By definition, a safe haven asset is an investment that is expected to retain its value or even increase its value in times of market turbulence. Because of bitcoin’s decentralized nature, bitcoin has long been considered as a safe haven asset, with many investors describing the digital currency as “digital gold.”
In 2016, gold recorded decline in value throughout the year, while bitcoin demonstrated staggering growth rate, increasing from $430 to $950, by over two-fold, within 12 -month period. In consideration of bitcoin’s ability to retain its value amidst financial instability and economic uncertainty, the vast majority of new investors have started to build a portfolio of bitcoin as a long-term investment and hedge against the unstable economy.
Earlier this month, the Bank of England, the central bank of United Kingdom, slashed its growth forecasted for the second time in 2017, mainly due to the backlash from Brexit, or the UK’s exit from the European Union. Mark Carney, the bank’s governor, stated that the “speed limit” of the British economy has slowed, with other economic indicators such as jobs growth declining as well.
Recently, the UK Recruitment and Employment Confederation (REC) chief executive Kevin Green revealed that Brexit has caused a significant decline in talents and professionals, leaving the UK with too many jobs but not enough workers. Green told CNN Money:
“The parts of the economy most reliant on European workers are under even more pressure as many EU workers return home. Employers are not just struggling to hire the brightest and the best but also people to fill roles such as chefs, drivers and warehouse workers. We can’t ignore the importance of our relationship with the EU to employers. If we want to keep our jobs market successful and vibrant, we must make it easier, not harder, for employers to access the people they need.”
The impact of the UK’s declining economy, worsening economic indicators and decreasing economic growth forecast by the Bank of England have had evident effect on the British pound, along with the country’s stock markets.
Following the growth forecast of the Bank of England and US President Donald Trump’s promise of “fire and fury” against North Korea, US stocks sell-off continued on the FTSE 100 Index, a share index of the 100 companies listed on the London Stock Exchange.
“European stocks have stabilised after this morning’s fear-fuelled deterioration in response to heightened fears of a US-North Korea conflict. Although the stock markets have regained some ground, concerns clearly remain over the potential of conflict,” IG market analyst Josh Mahoney told FT.
Despite the struggling economy of the UK, the European bitcoin exchange market has grown rapidly over the past few weeks, taking over the South Korean bitcoin exchange market, the fourth largest bitcoin market, at one point.
According to various bitcoin market data providers such as BraveNewCoin, Europe accounts for 8 percent of global bitcoin trading, processing around $70 million worth of bitcoin trades on a daily basis.
Demand towards bitcoin from institutional investors, accredited investors, traders and users in the UK and Europe is exponentially increasing and such rapid rise in demand is likely caused by an emergence of investors attempting to avoid or bypass the current economic instability of the UK with bitcoin.
Some analysts including IHS Markit economist Raj Badiani suggest that the UK will continue to suffer an economic slump throughout 2017.
“[The slump] was partly triggered by the start of a more subdued phase of consumer spending, with increased household stress pushing back the recent gains of several years of high employment and improved purchasing power over much of 2016,” said Raj.
Image Credit: Pixabay License, no attribution required.
Technical Analysis: NEO Jumps as Broad Markets Turns Lower
As the new waves of regulatory changes keep on hitting the segment, the major cryptocurrencies are mostly lower today. After the major update of Ethereum, and the recent surge in the price of Bitcoin, choppy conditions developed, with no clear short-term trend in most of the coins.
NEO is the best performing major today, as it surged back to the $30 level after a frustrating period that was dominated by a downward drift. The coin is now just below the key resistance level, and it could be ready to test the $34 level, with a further target found at $40. The long-term picture still looks positive, with strong support levels at $27 and $25.
NEO/USDT, Daily Chart Analysis
Ethereum is in a consolidation after the encouraging rally towards the end of last week, while Bitcoin is also correction after its stellar rise. The two largest coins pulled the rest of the majors lower, while Ripple remained very volatile after touching the $0.30 level yesterday, trading below the $0.26 again.
Litecoin, Dash, Monero, and IOTA are all a bit lower today, while Ethereum Classic found some relative strength, although it remains stuck in a declining short-term trend. All in all, the segment is still in a clear uptrend, so let’s see which coins are the most promising regarding the short-term picture.
Bitcoin Takes a Breather as Prices Drop Below $5,700
The world’s most talked about digital currency pulled back early Tuesday, a sign that the latest rally is nearing its end.
BTC/USD Price Levels
After a positive start to the week, bitcoin prices have reversed back toward $5,600 on Tuesday. The BTC/USD exchange rate opened up a nearly $200 trading range on Tuesday. At press time, the pair was down 1.3% at $5,653. Bitcoin remains in overbought territory, based on the RSI, with underlying momentum maintained.
Bitcoin’s current price level translates into a market cap of roughly $92.7 billion, according to CoinMarketCap. That nearly triples the Ethereum blockchain, which is currently valued at $31.2 billion. When assessed by market cap, bitcoin and Ethereum combined account for more than two-thirds of the cryptocurrency asset class.
The BTC/USD has registered a five-day gain of 15.%, which is equivalent to $772. The pair’s 52-week range is $627.77 – $5,861.15.
Analysts Struggle to Explain Rally
Analysts and market participants are struggling to explain bitcoin’s latest upsurge. The uptrend seems to have begun around the time of news suggesting Chinese policymakers may soon relax their ban on cryptocurrency. However, this alone doesn’t explain the 18% gain over the past five days.
Another plausible catalyst is the anticipated hard fork of the bitcoin blockchain in November, a plan that would benefit existing holders of the cryptocurrency.
The developers behind the Segwit2x protocol have identified a bitcoin upgrade approximately 90 days after the activation of Segregated Witnesses. The controversial plan, which aims to increase the transaction capacity of the blockchain, will occur at block 494,784.
Bitcoin Gold was also on some traders’ wish list before the blockchain community raised suspicion over the project. Several red flags have been identified by Gert-Jaap Galsbergen, which you can read here.
For now, bitcoin’s bull market appears to be taking a breather. As we’ve seen in recent weeks, it doesn’t take much to stoke investor exuberance in a market that has gained nearly 500% since Jan. 1.
Featured image courtesy of Shutterstock
Technical Analysis: Ripple Breaks Out Amid Ethereum Upgrade
The major cryptocurrencies are on the rise once again today, with Ethereum’s major Byzantium update being in the center of attention. The second largest blockchain network has been updated through a hard fork, as usual, and the successful lock-in led to an initial surge in the price of the ETH token. The digital currency recovered above the $330 level after Sunday’s pull-back, but so far it failed to durably break-out above the prior swing high just above $340.
With the long-term momentum readings still being neutral, the coin could be on the verge of testing the $380 resistance soon, with the all-time high near $400 being the last major technical obstacle. Below $330 further support is found at $300 and $285.
ETH/USD, Daily Chart Analysis
Bitcoin is also on the rise after dipping below $5500 during the weekend, and the most valuable coin is joined in the rally by Ripple, which most likely finished its short-term correction and could be ready for another leg higher. The other majors are also generally higher, with NEO and IOTA being ahead of the pack, while the rest of the market trading near unchanged. As the broad rally seems to be well and alive, let’s see how the short-term charts are shaping up.
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