Forex And Cryptocurrencies Forecast For Aug. 16 - 20

CRYPTOCURRENCIES: Crypto Spring in Full Swing

  • “Investors hope that the crypto freeze has passed, and instead of the crypto winter, the crypto spring came straight away,” - this is how we described the situation in this market in the previous review. The past week did not spoil the spring mood. Bitcoin has heaped by about 12% in seven days and is approaching $47,800 at the time of writing. The total capitalization of the crypto market increased over the same period from $1.67 trillion to $1.957 trillion, and the day it will once again cross the bar of $2.0 tn seems not far off. As for the Crypto Fear & Greed Index, it finally moved from the central zone to the green part of the scale, rising from 52 points to 70. At the same time, it is still far away to a state of severe overbought, which foreshadow a strong correction. And it gives investors hope that the day will come when the BTC/USD pair updates its historic high.

    In addition to optimists, of course there are enough pessimists in the market. Including those among recognized professionals. For example,  Bridgewater Associates billionaire founder Ray Dalio does not rule out bitcoin growth, but still prefers gold. Dalio has stated that he holds a "very small volume" of bitcoin. “If you put a gun to my head and let me choose only one of the two, I’ll choose gold,” he said.

    Reputable bankers like Goldman Sachs CEO David Solomon and fellow JPMorgan Chase Jamie Dimon continue to criticize cryptocurrency. But at the same time, they and many other banks continue to actively implement services related to digital assets. And analysts at JPMorgan predicted BTC's rise to $146,000 earlier in the year.

    Disputes about where it is better to invest money, in precious metal or in cryptocurrencies, do not subside. At the same time, simple calculations show the obvious superiority of bitcoin. The price of gold has fallen by about 5.5% over the past 10 years. As for the core cryptocurrency, it grew 571,000% during the same time. That is, having invested only two dollars in bitcoin then, you would be a millionaire by now. In the last five years alone, gold has fallen in price against bitcoin by 25 times.

    The numbers speak for themselves. But the reliability of investments cannot be forgotten. Between 2010 and 2015, the price of gold experienced a maximum drop, losing approximately 40% in five years. But if you look at the April-May chart this year, you'll see that bitcoin lost the same 40% in just four weeks!

    Investing in cryptocurrencies requires significantly stronger nerves and a safety margin. During the rapid collapse of the crypto market, some get rid of their coins, succumbing to panic. Others, on the other hand, see such corrections as an excellent buying opportunity.

    According to Tom Lee, head of research firm Fundstrat, the “golden rule” for crypto investors is to buy bitcoin every time the quotes cross the 200-day moving average (MA 200) from the bottom up. Starting in 2017, in three out of five cases, the closing of the daily candle above this line was the beginning of a gradual increase in trading volumes and the development of long-term upward trends that lasted from 4 months to a year. Two failures, according to Tom Lee, do not in any way cancel his "golden rule", since in these cases the BTC rate managed to rise enough for traders to protect their positions from any loss.

    Tom Lee also reiterated his prediction that he sees bitcoin in the region of $100,000-120,000 in 2022. Bloomberg Intelligence senior strategist Mike McGlone pointed to the same level of $100,000 in his latest report. “Bitcoin seems to have found support around the $30,000 mark, just as it did at $4,000 in early 2019. We see parallels with those events and, apparently, bitcoin may well reach $100,000," he wrote.

    More modest predictions were given by three other crypto experts. Well-known cryptocurrency analyst Willie Wu believes that, based on fundamentals, the fair price for bitcoin is $53,200. However, he warned that fundamental factors do not allow forecasting for a short period, but with sufficient time, they will fully justify themselves.

    Another analyst, Will Clemente, agreed with Wu's opinion and noted that, based on the bitcoin liquidity data from the Glassnode analytical platform, he predicted its growth to about $53,000 back on July 31. The well-known crypto strategist with the nickname Crypto Dog confirmed these predictions. In his opinion, "bitcoin will get to $50,000 very soon."
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