May’s month is finally coming to an end! To vary the pleasures, I left my place to Vincent Ganne. Let’s see with him what we can take away from this bloody month. Good reading !
Bitcoin, collateral victim of Sell in May and Go Away ?
At the end of April, the equity market was starting to be under pressure, with the appearance of peaks in volatility fueled by themes of fundamental concern, the rise in commodity prices (inflation) and bond yields. . The financial press put forward the adage Sell in May and Go Away like an almost obvious stock market sanction that was going to fall on the stock market. Finally, interest rates and inflation entered a waiting phase, and here is the stock market still on new historical and / or multi-year highs.
Since the start of the health crisis, the price of Bitcoin has been positively correlated with the stock market, but this month of May 2021 brought an abrupt end to this link., the price of Bitcoin is now dropping 50% from its all-time high at $ 65K.
Bitcoin, is the mindset of gradual adoption being challenged?
No the sky has not fallen on the head of the cryptocurrency market this month of May, but old obstacles have turned out to be still very much alive, the recent purge is a reminder.
The climate issue is now ubiquitous in the global political arena and intrinsic anti-cryptos regularly make the argument “Bitcoin, it pollutes”. Yes, the mining activity consumes electricity, but below 0.5% of the world total and above all, most relevant, more than two thirds of this electricity is from renewable sources. But this Crypto VS Climate debate is above all partisan and political.
China has long been suspicious of public blockchain currency tokens, it is natural, it is a philosophy completely opposed to the political dogma of this country. Bitcoin is decentralized, free, without the control of a trusted third party; in short, a computer code over which the Chinese central state does not control, the Chinese digital currency (100% under the control of the Chinese Central Bank) aims to take market share from BTC, while permanently replacing the use of cash in China. Ultimately, China communicates against the public blockchain regularly, so this is nothing new.
The High Finance of the United States has not given up, on the contrary!
The climate, China, these themes of volatility for cryptos will return regularly, but the real source of the rise in the price of Bitcoin for a year is still intact. BTC would never be where it is in the adoption by Wall Street, by the United States and US High Finance which now considers cryptos as an asset class in its own right., next to the equity market, the credit market, Forex and commodities. As long as this is not called into question by a massive disengagement and / or coercive regulation, Bitcoin will maintain its long-term bullish course.
In order to conclude this short column, let’s admit that the purge of this month of May demonstrated the still far too spectacular level of volatility of cryptos, as well as the reckless leverage used by private speculators. The activation of stop loss trading orders was the source of the May 19 stall around $ 30K. This phenomenon had generated an 85% drop in 2018 after the 2015/2017 bull run, this year the breakage is limited by the presence of institutional traders.
I didn’t touch on the technical analysis of Bitcoin in this weekend column, but here’s a fact: The chartist line between continuing the correction and resuming the uptrend sits at $ 42,000. Below is a small graph to better understand.
Behind the generic signature “TCT editorial staff” are young journalists and authors with specific profiles who wish to remain anonymous because they are involved in the ecosystem with certain obligations.
The comments and opinions expressed in this article are those of the author alone, and should not be considered as investment advice. Do your own research before making any investment decisions.