Yuri Mazur, Head of Cex.io Broker Data Analysis Department:
On Monday, Microstrategy announced the purchase of another 13,005 bits in the amount of about $ 489 million. Such an ambitious deal unequivocally suggests that large investors regard the current levels of BTC price to the US dollar as well-low for profit from further growth in its quotations. This can give a signal to a wider market segment about good levels to purchase and provoke a new growth wave.
Also, do not forget that now the inflation rate in the US economy has achieved the highest value since 2008, which can lead to the further devaluation of the US dollar and increase its investment risk. In this regard, investors will be inclined to find new capital protection tools, which clearly manifested after the historic decline in the country’s GDP by 32.9% in the second quarter of 2020. The wave of gold and bitcoin growth was followed, which was hastily was regarded as a good alternative tool for protecting capital from inflation risks due to its technological device.
In today’s situation, the monetary policy of the US Federal Reserve will be played. If an aggressive course is taken with the aim of restraining the fall of the US dollar, it may adversely affect the stock market, since loans rise in price. The probability of serious correction in the US stock market is also not excluded, because of which Bitcoin can win. If the Fed does not resort to aggressive monetary actions, the American dollar index can again go down to the levels of the beginning of June of this year.
Nevertheless, we can see that at the moment Bitcoin continued its fall, despite the acquisition of MicroStrategy. This means that the trade volume for the purchase of BTC was rapidly absorbed by the market, and bear moods are still dominated in the cryptocurrency market. In our opinion, the company plays a very risky game, continuing to invest in Bitcoin after it made a purchase at levels close to historical maxima.
The fall may continue, and a protracted consolidation may occur in the area of $ 30 thousand, and Microstrategy risks not to fulfill their debt obligations to investors on bonds that were issued to buy digital assets.
We believe that the next two weeks will be determining in the medium term development of the dynamics of Bitcoin. If there is a drop below $ 31 thousand — the nearest level of support, which was determined by trading data CEX.IO — the likelihood of continued correction to $ 20,000 will increase. If the support takes its own, return to $ 50,000 and higher will become the dominant scenario.
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