncertainty to the Bitcoin world.
Firstly, the BitMex trading platform has been pinned by the Commodity Futures Trading Commission (CFTC) which will take it to court. The CEO of BitMex, Arthur Hayes, and the other two shareholders of the company, Ben Dela and Samuel Reed, are being sued for accepting $11 billion in deposits, a significant portion of which is believed to come from American customers.
However, BitMEX did not register with the CFTC and was unable to put in place adequate anti-money laundering measures.
The exchange platform is supposed to block access to its services to American customers. However, 85,000 accounts have been opened by American customers on the platform. The IP address blocking implemented by BitMex can be easily circumvented via a VPN.
As a result, the Bitcoin price dropped slightly from $10.8K to $10.4K. I must admit that I was pleasantly surprised to see such a slight drop. A few years ago, such an announcement would have made the Bitcoin price much more volatile.
Bitcoin is evolving, and the market is becoming more mature.
A new stimulus plan of $2.2T arrives, and Donald Trump is tested positive for COVID-19
We then learned on October 2, 2020, that US President Donald Trump had tested positive for COVID-19. This announcement comes at a time when the first debate of the U.S. presidential election has just taken place, and there are only 31 days left before the voting starts.
Such news adds a great deal of already existing uncertainty about the outcome of this presidential election in the United States.
As you know, markets of all kinds don’t like uncertainty. As a result, this has kept the price of Bitcoin around $10.4K, whereas after cashing the news concerning BitMex, it seemed that its price was about to go back to testing $11K.
These two unexpected pieces of news come on top of the October 2, 2020 announcement that the House of Representatives had just approved a new $2,200 billion stimulus plan.
It will remain for the American Senate to validate this plan which will bring the American debt even closer to 30,000 billion dollars by the end of the year. In front of such a support of the Congress to the American economy, the fall of the DXY could very well stop there.
Since DXY seems to have been inversely correlated to the Bitcoin price for the past few months, this could mean a fall in Bitcoin in the coming weeks. The first support is currently at $10.3K. Once this support is broken, the Bitcoin price would probably re-test the psychological barrier of $10K that held up throughout September.
Then, we would probably have a rapprochement towards the famous CME Gap at $9,650 which has still not been filled since July 26, 2020, the last time Bitcoin’s price experienced high volatility in a few hours.
As you can see, uncertainty will continue to spread around the world, which will necessarily affect the Bitcoin world. More uncertainty should bring more volatility to the Bitcoin price in the coming weeks.
Under these conditions, my advice remains the same: be a Bitcoin HODLER.
And don’t forget to take advantage of possible decreases in the Bitcoin price to strengthen your positions. A Bitcoin with a 4-digit price is an awesome opportunity if you fully believe in the Bitcoin revolution.
This is my case, and it is up to you to ask yourself how much you believe in Bitcoin for the future.
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