According to some analysts, cryptocurrencies have become just another victim of the COVID-19 pandemic and investors should consider moving into other asset classes. However, recent price moves in the major coins suggest that prospects for a bullish rebound might be building. Some of the market’s coin offerings may look more attractive than others, but it seems as though the perceived weaknesses of cryptocurrency might actually turn out to be one of its main benefits. Specifically, I am referring to the fact that cryptocurrencies are unable to generate earnings in the same way that a corporation can generate earnings. 

Remember, it seemed like forever that the central criticism of crypto was that the sector had no earnings power and that this weakness would prevent cryptocurrencies from gaining validity in the broader market. But how does that factor into the current economic environment? During the next several months, most stock investors will likely experience significant losses in their portfolio returns, due to the large downside revisions in expectations for corporate earnings growth over the next two quarters. Of course, this is an element that applies to stock markets everywhere in the world, so it is difficult to see where the attraction would be at this stage for anyone that is typically focused on trends in the equities market. 

Further arguments supporting bullish rallies in cryptocurrencies have defined the outlook and there are now four major crypto trends that could have a drastic impact valuations in 2020. Perhaps the most important factor on this list will be the expanded size, use, and accessibility of cryptocurrency derivatives because this will open up new trading prospects in digital currencies for a much larger group of investors. As long as recent trends in total market adoption continue, the long-term bull rally in BTC/USD can be expected to build on its prior progress that this puts cryptocurrencies in a position to outperform (once again) as an asset class in 2020.

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Chart structures also support this view and my analysis on the 240-minute time frames shows that the underlying trend activity in BTC/USD remains sustainable. Broader trajectories in trend momentum have held at critical support levels in terms of both price and time (at intervals shown by the vertical lines in the chart above) and this could put BTC/USD in a position to retest prior highs from the middle of February 2020.

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As a result, price structures that develop over the next 2-3 weeks will be particularly important because they will determine whether or not traders can reasonably expect a retest of the prior highs just below $10,500. This figure is also expected to work as a key psychological level in the broader market, so an upward break through this area would be an event that is likely to stoke bullish sentiment on a wider scale. However, most of the technical analysis strategies that traders use in conjunction with BTC/USD tend to revolve around the proximity of daily moving average, so traders can find additional clues about upcoming trend directions in the event that BTC/USD rallies fail at the 50-day or 200-day moving averages.