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Stocks, Greed and Exuberance: 5 Things to Watch in Bitcoin This Week

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Bitcoin (BTC) begins Monday by avoiding another test of $9,000, but what could happen to change the mood or even set off a bull run?

Cointelegraph takes a look at five major facts that could influence the BTC price during the coming week. 

Stocks under pressure: does “valuation” matter?

The macro outlook seemed more or less stable on Monday. Prior to trading, futures for the Dow Jones, S&P 500 and more were modestly up, despite concerns mounting over coronavirus.

Specifically, one source quoted by Bloomberg warned on Sunday, the sentiment is one of worry — both about the spread of cases and the United States’ response to protect the economy. 

If the Federal Reserve intervenes in equities yet again and adds to its balance sheet, it would increase the sense of an artificial presence on the markets in terms of competition.

“There is an emerging possibility that the Fed hasn’t gone far enough,” quantitative strategists at Sanford C. Bernstein wrote in a note.

“If that came to pass, then maybe valuation of the market simply doesn’t matter.”

Fed balance sheet as of July 7

Fed balance sheet as of July 7. Source: Federal Reserve

As Cointelegraph reported, Bitcoin has shown no signs of lessening its dependence on stocks in recent weeks. Moves up or down appeared to shape BTC/USD performance, with last week’s trip from $9,000 to near $9,500 and back down again being no exception.

Analysts particularly eye the S&P 500, an index with which Bitcoin currently shows a 95% correlation. 

Coronavirus is also weighing on U.S. consumer confidence, fresh data meanwhile shows, with five indicators all flashing bearish in July after recovering during the two previous months.

A tale of two Fear & Greed indices

On the topic of macro, trader sentiment in cryptocurrency still contrasts with that of traditional markets.

That was the conclusion from two incarnations of the Fear & Greed Index, a basket of factors designed to show whether traders are overly risk-off or unduly confident.

The Crypto Fear & Greed Index remains in the “fear” category with little movement for several weeks. By contrast, the traditional market equivalent is flashing “greed,” while slowly trending downwards towards “neutral.”

On a scale of 1 to 100, Monday scored 59, down 7 points from the same time one month ago. The cryptocurrency equivalent measured 43 for Monday and 38 last month.

Fuelling traditional “greed” was “extreme greed” in stock price breadth, while derivatives put and call options, along with safe-haven demand, also sat firmly in the “greed” range.

Crypto Fear & Greed Index 1-month chart

Crypto Fear & Greed Index 1-month chart. Source: Alternative.me

Cash, gold inflows beat stocks in 2020

The greed narrative fits with other signs that stocks, in particular, are overly buoyant. 

As noted by market commentator Holger Zschaepitz on Monday, the correlation between the Nasdaq and S&P 500 is on the up, in what he describes as a “sign of exuberance.”

At the same time, banks are gearing up for a dismal quarterly performance, something that is on track to be the worst since the 2008 financial crisis.

As Cointelegraph noted, misgivings about stocks’ recovery since March have long persisted in Bitcoin circles. The Fed’s interventions, in particular, have fuelled accusations that the entire atmosphere is now artificial, and “true” value is of limited relevance.

Numbers this week show that investors themselves have in fact gone for cash and gold — not equities — in 2020. Inflows into the two assets beat others since the start of the year, similar to 2008-9.

Inflows as a % of assets under management chart

Inflows as a % of assets under management chart. Source: Jeroen Blokland/ Twitter

Bitcoin fundamentals stay strong

Monday sees a new Bitcoin difficulty adjustment, the latest in a series of bullish moves that underline miner confidence.

With the event just hours away at press time, estimates suggest a difficulty uptick of around 9.5%

This is much stronger than the previous move two weeks ago, which was stagnant, and on the way to matching last month’s 15% surge, which was the largest since early 2018. 

Difficulty represents how much effort is required to solve equations when mining new Bitcoin blocks. Upward adjustments suggest more competition, with Monday’s estimate slowly increasing over the past week.

At the same time, the network hash rate, having reached an all-time average high last week, has tailed off slightly. Data from Blockchain estimates a seven-day average of 124.42 EH/s for Monday, having previously hit 126 EH/s.

Hash rate is a sensitive and inexact metric, but nonetheless provides an idea of how much computing power is being dedicated to Bitcoin mining. Major swings are not uncommon, and a popular theory suggests that bullish progress for hash rate is followed some time later by a copycat Bitcoin price move.

Bitcoin 7-day average hash rate 1-month chart

Bitcoin 7-day average hash rate 1-month chart. Source: Blockchain

Warnings remain over derivatives

Bitcoin futures markets generated few opportunities for price movements over the weekend. Low volatility means that markets will begin Monday in a similar position to that at which they ended on Friday.

If Monday and Friday do not match, a “gap” opens up in futures markets which the BTC/USD spot tends to fill in subsequent days or even hours.

CME Bitcoin futures chart showing lack of weekend gap

CME Bitcoin futures chart showing lack of weekend gap. Source: TradingView

Nonetheless, futures remain a source of suspicion for some. As Cointelegraph reported, in-house analyst filbfilb warned last week that weak performance could be a sign of worse to come. 

