Mega-Bullish News For Bitcoin As Elon Musk Says, “Pay Me In Bitcoin” And Biden Says, “Ignore Budget Deficits”!
Elon Musk, The World’s Richest Man, Wants To Be Paid In Bitcoin. Mega-Bullish News For Bitcoin As Elon Musk Says, “Pay Me In Bitcoin” And Biden Says, “Ignore Budget Deficits”!
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Elon Musk, the billionaire founder of Tesla and SpaceX and who has just become the world’s richest man, has said he would never turn down being paid in the soaring cryptocurrency bitcoin.
Responding to a tweet by Ben Mezrich, the author behind the movie The Social Network and writer of Bitcoin Billionaires, that read “I’m never turning down getting paid in bitcoin again,” Musk replied: “Me neither.”
I’ll tell you one thing, I’m never turning down getting paid in bitcoin again.
Musk, who’s ridden Tesla’s soaring share price to the top of the world’s rich lists over the last year, is known to be a fan of bitcoin, regularly tweeting about it and other cryptocurrencies (though often in a tongue-in-cheek way).
With the bitcoin price reaching never-before-seen highs over the last month, bitcoin and similar digital currencies have returned to the forefront of global consciousness for the first time since bitcoin’s 2017 boom and subsequent bust.
The value of the combined bitcoin and cryptocurrency market has now surged to over $1 trillion. The bitcoin price smashed through $40,000 per bitcoin this week, with the total value of the world’s biggest cryptocurrency passing $750 billion—and pushing bitcoin up the charts of largest global assets.
The bitcoin price, after suffering through a three-year bear market, began to rally in October—breaking into fresh territory last month as a wave of big-name investors named bitcoin as a potential hedge against inflation.
In December, Musk sparked wild speculation his electric car company could add bitcoin to its balance sheet during a public exchange on Twitter.
Musk, responding to the chief executive of MicroStrategy, a business intelligence company that has attracted significant attention in recent months by buying over $1 billion worth of bitcoin, asked whether it was possible to convert billions of Tesla’s dollars to bitcoin.
A week later, Musk, who wants to make a manned mission to Mars a reality in just a few short years, tweeted a future Mars economy could be based on cryptocurrency, such as bitcoin.
Joe Biden Wants To Set Aside Deficit Concerns To Invest In Ailing U.S. Economy
“The president-elect is exactly right that this is not the time for austerity politics,” Sen. Bernie Sanders told NBC News.
President-elect Joe Biden said Friday that he favors setting aside concerns about the federal deficit in order to spend more money to boost the ailing American economy.
“Every major economist thinks we should be investing in deficit spending in order to generate economic growth,” Biden told reporters Friday, citing low interest rates and limited Federal Reserve powers to fix the Covid-19 crisis.
As this city reels from the chaos of a deadly riot at the Capitol spurred by President Donald Trump, Biden said he’ll lay out an economic relief package this year that will cost “in the trillions of dollars.” He said it will include emergency relief for those harmed by the pandemic as well as investments in infrastructure, health care and “a whole range of things that are going to generate good-paying jobs.”
“If we don’t act now things will get much worse and harder to get out of the hole later. So we have to invest now,” Biden said. “There’s a dire, dire need to act now.”
Biden’s remarks came two days after Democrats were projected to capture control of the Senate, giving them the power to set the agenda in both chambers. The comments indicate that he and his party will be less inclined than they were during the Obama administration to acquiesce to Republican demands to limit new spending because of the national debt.
The president-elect suggested he believes the $900 billion pandemic relief package passed by Congress last month would not be enough. His remarks were well-received by progressives who have been skeptical of his moderate and deficit-conscious instincts.
Sen. Bernie Sanders, I-Vt., the runner-up in the 2020 Democratic primary and likely incoming chairman of the Senate Budget Committee, praised Biden’s comments in a Saturday interview.
“The president-elect is exactly right that this is not the time for austerity politics,” Sanders told NBC News. “We cannot maintain the austerity economics that have allowed the very rich to do phenomenally in this country while working people suffer.”
Sanders is poised to oversee the budget reconciliation process, which is not subject to a filibuster. Democrats, who will seize control in the 50-50 Senate with the tie-breaking vote of Vice President-elect Kamala Harris, will be able to approve policies of taxing and spending with a bare majority of votes.
As Biden Preps $3T Stimulus, Bitcoin Could Be Set To Erupt
Biden’s fiscal stimulus plan could send the BTC price rocketing higher.
