Can Bitcoin Step into Its Moment?

by Alex Benfield
By Alex Benfield

If you’ve been following our work here at Weiss Ratings, you have probably heard about the origin story of Bitcoin (BTC, Tech/Adoption Grade “B+”).

In the aftermath of the Great Financial Crisis of 2008, Bitcoin was created by the infamous and pseudonymous Satoshi Nakamoto out of frustration with the unchecked power and greed of the financial powers that be.

After witnessing Wall Street elites wreak massive financial havoc on everyday people around the world, Satoshi designed and hardcoded an incorruptible, decentralized and inclusive answer to the existing financial and monetary system.

Bitcoin was created to protect its users from the greedy, centralized banks that control TradFi … and to give users the freedom to opt out of the legacy financial system.

The question now is whether Bitcoin can shed its reputation of being a volatile store of value and “the inflation hedge that does not work” and grow into the role it was created to serve.

I believe the recent banking crisis may reveal a piece of the answer.

That’s because this same legacy financial system is struggling to handle the changing interest rate environment, which has led to many banks holding on to underwater positions in U.S. Treasurys.

This is partially because those Treasurys were bought in a low-to-zero interest rate environment and are now losing positions after the Federal Reserve hiked interest rates at one of the fastest paces in history.

They say bad things come in threes, and the recent central bank crisis was no exception. First came the downfall of Silvergate Bank … then Silicon Valley Bank … and finally, Signature Bank.

Today, many other banks are showing serious weakness, including large banks like Credit Suisse (CS).

While the Federal Deposit Insurance Corporation has guaranteed depositors in those first three firms to stave off further contagion, the risk of this spilling over into other banks is still there.

If only there was another more promising, fairer and less centralized system …

As I said, we’re still waiting to see if BTC can live up to that promise. Our first hint in a positive direction was Bitcoin’s initial reaction to the banking news. BTC rose from a low of under $20,000 on Friday to a high of $26,000 yesterday — an impressive 35% move from bottom to top.

It has since retreated a bit, but we’ll learn more as the market gains more clarity on the current situation.

So far, Bitcoin has struggled to reclaim its 200-week moving average, which sits near $25,500. If Bitcoin can close above that level, the bulls will likely attempt a push for $30,000 or above.

However, given the confusion, panic and chaos out there right now, do not expect this to be a straight up or down move. Instead, expect heightened volatility for the next few days.

This has already been an incredibly interesting last seven days, but things could get even wilder as we close out the week.

Source: Coinbase Global (COIN)
Click here to view full-sized image.

 

Meanwhile, Ethereum (ETH, Tech/Adoption Grade “B”) has been underperforming Bitcoin for a few weeks now, and that hasn’t changed over these past few days.

After losing support at $1,550 a few days ago, ETH retested its 200-week MA around the $1,440 level. From there, it posted a nice retest and bounced from those levels as it shot up above $1,700 yesterday.

For the past two days, ETH closed above that important $1,650 level, but it’s currently retesting that level today.

It’s been a volatile two weeks for ETH traders, and I don’t expect that to change as we close out the month of March.

Source: Coinbase.
Click here to view full-sized image.

 

What’s Next

Confusion, panic and chaos bring with them volatility … and with volatility comes opportunity.

However, while there may be some good trading opportunities in our near future, that does not make this current situation any less stressful.

With that in mind, be cautious of which opinions you trust in the coming days. The truth is, nobody knows for certain what might happen.

What could help are clear “buy” and “sell” signals from our Crypto Timing Model, to help you balance out when headlines are just noise … and when they reveal times to act.

That’s exactly what Juan and I do for our Weiss Crypto Portfolio members.

Back in 2018, Juan used the Crypto Timing Model to help call the bottom of that bear market. Sure enough, investors who acted when he did could have turned a $10,000 BTC investment into $200,832.

Juan recently called another long-term cycle bottom. And the market is in the midst of shifting gears. We anticipate significant volatility as 2023 continues.

If you want to learn more about how the Crypto Timing Model can help you navigate that volatility, I suggest you watch Juan’s timely video conference now.

We’re taking it offline tomorrow, so this may be your last chance.

Otherwise, the best we can do is wait, watch the situation around us and react swiftly and thoughtfully, as we strategize the best way to take advantage of this chaotic market.

Here at Weiss Ratings, we will do our best to give you the information and analysis you need to make smart decisions.

Best,

Alex

About the Crypto Analyst

Alex has been actively researching and investing in cryptocurrencies since 2017. He contributes research and reports to several Weiss crypto publications, with a primary focus on helping to create crypto trading strategies.

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