Bitcoin and other cryptos continue to have a difficult time breaking out above key resistance levels. Bitcoin has stubbornly remained under the 10k mark, and seems to have found some equilibrium around the $8500-$9500 range.
Concerns over a global trade war have been significantly exacerbated this week, as the Trump Administration imposed tariffs on Chinese goods. China, in turn, fired back, listing 128 U.S. products that could potentially see a duty imposed. The potential for a global trade war has called into question Bitcoin and other cryptos’ role as a safe haven asset.
Bitcoin has not exactly had a stellar week, in which it could potentially have seen much stronger buying interest given the current geopolitical climate. A recent article from forbes.com After discussing how Bitcoin behaved following some other crises, the article questioned why it is not acting as a flight to safety instrument currently. The article stated:
“So if the digital currency’s price benefited from these crises, why has it been pushing lower as concerns of a trade war circulate?
The simplest answer to this query me be this: while Bitcoin has acted as a safe haven at some points, it isn’t functioning that way now.
This situation may largely be the result of Bitcoin not having the same liquidity as gold, another safe haven asset, said Mati Greenspan, senior market analyst for social trading platform eToro.
“Traditional assets like gold have a lot more liquidity Bridges and gateways that facilitate flows to and from stocks, bonds, and ETFs,” he noted.
“Bitcoin doesn’t have that framework in place just yet,” which makes it more difficult for investors to take money out of stocks, for example, and put them in to the digital currency. ”
The issue of market liquidity is certainly a big one. Investors who look to pull money from equities during periods of high volatility or crisis tend to look to put that capital to work elsewhere, and in a hurry. Bitcoin and other cryptos simply do not yet have the necessary infrastructure to facilitate such rapid and easy movement of capital. Until they do, they may not benefit from rapid flight to safety buying.
Bitcoin: After seeing a decline to less than 7.5k earlier in the week, Bitcoin has rebounded, moving over the 9k mark at one point. The market had a difficult time maintaining upside momentum one again, however, and has since dipped back down to under $8600. The currency appears to be comfortable in its recent range, and may need to see considerable buying strength in order to break above recent resistance.
Bitcoin Cash: This crypto saw a decline early in the week to nearly the $840 level, before seeing a strong rebound back towards $1080. Like Bitcoin, however, it has failed to maintain recent strength, and is trying to hold above the $1k mark going into the weekend.
Ethereum: After a brief dip to less than $480, this currency seems to have found some equilibrium in the $520-$550 range. It is down about 1% on Friday, and is trying to maintain trade above the $500 level. A break below this key area could signal a fresh and possibly significant leg lower in price.
Ethereum Classic: This crypto seems to be just fine trading between the $16 and $22 levels. The market has been trending lower on the larger time frames, however, and a break below the $16 level could trigger another fresh leg lower in price
Litecoin: This crypto seems stuck under the $200 level, and has spent much of the week oscillating between $160 and $170. On the larger time frame, recent market action does not look very encouraging. The market has spent the better part of three months moving sideways, and thus far has not shown any significant strength.
Ripple: This crypto has also been mostly range-bound, and has lacked any major rallies since it traded to about $3.20 a few months back. The longer-term charts do not look very constructive, either, as the last several weeks have seen mostly sideways action.
All of the cryptos seem to be lacking any significant bullish catalyst to take prices sharply higher from recent levels. The markets may simply have to trade sideways for a period of time, until more is known about potential regulation and there are more indications that economic use will continue to grow.