Bitcoin Price: Calm Before the Storm?

Bitcoin was back in consolidation mode Sunday, as the price pulled back from $11,000 following a decent run-up at the start of the weekend. The largest cryptocurrency is maintaining decent support above $10,400 and if fundamentals align, could be heading a lot higher in the medium term.

BTC/USD Update

Less than 24 hours after breaching $11,000, bitcoin’s price was back down in the mid-$10,000 range. The BTC/USD exchange rate reached an intraday low of $10,332.17 on Bitstamp, having lost 3.9% from the previous session. It was last seen trading just above $10,416.

BTC/USD: Daily chart. | Source: TradingView.

Over the 24-hour trading cycle, bitcoin is down 2%, according to CoinMarketCap.

The largest cryptocurrency accounts for 65.2% of the overall market based on a current valuation of $186.6 billion. Trade volumes have declined substantially over the past five days, reaching $1.4 billion on Sunday. This figure represents ‘real 10’ trading volumes on verified exchanges, as defined by Bitwise.

The Move Out of Fiat Currencies Will Benefit Bitcoin

Bitcoin and other store-of-value assets are benefiting from a broad exodus out of fiat currencies as central banks around the world prepare for new rounds of monetary easing. That’s the opinion of Brian Stutland, chief investment officer of Equity Armor Investments.

In a recent appearance on CNBC, Stutland said bitcoin and gold will be prime benefactors of dovish monetary policy.

“I think the move out of fiat currencies is still real,” he said. “If interest rates are going to stay below 2% in the United States, if they’re going to stay negative in Europe, [if] they’re going to stay flat in Japan, where else are you going to put your money? And that’s where you look at the metals, you look at cryptocurrency as a place to do that.”

Of course, Stutland is referring to the Federal Reserve’s all-but-confirmed plan to lower interest rates later this month. The target for the federal funds rate, which currently sits at 2.25%-2.50%, is expected to fall by at least 50 basis points this year, according to CME Group’s FedWatch Tool.

Meanwhile, the European Central Bank (ECB) assured investors last month that a new round of central-bank stimulus could be implemented soon to rescue the Eurozone from subpar growth. CCN reported at the time that, “by slashing interest rates and tweaking the parameters of its quantitative easing program, the ECB will effectively weaken the euro and help the export-oriented economy remain competitive.”

The market for bitcoin futures is also expected to heat up in the second half of the year as Bakkt prepares the launch of a new physically-settled bitcoin contract. Bakkt will begin trials on Monday and is expected to launch by the end of Q3, according to Fundstrat Global Advisors.

Read: Bitcoin Price Edges Higher Ahead of Bakkt Trials

The combination of easy monetary policy and new institutional gateways into bitcoin could propel demand for digital assets heading into next year’s halving event. Bitcoin’s halving, slated for May 2020, will be a major supply shock for the market at a time when accumulation is already at record levels.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. Chart via TradingView.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi