16:44 | 30/01/2021 Print
European Central Bank governing council member Gabriel Makhlouf said as the latest warning: Bitcoin investors need to be prepared to “lose all their money!
“Personally, I’m not sure why people invest in those sorts of assets, but they see them as assets clearly," Makhlouf, who is also governor of Ireland’s central bank, told Bloomberg TV on Friday. “Our role is to make sure that consumers are protected."
Makhlouf’s comments echo skepticism from ECB leaders. The cryptocurrency is a “highly speculative asset," President Christine Lagarde said this month. Bitcoin prices have more than doubled since November and topped $40,000 earlier this month.
Elon Musk-Prompted Bitcoin Price Surge Causes Liquidation of $387M in Shorts
The shorts were liquidated after Elon Musk added "Bitcoin" to his Twitter bio and prices rose by over 15%, Coindesk reported.
For Elon Musk, whose hatred for short-sellers blazes hot enough to reforge Mjölnir a dozen times over, the millions in losses suffered by shorts after the Tesla CEO changed his Twitter bio to “Bitcoin” it must feel like Christmas and his birthday rolled into one.
|Bitcoin long-short liquidations (Long in red, short in green) Source: Coinalyze|
That one word addition caused the price of bitcoin to spike to a 10-day high of $38,020 and sparked $387 million worth of short liquidations on major exchanges including Binance, Bitfinex, BitMEX, ByBit, Deribit, FTX, HuobiDM and OKEx.
The crypto market leader is trading at $37,390 at press time, representing a more than 15% gain from the low of $32,000 seen during the European morning session.
|Bitcoin daily chart Source: TradingView|
Today’s short liquidation is the largest since Jan. 2, when exchanges closed $575 million worth of shorts, according to data provider Coinalyze.
Forced closure of short positions happens when the price moves above a predetermined threshold, signaling the liquidation engine to “square off,” or close, the positions. A massive short squeeze like this often puts upward pressure on prices, leading to a bullish move.
Market was skewed bearish
Data indicates the market was skewed bearish early Monday and some observers were anticipating a price drop, courtesy of increased inflows onto exchanges.
However, sentiment turned bullish after Musk changed his Twitter bio and tweeted: “In retrospect, it was inevitable.” The Tesla and SpaceX CEO, who has made no secret of his loathing for short-sellers, may not haven intended to have caused the liquidations, but may have popped the cork on a bottle of champagne after viewing the carnage his bio change wrought.
To document Elon’s ostensible nod to the leading cryptocurrency, F2Pool, currently the largest mining pool by hashrate, embedded the tech mogul’s latest tweet in Bitcoin block 668,197.
Google searches for “bitcoin,” a barometer of widespread interest, surged following Musk’s cryptic endorsement of bitcoin. It remains to be seen if increased interest translates into more buying and stronger price gains.
“I assume the U.S. session will try to follow in lock-step of digesting the news,” Vishal Shah, an options trader and founder of derivatives exchange Alpha5, told CoinDesk. “Typically speaking, such things would be met with more muted response. But given the backdrop, I think it could be ripe for a follow-through.”
So bitcoin is looking north, having pierced a two-week bearish trendline on the daily chart. Resistance is seen at $40,112 (Jan. 14 high), followed by the psychological level of $42,000.
Bitcoin is struggling to retake the $35,000 level as one analyst predicts miners will continue selling BTC ahead of the Chinese New Year holiday, said Cointelegraph.
On Jan. 29 Bitcoin (BTC) price briefly rallied to $38,500 before retracing the move and spending the majority of the day struggling to reclaim $35,000.
The wild breakout in Bitcoin price has partially been attributed to Elon Musk changing his Twitter profile to simply “#Bitcoin,” which Musk subsequently followed up with a cryptic tweet saying “In retrospect, it was inevitable.”
Dogecoin (DOGE) also continued to make waves across Twitter and with crypto traders. After reaching a new all-time high at $0.078 on Jan. 28, DOGE price corrected by 41% before rebounding to trade at $0.045.
Developments related to DOGE and r/Wallstreetbets led FTX crypto exchange to create a Wall Street Bets (WSB) index which tracks the price of Nokia (NOK), BlackBerry (BB), AMC Theaters (AMC), GameStop (GME), Silver (SLV), DOGE, and the FTX Token (FTT) using a weighted average of their prices.
The exploits of the popular Reddit group have also not gone unnoticed by the United States Securities and Exchange Commission, which announced that it will be taking a closer look at how Robinhood handled the trading of GME stock on its platform.
Bitcoin price holds strong despite miners selling
Despite the recent volatility, institutional investors continue to show an increased interest in Bitcoin and are willing to pay a premium to get exposure to CME’s Bitcoin futures contracts.
Even selling pressure from Bitcoin miners, who have been selling at levels not seen since BTC price topped out at $14,000 in July 2019, has not been able to satisfy increasing demand. Unlike previous years, mass selling from miners is not negatively affecting the long-term price of BTC, as shown by data from CryptoQuant.
According to Lennard Neo, the head of research at Stack Funds, the current miner sell-off is likely to continue in the near-term due to the upcoming Chinese New Year holiday.
Growing interest from institutions and the emergence of DeFi are big drivers of Bitcoin price growth. As the market heads into the Chinese New Year holiday, the key level of support to watch is now $34,000 while a move higher is likely to face resistance at $38,000.
The $4.9 billion worth of BTC futures that expired on Jan. 29 appears to have little effect on the market as this past week’s Robinhood ordeal is bringing more attention to the cryptocurrency industry.
The traditional markets faced a new wave of pressure which led to the worst weekly performance for the S&P 500. The Dow, NASDAQ and S&P 500 all finished the day negative, down 2.03%, 2.0% and 1.93% respectively.
Bitcoin and Litecoin prices are rising today, helped by the rising market demand for risky assets. The BTC price has jumped by more than 14% to the current $36,820 while the LTC price has jumped by more than 8%. Other digital currencies like Ethereum and Ripple prices have also jumped, according to Investingcube.
Cryptocurrencies are rising because of the ongoing hype in the market that has been fueled by interactions in platforms like Reddit and Discord. This hype has pushed risky financial assets like stocks and cryptocurrencies up sharply. Earlier today, I wrote about Dogecoin, a hyped currency whose price has jumped by more than 77% in the past 24 hours.
Litecoin, Ethereum, and Bitcoin prices are also rising in anticipation of the weekend when all traditional markets are usually closed. Investors believe that the ongoing hype will shift from stocks to these currencies because they are usually traded during the weekend. In fact, in the past few weeks, the prices of cryptocurrencies has jumped during the weekend.
The four-hour chart shows that Bitcoin price has finally broken-out. In the past few days, it has remained inside the descending triangle pattern. Today, it moved above the upper side of the triangle sending signals that there is still demand for the currency. Therefore, while there are still substantial risks, there is a possibility that the price will jump to above $40,000 during the week.
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