Crypto & Digital Assets
Bitcoin Braced For A Bullish Breakout As Rishi Sunak Suggests CBDC To Be Rolled Out
16 Nov 2020
Bitcoin’s rise and rise continued as it touched another important threshold. The cryptoasset moved through $16,000 as prices observed an ‘upward continuation pattern.’ As part of that we would expect prices to break out and then head in the direction of the prevailing trend.
By Simon Peters, analyst, eToro
There is a good chance we will see a bullish breakout and, if we do, expect bitcoin to head up towards its next price threshold of $17,500. If we do get there, that would get us back to a resistance level last seen in January 2018 when prices failed to push any higher after a major drop from the all-time high of $20,000. It will be interesting to see what happens, but I remain bullish on bitcoin’s prospects over the long term.
With the US election now (almost) behind us, attention is returning to fiscal stimulus. With the rolling out of any COVID-19 vaccine likely to occur deep into 2021, all indications are that a package will still be required to prop the US economy up. With bitcoin increasingly cementing its status as an effective inflation hedge and huge amounts of liquidity set to be pumped into main street USA, that could be another catalyst to finally take the world’s most popular cryptoasset past $17,500.
Altcoin activity presenting opportunities
The price of Ethereum has risen favourably too, from $369 a month ago to $453 today, and altcoins like Tezos and Cardano may be presenting attractive buying opportunities for many investors. Tezos had suffered earlier this year after reaching all-time highs but, with falling prices seemingly checked, many might see this as a good point to reconsider their position.
The ETH 2.0 launch continues to loom large. With 16,384 nodes required 7 days before the scheduled launch and each needing 32ETH, it is looking increasingly likely that the launch date of the 1st December will be delayed. Just over 11% has been staked toward that ETH 2.0 target, which indicates that a delay is imminent, but encouragingly the number of addresses with 32ETH+ is at an all-time high. Perhaps investors are waiting to see what happens.
If ETH 2.0 does defy the odds and launches on time, then we could see an investor influx to take advantage of staking rewards. Validators are rewarded for adding blocks to the blockchain. If investors are doing their bit for the ecosystem, then those rewards will be distributed and that might be the incentive needed to see more action. Once things do get up and running, we could see further influxes into Ethereum as a result.
Rishi’s CBDC to be rolled out?
Rishi Sunak has suggested in a tweet that the BoE and Treasury are considering CBDCs, but “as a complement to cash” not an alternative to it. No doubt UK society will increasingly move towards being fully cashless and this initiative could and should play its part. The CBDC has options to either roll out via a centralised ledger or a decentralised system. Either way, it’s good to hear that the UK government is considering CBDCs. If they weren’t, the UK could risk being left behind by other global powers like China or private companies launching stable coins.
Looking ahead this week, we will be watching closely for signs of fiscal stimulus as the US Senate settles down. We will also continue to monitor how the ETH 2.0 launch progresses as time ticks down toward the deadline.
PayPal speeds up crypto rollout
PayPal, which was onboarding customers who were interested in crypto to be able to buy, sell and hold various coins, has now dropped this waitlist. Instead, all customers in the US will be able to use the service without being required to register interest. I continue to be of the view that this is a hugely positive move for crypto adoption, opening up a potentially massive user base to cryptoassets. The community agrees, especially given the price movements we saw last month following the initial announcement.
