(DAILY NOTION): Can The BTC/USD Bulls Regain Its Crown? Next Mover: U.S. Stimulus Package, Biden's Inauguration

12 Jan 2021, 10:05 · Views 1,410

Source: Yahoo Finance

The BTC/USD is fighting hard to hold the fort, but it does not seem to be winning. The BTC/USD dipped nearly 15% in 24 hours, which has led to a staggering $170 billion loss in the cryptocurrency market value. It has also impacted altcoins, with both Ethereum and Litecoin experiencing a 20% loss. The already troubled XRP/USD has broken past its support at $0.30.

At the time of writing, the Moving Average Convergence Divergence (MACD) is bearish below the 50-bar Simple Moving Average (SMA). BTC/USD is currently at $35,452.82 with a Relative Strength Index (RSI) of 68.

Analyst Anil Panchal from FX Street opines that a pullback to an ascending trend line from Dec 29, at 30,320 at the moment, is imminent. However, the strong RSI and 200-bar SMA of 27,006 are fighting the case for the bulls. If the price breaks below 27,000, the bears will gain the upper hand to take the Dec 20 top around $24,300.

An interesting view comes from Pinchas Cohen of Investing.com, who opines that the BTC/USD price drop is a good thing for BTC/USD enthusiasts, in light of its recent acceleration upwards. With this decline, traders who want to cash out can do so to allow other traders to buy-in. However, is this a sentiment that is echoed by Bitcoin believers everywhere?

In the markets, hope fills the air as traders wait for the increased stimulus packages by the Biden administration. President-elect Joe Biden has hinted of massive packages, with the $2,000 checks for most Americans his top priority. However, it is estimated that these stimulus packages will add trillions to the U.S. Federal Debt. In the long run, the combined impact of this massive impact would take its toll on the USD, and lure funds away to gold, and perhaps even cryptocurrencies.

However, the temporary hype of the increased stimulus packages combined with a new beginning that awaits America with Joe Biden’s inauguration as the U.S. President on Jan 20 could increase the risk-on sentiment in the market. Will this prove to be the straw that broke the back of BTC/USD bulls? Let’s keep an eye here.

BTC/USD (as of Jan 12, 2021, 9.40 a.m., GMT +8) - $35,452.82

FOLLOWME BTC/USD User Sentiment (as of Jan 12, 2021 at 10.00 a.m.)

Short – 62.39%

Long – 37.61%

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It’s never boring these days. Recall that there are times when the S&P 500 goes 100 days or more without making a 1% intraday move. But big moves are the norm nowadays — and they aren’t bullish. Neither is the fact that the many of the worst of the low-quality stocks that are down still down 80%-90% from highs are continuing to spike. Much, probably most, of the recent rally action for those and other downtrodden stocks has resulted from short covering. Short-selling is when people borrow stock from their broker to sell it immediately, hoping to buy it back at a lower price, return it to the lender and pocket the difference. Short covering is when the trader buys the shares to close out a short position. Short-selling got to be very profitable for a month or two when the stock market was tanking in May and June. But, of course, the action brought in too many short-sellers, which made it crowded. That crowd has thinned out in the past couple weeks. Here are five main reasons I expect a “Big Broad Sell-Off” in coming days and weeks: 1. We had an historic Bubble Of All Bubbles that just popped over the past year. I don’t think the odds favor a quick resolution in the midst of a new Federal Reserve/inflation paradigm. 2. Valuations for most of the former high-flyers that have crashed and then bounced are still too high to be good risk/reward for the long-term. 3. Everyone seems to agree that the Fed can and will simply go back to easy money policies in two months or six months or something. I don’t think the Fed/inflation playbook that will work for the next 10 years or longer is the same playbook that has worked for the last 40 years. 4. Crypto’s crash doesn’t seem like to be over, and I don’t think the tech stock market can bottom until crypto finishes washing out. Too many people who own cryptos that are 70% to 95% off their all-time highs from last year are still talking trash to crypto bears and crypto luddites: “You’re so stupid if you can’t understand that my crapcoin is going to go back up to its all-time highs after this latest crypto winter is over.” I have people talking trash to me who have lost tons of money on cryptos that I had warned them to get out of before they crashed. It reminds me of the time when I was leading the state in scoring but my team was 5-17 on the year. 5. I expect a Big Broad Sell-Off because greed seems to be back driving the market action lately. Many of the trashed former high-flyers that were down 90% or more are now up 50% or more from their lows (which means that those stocks are still down 80%-90% from their all-time highs and almost none of them are ever going back to those levels.Selling and ‘shorting’ Stocks are up big since my early summer bullishness about buying stocks during the panicky selling action. I’ve raised some cash since then in my personal account by selling some names completely, such as PayPal PYPL, +2.01% and Alibaba BABA, -0.11%. In the hedge fund, I have been shorting some of the hyped-up, rallied-up solar stocks, including the Invesco Solar ETF TAN, +1.31%. I’m also staying short some of the worst electric vehicle manufacturers, such as Fisker FSR, +3.90%, although I covered some of it just yesterday. I think we’ll look back in two months’ time and say this sort of thing: “How did all those crappy stocks go up so much so quickly this summer?”Rise of Rocket Lab Rocket Lab RKLB, +21.16%, which I’ve written about many times over the last year here on MarketWatch, had a great quarter, beating the topline estimates by 10%-plus and guiding next quarter up by 10%-plus. In updating its numbers on a price-to-profit (PP) ratio spreadsheet, it’s cheaper today than it was yesterday even with Friday’s 20% pop in the stock, because adding 10% to the current year’s estimates magnifies profitability in the future years. I’m mostly sitting tight with this name. I wouldn’t go selling a bunch of your long-term stocks or try to game a potential market downturn. We did some buying at those lows that are far away right now and there’s no reason to feel rushed to make your next long-term move. Easy does it, as always. Cody Willard is a columnist for MarketWatch and editor of the Revolution Investing newsletter. Willard or his investment firm may own, or plan to own, securities mentioned in this column.

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