FOMO Starts to Kick In!
by Bogdan Giulvezan
Bitcoin is pumping once again and is now trading comfortably above $15K. It successfully cleared the resistance at $13,800 (June 2019 high) and is now sitting at levels last reached in January 2018.
The US Dollar on the other hand is losing ground and looks strongly affected by the turmoil created by the US Presidential Election, rising COVID-19 cases, and overall weakness in the American economy.
Due to the economic frictions between China and the Trump administration, a Biden win would weaken the US Dollar further, while bolstering the Yuan but a Trump win wouldn’t do the greenback much good either.
We are probably dealing with choosing the lesser of two evils, of course strictly speaking about the impact on the FX market. Whatever the result of the election will be, many voices say that a new round of monetary stimulus is underway, possibly triggering a risk-on scenario.
Bitcoin has been benefiting lately from a series of high-profile investments coming from the likes of Square, Inc. and Paul Tudor Jones, while JPM Coin (JPMorgan Chase & Co.’s digital asset) has concluded its first payment transaction.
All this shows that cryptocurrency adoption is growing and to support this idea, Google Trends shows a notable increase in searches for the word “Bitcoin”, which possibly shows that fear of missing out (FOMO) is kicking in.
As we already know, FOMO is a great catalyst for a bull run, thus maybe a $20K prediction for the end of 2020 is not that farfetched.
Head Analyst at DayTrading.com, Tobias Robinson, said:
“Bitcoin (BTC) is evolving from the initial rebellious cash alternative, to a legitimate store of value – the true value of which is yet to be established.”
Chart Analysis – BTC/USD
At the time of writing Bitcoin is up 17.21% for the last 7 days, trading at 15,500 against the US Dollar and sitting comfortably above the psychological support at $15,000. These levels were last reached in January 2018, right after the peak around $20,000.
After bouncing at the bullish trend line seen on the Weekly chart below, the digital currency posted 5 consecutive bullish weeks and gained a whopping 50%, but while this obviously shows upwards momentum, it also warns that a pullback is likely to come. Usually, after strong and fast moves, an asset, be it digital or traditional, tends to take a “breather” and to retrace its moves, mostly due to some investors taking the profits off the table.
Currently, all signs are bullish: the Stochastic and MACD are moving up on Weekly and Daily charts (albeit the Stochastic is overbought on a Daily chart) and the pair is trading above key resistance, which may turn into support ($15,000). Despite all this, we may see a retracement that may find support at $15K before Bitcoin prepares to make a run for $20,000.