The Capital
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The Capital

Decision time! Will Bitcoin Hit $17,000 Next?

Bitcoin continues to fly in the face of naysayers as it approaches another pivotal moment that could take it to $17,000.

Meanwhile, as one side celebrates an expected Biden victory, the US presidential election is technically not over and could still surprise markets in the near future.

Let’s dig in.

What if the Biden presidency expectation is over-turned?

On Monday, we covered the increasing likelihood of a correction in bitcoin due to specific on-chain metrics. Today, we’ll take a deeper look into a scenario that investors aren’t considering yet.

Despite not having been declared the official winner, Joe Biden is making in-roads into his upcoming prospective presidency. In fact, he has appointed a well-known crypto advocate Gary Gensler to his pre-inauguration transition team to lead the financial policy transition.

Gensler has been an outspoken advocate of cryptocurrencies, according to CoinDesk, speaking on the topic on multiple occasions and coming to the defence of cryptoassets in front of congressional hearings.

Gensler has defended the status of some cryptos such as Libra and Ripple as securities, rather than Ponzi schemes, and has referred to blockchain technology as a “change catalyst”.

He is most known for the role played in the Obama administration as a regulator, outlining derivatives rules after the 2008 financial crisis. Before that, he served in the US Treasury Department during Bill Clinton’s presidency.

Clearly, the man has been around the political block.

While this is seen as a good development for crypto enthusiasts — many of whom expect crypto to perform well under a Biden presidency — the fact remains that US elections are still undergoing a process that seeks to clarify the electoral results.

As such, it’s reasonable to consider how a surprise Trump 2020 presidency would impact bitcoin in these uncertain times.

My Twitter poll asks this exact question. I’d urge you to participate in this simple poll.

How would #bitcoin react if Trump suddenly got elected (via the courts)?

- Chris on Crypto (@ChrisOnCrypto1) November 10, 2020

In any case, the current situation is one where there is general acceptance of an upcoming Biden presidency. In fact, the S&P 500 hit all time highs on the 9th, contrary to warnings from the incumbent administration. The same cannot be said for bitcoin, however, which fell dramatically on the day, further fanning the ‘decoupling narrative’ flame. On the one hand, this suggests that bitcoin is simply indifferent to legacy markets, and will perform in its own way regardless of legacy markets.

On the other hand, if US electoral news has meaningfully impacted bitcoin, then it’s worth noting that Trump is no fan of bitcoin (in his own words).

In the past, Trump was quite vocal about his scepticism on bitcoin. In July 2019, he tweeted:

I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….

- Donald J. Trump (@realDonaldTrump) July 12, 2019

Clearly, each political party suggests a different stance on bitcoin and the crypto sector as a whole, which might cause a short-term stir in the event that current expectations of a Biden presidency are over-turned. Bear in mind that old and new markets might be betting on a ‘deadlocked’ government, wherein legislation simply doesn’t pass through and the US government experiences 4-years of inefficiency. Should Trump win via the courts, this will no longer be the case — which would mean that the US government would be better positioned (internally) to react to bitcoin.

Ultimately though, bitcoin’s rise is not dissimilar to the theory of relativity; it can be squeezed and stretched but it does not go backwards.

Technically speaking

The technical and on-chain data delineated on Monday remains relevant. Since the newsletter, bitcoin experienced a brief pump that was quickly engulfed in another sell off.

However, despite the selling pressure, bitcoin held on and bounced at $14,800 forming a bullish pennant structure. Just last night, bitcoin bounced again at the $15,000 level and is currently testing the upper limit of this formation (and has arguably broken out depending on how you draw it).

Per the chart, bitcoin is on the precipice of taking a decision that will probably have a major rippling effect in its price-action. While there is no crystal-ball like thesis, we can contextualise price-action as it develops.

From an on-chain perspective, there are reliable reasons why bitcoin could take a breather and correct from here.

Technically speaking though, bitcoin is in a bullish pennant structure, which tends to break to the upside more often than not.

In the past run-up, bitcoin was fighting an uphill struggle as it faced bearish divergences clearly denoted on the Relative Strength Index below.

The current consolidation structure hasn’t provided these bearish signals.

As such, the market is faced with a situation wherein on-chain data indicates that bitcoin could cool-off but the technical structure suggests bullish continuation, in its simplest form.

Given these conflicting signals and lack of confluence, it’s hard to strongly favour one bias over another.

Levels to watch

  • Break above $15,800 (on volume) indicates continuation above $16,000.
  • Break below $15,150 suggests accelerated downside to $13,800.

Whichever way bitcoin goes, rest assured that consolidation moves are merely a prelude for what’s to come. Bitcoin is going to hit $20,000 and beyond, and sooner than most people think. The fundamental situation is too positive to conclude otherwise.

In the event that US election shenanigans trend towards the above outcome, then bitcoin might endure another setback in its path towards mass adoption; but that’s fine from a hodler’s perspective.

Ultimately, there has never been a more exciting time to be in finance, and we should be honoured to have the privilege to witness what’s about to happen.

Onward bitcoin Spartans.

Catch you next time.

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Best regards,
Christopher Attard
Founder of Chris on Crypto
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Chris on Crypto

Chris on Crypto

Journalist-turned crypto-writer & analyst; forging the narrative, stacking sats.