Specifically, one indicator showed uncanny similarities to the days before Bitcoin’s March crash. Should history repeat itself, he added, the drop, however, should not be as intense as at that time.

Source: https://cointelegraph.com/news/stocks-greed-and-exuberance-5-things-to-watch-in-bitcoin-this-week

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Bitcoin Escapes Stock Market Sell-Off on Booming Safe-Haven Appeal

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An overnight attempt to crash Bitcoin alongside the US stock market met with extreme resistance as the cryptocurrency bounced back handsomely.

The BTC/USD exchange rate lost $465, or 3.51 percent, after the New York opening bell Monday. The pair fell to as low as $12,785, only to find a considerably higher buying sentiment. As a result, BTC/USD rebounded almost instantly after touching the said local bottom, climbing back above $13,000 to reclaim the level as support.

Interestingly, the brief downside attempt in the Bitcoin market appeared almost in sync with a similar sell-off across the US stock market. The Dow Jones Industrial Average plunged 650 points, or 2.3 percent, logging its worst one-day decline since September 3, led by a drop in leisure and travel stocks.

cryptocurrency, Bitcoin, BTCUSD, XBTUSD, BTCUSDT, S&P 500, Dow, Nasdaq

Bitcoin correlation with the Wall Street indexes and the US Dollar Index. Source: DXY on TradingView.com

Meanwhile, the benchmark S&P 500 and the tech-savvy Nasdaq Composite dropped 1.9 percent and 1.6 percent, respectively. Together, all three indexes were down more than 5 percent from their record peaks earlier this year.

Bitcoin Not Infected

The US stock market suffered pain as investors assessed the growing number of coronavirus cases in the country. The infections reached an all-time high of 68,767 on Monday. Additionally, scientists warned that a second way is due amid the coming winter season.

That is increasing worries about tighter lockdown restrictions and their impact on an already-suffering US economy.

Bitcoin and the US stock market could survive the first round of lockdowns because of the US government’s $3 trillion fiscal injections into the economy. Nevertheless, the situation is direr in current times. The first stimulus package stands dried, and the second one remains stuck amid a political battle between the Democrats and the Republicans in the US Congress.

Analysts believe no package will come up until the November 3 presidential election. That explains why investors are seeking safety outside equities.

Ronnie Moas, the founder of Standpoint Research, noted:

“BTC is now above where it was 24 hours ago, even though the Dow Jones dropped 640 points today. That is impressive, especially to those who (mistakenly) thought the two asset classes were correlated. Year-to-date, the US stock market is negative. BTC is +80%.”

Gold Correlation Back

The overnight sell-off and subsequent recovery in the Bitcoin market attest to the renewed demand. The cryptocurrency traded more in line with gold, a traditional rival asset, than with the risky stocks, showing that investors are beginning to explore its safe-haven characteristics.

cryptocurrency, Bitcoin, BTCUSD, XBTUSD, BTCUSDT, gold

Spot gold recovers on the line of Bitcoin after witnessing an early morning decline Monday. Source: XAUUSD on TradingView.com

The sentiment follows a JP Morgan report in which analysts treat Bitcoin as an alternative to gold among millennials. The study expects the cryptocurrency price to increase by 300 percent in the coming years.

That party explains Bitcoin’s ability to hold $10,300 as its interim support amid unsupportive fundamentals.

Source: https://bitcoinist.com/bitcoin-escapes-stock-market-sell-off-on-booming-safe-haven-appeal/?utm_source=rss&utm_medium=rss&utm_campaign=bitcoin-escapes-stock-market-sell-off-on-booming-safe-haven-appeal

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ARK Investment Management Will Review its Distribution in US

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ARK Investment Management, LLC, a self-described “New York-based investment adviser focused solely on disruptive innovation,” has revealed “an important step toward strengthening its business and foundation for future growth,” according to a press release from the group.

“As part of this process, ARK has commenced a request for proposal (“RFP”) process to explore the potential replacement of Resolute Investment Distributors, Inc., an affiliate of ARK’s minority partner, Resolute Investment Managers, Inc., as a distributor of its U.S. retail and institutional products and services. Resolute Investment Distributors, Inc. will be considered in ARK’s evaluation and RFP process,” the release continues.

Speaking on the matter is ARK Founder, CEO, and CIO, Cathie Wood, who said:

“Since our founding in 2014, ARK has evolved a differentiated research and investment strategy that identifies technologically-enabled disruptive companies which, as reported by Morningstar, has resulted in top 1 percentile returns for multiple products over one, three, and five year periods. Thanks to our research and investing success, ARK now is one of the largest ETF issuers in the U.S. To maximize ARK’s potential, one of our priorities is to partner with shared-vision, best-in-class service providers.”

Source: https://insidebitcoins.com/news/ark-investment-management-will-review-its-distribution-in-us

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Bitcoin Will 10X Compared to Gold, Says JP Morgan

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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

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Source: https://cryptobriefing.com/bitcoin-will-10x-compared-gold-says-jp-morgan/

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