Cryptocurrencies

Bitcoin (BTC) Higher whatever happens on November 03? – Cryptocurrencies

At 13,400 dollars, BTC / USD shows an annual return of 85%, against around 24% for gold and 6% for the S&P 500. The harvest therefore seems already assured but since we are in 2020 … it would be better not to sell the bear skin before you kill it. Especially since the US election will take place next week (Nov 3)!


Dollar Index

Bitcoin is generally poorly correlated to financial markets over the long term. It’s fine like that but it doesn’t show intermittent correlations. Currently, we are seeing a fairly stubborn inverse correlation with the dollar. Which is quite logical since a sharp and continued fall in the number one international reserve currency can only be good news for stateless cryptocurrency.

DXY
DXY (Dollar Index) over one year / The dollar still on the decline, close to a low since 2018
DOLLAR INDEX
DXY over 5 years

This bodes well because it is very likely that the dollar will continue to depreciate over the next few years as the economic fundamentals of the United States are bad. Twin deficits keep getting worse. Uncle Sam currently has his worst trade deficit in 15 years and a budget deficit at the highest level by far ($ 3 trillion).

The twin deficits will not go away with a wave of a magic wand so no matter what the outcome of the US election, the dollar’s underlying trend will remain bearish. Note however that Biden having announced his intention to raise the tax rate, there is a good chance that his eventual victory will cause capital outflows and therefore an acceleration of the decline of the greenback.

Remember also that the dollar no longer has the advantage of serving a high interest rate as before. The FED has indeed warned that it will remain at the bottom at least until 2023 (forever in reality unless there is huge inflation against the backdrop of helicopter money).

Correlation with the S & P500?

The latter has been non-existent for a month …

btc vs s & p500
Correlation of Bitcoin with the S & P500 (US stock market) over the past 30 days / No correlation.

To be sure, Bitcoin plunged along with Wall Street in March. It is true. But correlation does not necessarily mean causation! It was actually the sharp rise in the dollar that crushed Bitcoin earlier this year. The reason being that despite the collapse of the US stock market (due to containment), the dollar has benefited from its status as a global safe haven.

The situation is quite different this time around. Moreover, the absence of a bipartisan agreement this weekend to increase the budget deficit by 2 trillion caused the biggest stock market decline in a month in NY on Monday without Bitcoin sinking. On the contrary, its value increased from $ 13,100 to $ 13,450.

Either way, the fate of the stock market will very much depend on whether or not to confine in the United States. In this regard, it is difficult to see Donald Trump decreeing a “lockdown” in the face of this “second wave”.

Pub

Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.

trump covid
“The fake news media will ride the Covid all the way to the election”

That being said, it could be that the crack is coming from Europe this time around as the Eurostoxx starts to take a serious dip. The announcement of containment in France could sweep away European markets and rub off on Wall Street. But again, in our view, there is little chance that a Wall Street plunge will cause the dollar to rise to derail Bitcoin.

Trump or Biden?

Nationwide polls give Democrat Joe Biden a solid lead. The fight is, however, close in some states which could turn everything upside down.

Whatever happens, let’s not forget to remember thatHillary Clinton, a former Democratic presidential candidate, advised Joe Biden not to admit defeat on election night (arguing that postal votes would take time to count). The stock market could rock if Trump declares himself the winner a little too soon. The United States Supreme Court may then have to decide the issue. Knowing that the said Court had favored the Republican candidate George bush in 2000…

The strong ambient uncertainty could make Wall Street falter, undeniably. But with the problem internal to the United States (unlike the Covid in March), the dollar is unlikely to appreciate this time around. Which would benefit Bitcoin.

Let’s also keep an eye out for the new majority in the US Congress. Democrats currently control the lower house (house of representatives) while Republicans control the upper house, the Senate.

Hash rate and addresses

The Bitcoin network continues to grow. Over 820,000 addresses hold at least 1 BTC. The total number of Bitcoin addresses continues to increase and the pace has accelerated in recent days …

Number of Bitcoin addresses
Number of addresses with more than $ 10, $ 100 and $ 1000

The technical highlight of the week concerns the hash rate. BTC / USD continued to rise as the hash rate lost 45% of its potency! As this dip is most likely temporary, one should not jump to conclusions by claiming that there is no correlation between the hash rate and the value of Bitcoin. The continuous increase in the energy resources put at the service of Bitcoin is obviously a parameter to take into account.

By the way, this dizzying drop in hash rate is believed to be related to the Chinese moving their mining equipment due to the change of seasons. Which suggests that a single Chinese entity controls 45% of Bitcoin’s mining power. To meditate…

Pub

Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.

We still remain on the upside, with resistance at $ 14,000 and then the all-time high of $ 20,000 in our sights. And that regardless of the outcome of the sham US democracy …

  • Weekly BTC / USD chart (one candle = one week):
btc usd
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