Bitcoin Bulletin Midweek Market Update
The Bitcoin Bulletin midweek market update summarises Bitcoin market action every Wednesday.
This article is for information only. Bitcoin Bulletin will never give you trading or investment advice.
Today the sentiment for bitcoin is cautiously positive, despite confirmations that Tether is now running a fractional reserve on USDT deposits.
Following a turbulent end to last week, bitcoin is once again pushing upwards. At the time of writing BTC sits at the $5,300 mark. While this is down from the $5,600 ceiling it hit eight days ago, it is remarkable that the market maintains such confidence in the wake of the Bitfinex/Tether filing by the US Attorney General.
In an affidavit, Tether’s General Counsel, Stuart Hoegner, has confirmed that the company holds around $2.1 billion in cash and short-term securities, meaning the currency is just 74% backed. Conventional wisdom suggests that bitcoin’s price in USDT should have skyrocketed to over $7,000, reflecting the fact that each USDT may only be worth $0.74. However, traders are acting as if USDT are still fully backed with US dollars – or believe that Bitfinex will make good on their loan.
Strangely, this transparency – forced or otherwise – appears to have reassured the market, which has shrugged off concerns that Tether may prove a systemic problem. Bitcoin has risen $100 since that time. It is still trading well above the 200-day moving average and the 50 DMA, and support at $5,000 has held.
The area above the recent high of $5,600 is likely to prove strong resistance, since the $5,700–$6,000 zone was one that was repeatedly tapped throughout 2018. While analysts in general agree that the bottom is in for bitcoin based on a number of factors, there is the prospect of BTC trading in a range for the next several months – potentially revisiting the $4,000 level and even its lows in the $3,000 area as the market consolidates. However, with reports of heavy accumulation and more positive sentiment returning, this can only be a temporary phase.