The incoming Biden administration’s plan to flood the U.S. economy with trillions of dollars could ignite the next leg of the Bitcoin (BTC) bull market, as more investors seek refuge from a crumbling United States dollar.
Axios, an Arlington-based news outlet, reported Thursday that Joe Biden has asked Congress to provide Americans with $2,000 in stimulus payments to help offset the economic devastation of Covid-19. The incoming president has also proposed a $3 trillion tax and infrastructure package as part of his “Build Back Better” program.
Biden doubled down on his call for more direct relief to Americans following Friday’s disappointing jobs report showing a loss of 140,000 positions in December.
“Economic research confirms that with conditions like the crisis today, especially with such low interest rates, taking immediate action – even with deficit financing – is going to help the economy”
If 2020 is anything to go by, the new tidal wave of stimulus could be another catalyst for Bitcoin as more money floods the market and makes its way into asset prices.
Even Donald Trump, a Republican, was no stranger to stimulus. Under his leadership, the United States passed a historic $2 trillion stimulus bill in March. Trump also signed a $900 billion relief package last month that would pave the wave for $600 stimulus checks.
The federal government’s inflation-boosting policies have coincided with record intervention from the Federal Reserve, which deployed trillions of dollars in 2020 to combat a liquidity crisis and keep overnight rates under control.
Although these policies provided a strong backstop for risk-on assets – a category that has included Bitcoin in the past – the emerging narrative surrounding BTC is that it’s a hedge against inflation.
This is not only corroborated by Bitcoin’s historic outperformance over the past 11 years but also by the fresh wave of institutional money entering the market. Institutions are buying Bitcoin with a clear purpose, and may one day become the industry’s “mega HODLers.”
Bitcoin’s digital gold narrative has been one of the biggest catalysts behind the institutional shift towards BTC. This narrative helped fuel Bitcoin’s 300% rally in 2020 and its more than doubling in price over the past three weeks. This trend could intensify in 2021 as the dollar’s purchasing power continues to erode.
Even JPMorgan Chase has acknowledged that Bitcoin is taking market share from gold, the traditional haven asset. On Friday, one Bitcoin was worth more than 22 ounces of gold, which represents a new all-time high.
Bitcoin, Gold Extend Big Losses On Rising Dollar, Yields
Gold fell to extend the biggest drop in two months amid gains in the dollar, Treasury yields, and equities, with investors weighing President-elect Joe Biden’s pledge to detail plans for huge U.S. economic aid.
Bullion endured a switchback week as January got under way, with early gains getting overturned as a surge in Treasury yields damped the appeal of the non-interest bearing asset. That’s come as the dollar recovered from its lowest level in almost three years. The S&P 500 hit another record on Friday.
Gold posted the biggest annual gain in a decade last year as the pandemic ripped through the global economy, and central banks and governments boosted stimulus. With vaccines getting rolled out, traders are weighing up the haven’s prospects for 2021, although further massive support is on the way.
Biden on Friday called for trillions of dollars in immediate further aid, including increased direct payments, after a surge in coronavirus cases caused U.S. payrolls to drop for the first time since April. He will lay out his proposals on Thursday, before taking office on Jan. 20.
Spot gold lost as much as 0.7% to $1,836.30 an ounce, and traded at $1,838.24 at 9:08 a.m. in Singapore. It sank 3.4% on Friday, the most since Nov. 9, and is now on course for a fourth daily fall. Silver declined 2.4%, platinum shed 2.3% and palladium retreated 0.6%. The Bloomberg Dollar Spot Index rose 0.2%.
Meanwhile, in U.S. politics, the House this week will take up a resolution to impeach President Donald Trump for the second time in less than two years over his actions encouraging a mob that stormed the Capitol, Speaker Nancy Pelosi said.
Does A Stronger Dollar Mean Bitcoin Price Is Destined To Lose $30K?
Bitcoin price may see a relief bounce first before retesting the $30,000 support.
Bitcoin price has been accelerating massively in recent months, with Bitcoin (BTC) rallying from $10,000 to $41,500. This rally went vertical without any major corrections in between.
However, every upward cycle has its standard 30% corrections, which can even be considered healthy for more upside.
Bitcoin’s price started to fall south in the past days as it dropped 25% to $30,000. This dropdown was also influenced by the U.S. dollar’s sudden surge, which might be bottomed out in the short term.
Bitcoin Price Flips Bearish On Lower Time Frames
A trend reversal starts with lower time frames flipping bearish, and this chart is an example of such a trend reversal. The $38,900 support was lost after multiple tests.
