During the last 24 hours, Bitcoins price has rallied +3%. BTC market capitalization has added $5 billion in total value. Yesterday, Goldman Sachs was extremely bearish on Bitcoin as an asset class, listing numerous flaws it saw in the infrastructure. Despite the negative outlook, Bitcoin built positive momentum as it continues to separate itself from the centralized financial system. Where could Bitcoin be heading next?
Goldman Sachs On Bitcoin
On Wednesday, Goldman Sachs released a slide deck on its Bitcoin outlook. When this presentation was announced a while back, investors across the digital asset space were bullish. The reason for this is because there were a lot of rumors surfacing since 2017 regarding Goldman and crypto. Back in 2017, it was reported that Goldman was setting up a cryptocurrency trading desk. In 2018, this was later debunked as it was reported that the firm no longer had plans to launch the trading desk. It was believed that Goldman was having a difficult time navigating the regulatory scope in terms of custody and security.
The slide deck on Wednesday supported further evidence that the firm was officially done with Bitcoin. The investment strategy team outlined many concerns around Bitcoins infrastructure. Goldman gave 5 reasons why they believe investors should stay away:
- Bitcoin does not generate cash flow like bonds
- Bitcoin does not generate any earnings
- Bitcoin does not provide consistent diversification benefits due to its unstable correlations
- Bitcoin volatility being in question given a historical of 76%. Goldman references March 12 when bitcoin fell 37% in a single day
The Crypto Community Goes Off
Leaders in the crypto space were stunned by the Goldman outlook. Many professionals in the crypto space still argue that firms like Goldman lack education in the digital asset space. The CEO of Binance mentioned in a tweet that banks simply “don’t want” to understand cryptocurrency. Founders of Gemini, Tyler & Cemeron Winklevoss were also going off on Twitter, arguing that Wall Street still lacks education in the space as well.
Bitcoin Sentiment
Since the Goldman coverage surfaced, Bitcoin has experienced positive momentum. As discussed above, the digital asset has rallied +3% the last 24HR, adding around $5 billion in total market value. We’ve seen this narrative play out in Bitcoin history. This isn’t the first time that Bitcoin has rallied after Wall Street criticism. In 2017, Bitcoin wasn’t fazed by Jamie Dimon warnings. Price experienced upward momentum despite one of the most powerful guys in finance talking down on the digital asset. In November 2015, Jamie Dimon issued warnings on Bitcoin and the price rallied +82% the next 12 months. In 2016, Jamie Dimon issued another warning regarding Bitcoin and the price rallied +113% the next 12 months. Bitcoin was created after 2008 to create a peer-to-peer financial system that doesn’t rely on Wall Street. With Bitcoin continuing to rally after negative Wall Street sentiment, just goes to show how strong the protocol is on a global basis.
Bitcoin Technical Analysis
In previous Bitcoin analysis, Visionary Financial outlined the fact that Bitcoin was dipping below the 25 day moving average. The dip below was concerning and we argued the fact that Bitcoin could very well test $8,000 based on historical price action following a 25 day moving average rejection. BTC bounced pretty hard after the Goldman coverage and quickly jumped back above the 25 day moving average which was positive. In addition, the strength index went back into upward trajectory. It will be crucial to see if Bitcoin will close above or below the 25 day moving average. If price closes below the 25 day moving average, you could very well categorize this recent run as a “bull trap.” If this were to happen, you could still see the $8,000 test that was originally outlined. On the flip side, if Bitcoins price closes above that 25 day moving average, then sentiment could very well be changing. If this holds true, BTC may attempt to target the $10,500 resistance level.
Bitcoin Hash Rate
Bitcoins hash rate finally corrected itself after falling to December 2019 lows. As mentioned in a recent thread on twitter, it was crucial for Bitcoins hash rate to correct itself. Hash rate and price have been historically correlated. Late yesterday, you finally saw the Bitcoin hash rate build some positive momentum. After doing so, you saw the upward momentum in price as well. As we progress later into the week, we will continue to watch Bitcoins hash rate to see if it can truly bounce off this support level.
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