That’s not bad in itself. But when the support level flips bearish into a resistance, that’s likely to trigger continuation downward.
A similar support/resistance flip occurred at the $36,300 area, after which the price accelerated downward to the support areas at $32,500 and $30,000. Traders and investors should remember that downward corrections almost always occur in a fast and painful move.
However, support seems to be found at $30,000, which can induce some range-bound constructions for now. Such a range-bound construction is healthy for the markets, as strength can be built for the next impulse wave. This impulse wave will most likely occur at a later stage in 2021.
Fibonacci Confluences With The Current Support Levels
The 3-day chart shows confluences on the levels of interest for Bitcoin investors. In general, the previous all-time high at $20,000 would be a tremendous gift to the entire market. However, above this last all-time high, other levels are found and will likely be formidable support.
These levels are aligned with the Fibonacci indicator. The first significant level of support is found in the region between $29,500 and $30,500. This is the level where Bitcoin’s price is currently finding support.
From here, a relief bounce toward $35,000 to $37,000 could occur before another final dip starts.
That final dip could be toward the region around $25,000 to $26,000, as that’s the next Fibonacci level.
Dollar Bouncing Signaling Weakness Across Markets
One of the primary variables for this recent correction across the crypto and equity markets is the strengthening of the U.S. dollar. The dollar strength index (DXY) landed on a significant support level and marked a temporary low with a daily bullish divergence.
Since then, the dollar has been rallying upward, causing other inversely correlated markets to drop south.
The first area of resistance is constructed around the 92-points level. This area of resistance would automatically mean that other markets could correct further.
The ultimate level to watch for Bitcoin traders is the weekly time frame, which is the 21-week moving verage. In 2016 and 2017, Bitcoin’s price rested on this moving average as support through the entire bull cycle.
It’s not unlikely to have a similar test happen in the coming months, and it would suit with the likelihood of some consolidation before continuation. However, investors shouldn’t be worried at all about the current value of the 21-week MA. It’s a lagging indicator, however, which means it’s going to crawl up in the coming weeks toward the $25,000 area.
That region would mean a correction of around 40% for the crypto markets, which is also something that has happened more than once in previous bull cycles before new highs.
Bitcoin’s Big Drop Again Coincides With Dollar Bounce In Forex Markets
Bitcoin continues to trade in the opposite direction to the Dollar Index in a reflection of the cryptocurrency’s maturation as a macro asset like gold.
The top cryptocurrency by market value slumped to $32,400 early on Monday, having set record highs above $41,800 on Friday.
The crash came alongside a bounce in the Dollar Index (DXY), which tracks the greenback’s value against major currencies. The DXY has jumped to two-week highs near 90.50, extending a two-day winning streak. The index reached a 33-month low of 89.21 on Jan. 6, according to TradingView.
Since the major markets crash in March, bitcoin (BTC, -15.86%) and the index have trended in opposite directions, with bitcoin witnessing consolidation or correction during DXY’s temporary recovery rallies.
“Bitcoin’s value increased as the money supply and inflation expectations grew. At the same time, the dollar depreciated to multi-year lows, resulting in an inverse correlation between the government-backed fiat and decentralized digital asset,” Kaiko Research noted in its December market report.
Bitcoin’s price fell from $12,000 to $10,000 in early September and remained sidelined for the rest of the month as the dollar index bounced from 91.75 to 94.75. Similar action was observed in June 2020.
The cryptocurrency’s rally resumed in October as the foreign exchange markets began selling the dollar on expectations of additional U.S. fiscal stimulus. A steep drop in the DXY accompanied the cryptocurrency’s meteoric rise from $15,000 to above $41,000 seen over the past two months or so.
The inverse correlation isn’t surprising, given that publicly listed companies such as MicroStrategy are buying bitcoin to preserve the inflation-adjusted value of their treasury assets, mainly cash (USD).
“What we’re trying to do is preserve our treasury; the purchasing power of the cash is debasing rapidly,” MicroStrategy’s CEO Michael Saylor told CoinDesk in November.
The dollar’s latest bounce looks to have been fueled by a rise in U.S. Treasury yields.
Bitcoin is not the only asset falling alongside the dollar’s recovery rally. Gold, the classic inflation hedge, declined to a one-month low of $1,817 early Monday. The yellow metal peaked at a multi-week high of $1,959 last week as the DXY found a temporary bottom.
It remains to be seen if a continued rally for the dollar, if any, will fuel a deeper drop in bitcoin.
At press time, bitcoin is trading near $33,520, representing a 15% drop on a 24-hour basis.
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